The project consists of a facility for Kereskedelmi és Hitel Bank, Hungary, in the form of a convertible subordinated bond of US$ 30 million for a term of seven years.
The principal objectives of the project are to:
- improve K&H's capitalisation;
- facilitate K&H's privatisation and encourage interest from a strategic investor;
- enable K&H to expand its business activities, to improve its information technology and to renovate its branch network.
By helping the restructuring and privatisation of the last major state-owned bank in Hungary, the EBRD will contribute to the promotion of a sound private banking system in that country and will facilitate the financing of private corporate customers.
K&H is one of the largest commercial banks in Hungary in terms of total assets and branch network following its merger with its retail banking subsidiary IBUSZ Bank. In 1995 a new management team transformed the institution into a leading universal bank with its primary focus on wholesale activities.
The Government of Hungary has approved a decree on the privatisation of K&H, requiring a strategic investor to hold a minimum of 25 per cent of K&H by the end of 1997 and requiring the Government to fully divest its shareholding in K&H by that time.
A subordinated bond which will form part of K&H's capital base, with an option to convert into ordinary registered shares of K&H.
Up to the equivalent of US$ 30 million (ECU 23.4 million), all of which will be financed by the EBRD.
The project has been classified as medium. K&H will carry out its operation in accordance with the EBRD's Environmental Procedures for Local Banks, which provide for the integration of environmental due diligence into its credit and investment appraisal processes, and for a requirement that borrowers comply with national and local health and safety and environmental regulations and standards. K&H will submit annual environmental reports to the EBRD.
Technical cooperation funds for the external due diligence have been made available under the Framework Contract for Financial Institutions.
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Independent Project Accountability Mechanism (IPAM)
If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).
IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.
Please visit the Independent Project Accountability Mechanism webpage to find out how to submit a Request for review through our confidential online form, by email, mail or telephone. IPAM is available to discuss your concerns and answer any questions you may have about the submission or handling of Requests, which follow the Project Accountability Policy and Guidance. Requestors’ identities may be kept confidential, upon request.