EBRD invests in PKO Bank Hipoteczny covered bonds

By Axel  Reiserer

EBRD invests in covered bonds by PKO Bank Hipoteczny S.A.

The European Bank for Reconstruction and Development (EBRD) has invested PLN 100 million (approximately €23.6 million equivalent) in a zloty-denominated benchmark covered bond issue by PKO Bank Hipoteczny S.A. (PKO BH). This is the third PLN-denominated benchmark issue by PKO BH under the new covered bond legislation that entered into force on 1 January 2016.

The covered bond issue reduces the maturity mismatch on PKO BH’s balance sheet and enhances and diversifies PKO Bank Polski Group’s financing structure by providing access to long-term funding for its mortgage loan portfolio.

PKO BH is one of three mortgage banks operating in Poland and specialises in PLN-denominated residential mortgages. The bank, which started operations on 1 April 2015, is a 100 per cent subsidiary of PKO Bank Polski, the largest commercial bank in Poland.

The EBRD investment aims to strengthen the local capital market, one of the Bank’s priorities in its activities in Poland to support sustainable growth and a resilient economy. The EBRD’s new transition concept argues that a well-functioning market economy should be integrated, competitive, inclusive, well-governed, green and resilient.

The EBRD played an active role in the development of the new legal framework for covered bonds in Poland. Under its Local Currency and Local Capital Markets Development Initiative and following a request by the Polish Ministry of Finance, the Bank engaged in drafting legal provisions for the new law, together with a working group organised by mortgage banks and the ministry. The revised covered bond law was approved by the Polish parliament and entered into force on 1 January 2016.

Lucyna Stańczak-Wuczyńska, EBRD Director for EU Banks in the Financial Institutions group, said: “This is the third zloty-denominated benchmark covered bond issue by PKO Bank Hipoteczny and the success of this programme is testimony both to the quality of the product and the appetite in the market. It shows the potential of the Polish capital market, which the EBRD is interested in developing. We are proud to be associated with a benchmark transaction like the present one and we remain available to do more.”

Rafał Kozłowski, CEO of PKO Bank Hipoteczny, said: “I am pleased that once again the EBRD is investing in our covered bonds. As a result of the EBRD’s involvement, PKO Bank Hipoteczny has become the leader in Poland’s covered bond market in just its second year of operations, being at the same time the most active and repetitive covered bond issuer in Poland.”

Since the beginning of its operations in Poland in 1991, the EBRD has invested almost €8.5 billion in more than 380 projects in the country. In addition to its wide range of products for banks and companies, in recent years the EBRD has built a growing portfolio of investments (both equity and debt) in the Polish financial sector, for which demand remains high.