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• EBRD issues green loan to NLB Banka Sarajevo
• Funds provided under the Western Balkans Green Economy Financing Facility
• On-lending supported by the European Union in the form of technical cooperation and incentive grants

The European Bank for Reconstruction and Development (EBRD) is providing a €2 million loan to NLB Banka Sarajevo for on-lending in support of green investment in Bosnia and Herzegovina – the first time that the latter has received green financing from the EBRD.

The loan is being issued under the third phase of the EBRD’s flagship Western Balkans Green Economy Financing Facility (GEFF).* The proceeds will support NLB Banka’s evolving sustainability commitments by enabling it to finance gender-responsive green investment projects carried out by the residential sector (individual residents, housing collectives and housing management companies, service providers, producers and vendors of green technologies and materials, and construction companies) and the public sector.

The loan will be accompanied by grant incentives funded by the European Union (EU), with households able to access grants of up to 20 per cent of their loan amounts on successful completion of their green investments.

Stela Melnic, the EBRD’s Head of Bosnia and Herzegovina, said: “We’re proud to support NLB Banka Sarajevo with green financing that helps Bosnia and Herzegovina move towards a cleaner, more sustainable future. This initiative will fund projects that make homes and public buildings more energy efficient and environmentally friendly. Through the Western Balkans GEFF III REpower Programme, we’re working with local partners to bring real benefits to communities and promote growth that is inclusive and climate-resilient.”

Lidija Žigić, the CEO of NLB Banka Sarajevo, said: “Partnering with the EBRD on our green financing facility marks a decisive step in accelerating NLB Banka’s sustainability agenda in Bosnia and Herzegovina. This financing will strengthen our role in driving the country’s green transition by enabling households, housing collectives, construction companies and public institutions to invest in energy-efficient and renewable technologies. We see this cooperation as an investment in a future that is cleaner, more resilient and economically competitive. Together, we are empowering communities to reduce energy consumption, lower costs and contribute to a greener Western Balkans.”

Berin Lakomica, the CMO of NLB Banka Sarajevo, added: “The GEFF III REpower Programme brings tangible value to our clients by making green investments more accessible and more affordable. Through attractive financing conditions and EU-backed incentives of up to 20 per cent, households can modernise their buildings, improve energy efficiency and adopt renewable technologies with a significantly reduced financial burden. Demand within the residential segment is already strong, especially among individuals. With this programme, we are broadening the market for green technologies and supporting customers on their path towards smarter, more sustainable living.”

NLB Banka Sarajevo is a universal commercial bank that serves retail, SME, corporate and public-sector clients in the Federation of Bosnia and Herzegovina and the Brčko District through its network of 34 business units.

The EBRD has invested more than €3.4 billion in 254 projects in Bosnia and Herzegovina since it began operating there in 1996. The Bank’s strategic priorities in the country are to promote the green economy, support the competitive development of the private sector and foster regional integration.

* The GEFF programme is co-funded by the EU, Austria, Japan and Denmark, and by Austria and Switzerland through the EBRD’s High-Impact Partnership on Climate Action (HIPCA).

HIPCA is supported by Austria, Canada, Finland, Germany, the Netherlands, South Korea, Spain, Switzerland, TaiwanICDF, the United Kingdom and the United States of America.

The Bank of England is planning to ease capital rules for high street banks for the first time in a decade, marking the latest attempt to loosen regulations designed to protect the UK economy in the wake of the 2008 financial crisis.

The central bank has proposed lowering capital requirements related to risk weighted assets, by one percentage point to about 13%, reducing the amount lenders must hold in reserve. The move is designed to make it easier to lend to households and businesses.

Capital requirements act as a financial cushion against risky lending and investments on bank balance sheets.

It came as fresh stress tests showed that the UK’s seven largest banks – Barclays, Lloyds Banking Group, Nationwide, NatWest, Santander UK and Standard Chartered – are strong enough to continue lending through “a severe but plausible” economic downturn.

The Bank said its proposed new capital rules were “consistent with its view that the banking sector can support long-term growth in the real economy in both current and adverse economic environments”.

It added that banks have tended to hold more capital than required, meaning that money is not used to issue loans.

“Banks should have greater certainty and confidence in using their capital resources to lend to UK households and businesses,” the Bank’s financial policy committee said.

The central bank announced it would be reviewing capital levels in June, having last assessed them in 2015. It said that, since the capital levels were last reviewed, banks had managed to continue issuing loans and mortgage despite “several macroeconomic shocks” including Covid and Russia’s full-scale invasion of Ukraine.

The chancellor, Rachel Reeves, has put extra pressure on regulators to do more to stimulate growth, having this summer gone so far as to say that rules and red tape were a “boot on the neck” of businesses and risked “choking off” innovation across the UK.

The move could stoke concerns about weakening protections against UK bank failures, as the government continues to row back on regulations introduced after the 2008 financial crisis.

Reeves appeared to subtly encourage cuts to bank capital requirements last week. In letter to the Bank’s governor, Andrew Bailey, released alongside the budget, she said she welcomed the review of bank capital requirements, adding that the process should “ensure the UK’s capital framework strikes the optimal balance to deliver resilience, growth and competitiveness”.

“The next steps in this work should identify actions that could support the supply of long-term capital for productive investment, particularly for high growth-potential firms seeking to scale up,” the chancellor’s letter added.

There will also be pressure on banks to do more to support the UK economy after they narrowly escaped higher taxes and emerged among the biggest winners of the budget.

The Bank warned over the risks of the rise in valuations of artificial intelligence companies this year, saying that this “heightens the risk of a sharp correction”.

“Equity valuations in the US are close to the most stretched they have been since the dotcom bubble, and in the UK since the global financial crisis. This heightens the risk of a sharp correction,” it said. It expressed similar concerns last month.