The European Bank for Reconstruction and Development (EBRD) is investing €9 million in bonds issued by Erste & Steiermärkische Bank, the Croatian subsidiary of Austria’s Erste Group Bank, as part of a €45 million bond issue listed on the Zagreb Stock Exchange, EBRD reported on Friday.

The bonds are marketed mainly to local institutional investors.

“It is the EBRD’s first purchase of a bond eligible under the Minimum Requirement for own funds and Eligible Liabilities (MREL), issued by a local financial institution in Croatia,” the bank said in their press release.

It also is the first MREL-eligible instrument issued by a Croatian bank on the local or international market since the introduction of the EU’s Recovery and Resolution Directive (BRRD) and the MREL guidelines in Croatia.

Under the regulations of the EU Banking Union participating banks must meet regulatory targets so as to be able to absorb losses and restore their capital position, allowing them to perform their economic functions during and after a crisis. MREL represents one of the key tools in enhancing banks’ liquidity.

This is also the first time when a bond issued by a Croatian bank will adopt the Green Economy Transition (GET) eligibility criteria, with Erste Bank allocating majority of the EBRD’s investment to GET-eligible projects – mainly renewable energy and internationally-certified ‘green’ buildings.

In total, the EBRD has invested more than €3.97 billion in Croatia in 226 projects to date, the bank said.