EBRD backs largest subordinated bond in Polish banking sector

By Axel  Reiserer

EBRD backs largest subordinated bond in Polish banking sector

PKO BP raises finance for green residential loans

The EBRD has invested PLN 91.4 million (€21.4 million equivalent) in zloty-denominated subordinated bonds issued by the Polish lender PKO Bank Polski S.A. (PKO BP) as part of its PLN 1.7 billion (€400 million equivalent) bond programme.

This is the largest subordinated bond issuance by a Polish bank on the local capital market to date. It attracted a substantial order book with orders coming from over 100 investors from Poland.

The Tier II capital eligible bonds have a 10-year maturity, are callable after 5 years and will be listed on the Warsaw Stock Exchange. The bonds are compliant with the EU Capital Requirements Regulation and Capital Requirements Directive IV (commonly referred to as CRR/CRD IV or Basel III).

Lucyna Stańczak, EBRD Director, EU Financial Institutions, said: “We are pleased to support the largest issuance of subordinated bonds in the Polish banking sector yet. For investors this represents a fine combination between equity and debt while for PKO BP it is an innovative way to diversify sources of capital. This transaction is yet another boost for the Polish capital market, the development of which is among the EBRD’s priorities.”

PKO BP has committed to allocate the equivalent of 200 per cent of the proceeds from the EBRD bond investment to finance loans for environmentally friendly residential real estate refurbishments.

Grzegorz Zieliński, EBRD Regional Director for Poland and the Baltic states, said: “This transaction with PKO BP supports our long-standing client in raising capital to support eco-friendly refurbishments by Polish households. Investments that bring environmental benefits are at the heart of the EBRD’s mandate and we are pleased to have PKO BP at our side.”

Under its Green Economy Transition approach, the EBRD aims to increase the volume of green financing from an average of 24 per cent of its annual business investment in the last 10 years to 40 per cent by 2020.

PKO BP Group is among the largest financial institutions in Poland and one of the largest financial groups in central and eastern Europe. The company is listed on the Warsaw Stock Exchange with a market capitalisation of PLN 44 billion (€10.2 billion equivalent) as of 23 August 2017. PKO BP had a 16 per cent market share by total assets and a 17.1 per cent market share by loan portfolio as of the end of the first quarter of 2017. Poland’s State Treasury is the single largest shareholder with 29.43 per cent of total capital.

Ilona Wołyniec, Director, Department for Relationships with Strategic Clients and Financing Projects at PKO BP, said: “PKO Bank Polski remains active on the bond market. We regularly tap the market with issuances, which find strong interest from financial institutions. The success of today’s transaction is more evidence of how highly investors value our credibility.”

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.