International Finance Corp. has underwritten potential credit losses on part of a $730 million loan book held by the Polish operations of Santander, freeing up finance to be issued for more green projects, including renewables.

The provision of $120 million worth of credit loss guarantees by International Finance Corp. (IFC) will free up the equivalent of at least $600 million of further “green lending,” according to the international development body.

The IFC, the private-sector arm of the World Bank, said it has provided the “second-loss guarantee” for a loan portfolio worth the equivalent of $730 million belonging to Santander Bank Polska, the Polish business of Spanish lender Santander. The second-loss guarantee underwrites potential credit losses beyond an initial credit loss guarantee associated with the loans. The IFC did not specify the extent of the initial arrangement tied to the loan book, when it announced its contribution.

Describing the arrangement as “the first synthetic risk transfer (SRT) in emerging markets with a climate risk mitigation objective,” the IFC said it would free up Santander capital to back further lending in Poland for projects including credit for renewables, unspecified “energy” assets, water efficiency projects, and green building plans. SRT refers to the purchase of the credit loss guarantee by a bank from investors.

Steve Gandy, global head of product data management notes and structuring at Santander Corporate and Investment Banking, said that Santander Group had previously arranged synthetic risk transfers with the IFC in other markets. The IFC said the finance deal was the fourth synthetic risk transfer arranged by Santander Bank Polska.

In 2017, the Polish operation and the IFC arranged the nation’s first subordinated green bond – subordinated because it had junior status behind other creditors – which was worth $150 million, the IFC said.