Effective financing means sustainable financing

Alexander Krustev is Head of Advisory and Specialized Lending at UniCredit Bulbank since June 2022. Before his current role, he was successfully leading UniCredit Leasing as CEO for more than 8 years. His career with the bank started in 1998. He gained valuable professional experience through his work in Milan and Bucharest and his participation in UniCredit’s talent management programme. Later on, he became Credit Activity Analysis and Control Manager and actively supported the process of merging of the three banks - Bulbank, HVB Bank Biochim and Hebros Bank. From 2007 to 2009 he was head of Credit Risk with the Bank, and from 2009 on he was the Chief Risk Officer of UniCredit Bulbank.

SeeNews talked with Alexander Krustev, Head of Advisory and Specialized Lending at UniCredit Bulbank, about the bank’s commitment to green financing.

UniCredit Bulbank has the biggest portfolio of green loans in Bulgaria. What areas does the bank cover when it comes to this type of credits?

We strongly believe in the effectiveness of sustainable financing and its ability to channel investments that could ultimately bring wider environmental and social benefits for the community. As UniCredit Group, we were among the first banks to commit to sustainability and to support its clients, local communities in which we operate, our partners, and the industry at large by financing the transition to a low-carbon and more circular economy. Moreover, throughout the years we have been constantly working on reviewing the ESG factors that are integrated across our business, monitoring every step from lending to risk management in order to be up-to-date with the trends and latest developments, whilst helping our clients grow and develop.

Currently, we have the biggest portfolio of loans dedicated to renewable energy projects. We continue to expand our ESG product catalogue and service offer, including: Social Impact Banking, sustainable financial instruments and advisory (such as green bonds), loans for achieving better energy efficiency, ultimately targeting improved sustainability of our clients. It is important to mention, that the approach we use covers our entire service spectrum by having a bespoke approach towards the needs of our corporate clients.

Your portfolio also includes loans aimed at financing specifically photovoltaics for SMEs. Tell us a bit more about this particular product.

For the past few years we faced several converging courses that led to the booming demand in the photovoltaic segment – soaring energy prices due to global trends and geopolitical conflicts, general movement towards more sustainable power generation, but also improved purchasing power of our corporates when it comes to accessing such photovoltaic installations.

Considering that one of the top priorities for UniCredit Bulbank is to support ESG-driven projects and moreover to be the first choice also for small companies, which are the backbone of the local economy, we launched a simple and easily accessible product for financing of small green projects.

The solution targets enterprises or businesses registered in Bulgaria, with significant electricity consumption, looking to optimise their electricity costs by installing a photovoltaic equipment for their own needs. We finance both the purchase of photovoltaic panels as well as the necessary equipment, e.g. inverters, sub-stations, etc. Such a solar installation could be extremely useful in the long-run by reducing the energy expenses of clients whose main electricity consumption is during the day.

What is the current trend in green lending, are these types of loans expanding their share in your overall portfolio?

Given the events in the past year, we are observing a general trend of accelerated energy transition, also considering the pace transferred from 2021, which on its own was a record-breaking year for green financing, as governments, international institutions and lenders started to support more significantly the shift towards renewables. It is widely held that “green” financing leads the way in providing the liquidity necessary to combine economic growth with sustainability, ultimately targeting a net zero impact.

As such, we are observing a general trend for the development of not only renewable energy power generation solutions but also higher share of green buildings, improving overall waste management and building a more sustainable transportation systems that connect urban and rural areas. All of these, step by step, take us to a more inclusive and sustainable way of living.

Apart from loans, UniCredit Bulbank is also taking proactive approach towards helping clients mitigate the risks related to renewable energy facilities. UniCredit Insurance Broker also provides advanced insurance solutions for your clients. What are the main advantages for them?

Regardless of the size of any project, it faces various risks – starting from delivery of the solar panels, inverters, turbines, moving to construction phase and ending with fully operational solar park. In order to address properly the risk exposures over the life cycle of the PVs, UniCredit Insurance Broker designed, and in 2021 started offering, a specialised Renewable energy insurance product. It is All Risks cover which includes both material damage, machinery breakdown and loss of gross profit. Alternatively, if the PV is used only to feed the owner’s need for electricity, insurance will cover the increased expenses for electricity if the facility is damaged or lost.

Another unique feature of the product is the so-called Advanced Loss of Profit cover. Already at the construction stage of the RES installation, serious material damage may occur from fire or natural disasters. In this case, the recovery of damages may also lead to a delay in commissioning, and hence to a loss of profit. In fact, one of the peculiarities of this type of risks is that loss of profit can be two or three times higher than the cost of material damage itself. This is the main reason why our solutions also offer such coverage. This way, we provide security for both investors and the institutions financing the projects.

UniCredit Insurance Broker has structured suitable insurance solutions for nearly 400 megawatts of all types of renewable energy sources. We cooperate with insurers both on the Bulgarian market as well with leading international insurance carriers, specialised in providing coverage for solar parks, wind farms and hydropower plants. Our goal is to provide clients with clear insurance terms that match their risk profile, naturally looking for the most competitive price.

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