EBRD in first financial institutions bond purchase in Croatia

By Axel  Reiserer

EBRD in first financial institutions bond purchase in Croatia

Investment of HRK 45 million in Erste Bank bonds will support local capital market

In its first purchase of a bond issued by a local financial institution the EBRD has invested HRK 45 million (€6 million equivalent) in bonds issued by Erste & Steiermärkische Bank d.d., the Croatian subsidiary of Austria’s Erste Group Bank AG.

The proceeds from the bonds issue will enable Erste Bank to diversify its funding base for its core business and will strengthen the balance sheet of the bank by securing long-term wholesale kuna funding. The bond issuance will contribute to the development of the local capital market in Croatia and the securities will be listed on the Zagreb Stock Exchange. Developing and strengthening local currency and capital markets is one of the EBRD’s strategic priorities.

Lucyna Stanczak-Wuczynska, Director, Head of FI EU Banks, said: “We are very pleased to see a long-term kuna issuance by a Croatian bank on the local market. Such funds acquisition contributes to greater resilience of the banking sector in the country as well as contributing to the more stable balance sheet structure in the banking sector. At the same time it fits into the EBRD strategic objectives, which is the support of the capital market development in our countries of operations.

In delivering this the Bank has adopted a strategy combining investments with policy engagement. In Croatia, the EBRD has been active in promoting covered bonds as a secure instrument which offers the stability long-term investors typically seek.

Victoria Zinchuk, EBRD Director for Croatia, said: “With our investments we aim to support the development of the local capital market and the provision of funds to the local economy. Participation in the Erste bond issue is an important step in this effort.”

Erste & Steiermärkische Bank is the third largest bank in Croatia and a long-standing partner of the EBRD. To date, the Bank has invested €3.7 billion through 201 projects in the country.