ING and PGGM agree €5bn project-finance credit risk sharing transaction

ING has entered into a credit risk-sharing transaction with Dutch pension investment manager PGGM covering a €5bn portfolio of project-finance loans, allowing the bank to reduce its retained credit risk and create additional capacity for new lending.

PGGM is participating on behalf of Dutch pension fund PFZW, whose assets support workers in the Netherlands’ healthcare and welfare sectors.

The arrangement, named Linden-1, is ING’s first large-scale significant risk transfer transaction involving project-finance assets.

The underlying portfolio comprises loans originated by ING’s Wholesale Banking division across Europe, the Middle East, Africa and Asia-Pacific, with most of the financed projects contributing directly to the energy transition.

The portfolio includes exposures managed by the bank’s energy, technology, media, telecommunications, healthcare and infrastructure financing teams.

Under the structure, ING shares a portion of the credit risk associated with the reference portfolio with PGGM.

This is distinct from selling €5bn of loans outright or receiving €5bn in new funding. The announced figure represents the size of the underlying reference portfolio, not the amount of capital transferred to the investor.

The transaction has been structured to meet the European Union’s Simple, Transparent and Standardised securitisation criteria.

ING said the arrangement provides capital relief, improving the efficiency with which it allocates regulatory capital against its lending activities.

Banks can use significant risk transfer arrangements to reduce the amount of credit exposure retained on their balance sheets, subject to applicable regulatory requirements.

This can create lending capacity without requiring a corresponding sale of the underlying customer loans.

The transaction also includes a mechanism allowing ING to add newly originated eligible loans, potentially expanding the reference portfolio over time.

Neither the precise amount of credit risk transferred nor the investor’s participation terms, pricing or capital-relief amount was disclosed.

For PGGM and PFZW, the structure provides access to credit exposure linked to projects supporting infrastructure development and the energy transition.

For ING, the arrangement broadens institutional participation in its project-finance portfolio while retaining the bank’s role in originating and managing client relationships.

Although the underlying assets are project-finance loans rather than trade receivables, the transaction illustrates the growing importance of institutional risk-sharing structures in enabling banks to expand financing capacity without holding every exposure entirely on their own balance sheets.