Estonia Covered Bonds



Project number:


Business sector:

Financial institutions

Notice type:


Environmental category:


Approval date:

28 May 2020



PSD disclosed:

10 Jun 2020

As permitted by paragraph 2.6 of Section III of the Access to Information Policy, disclosure of this PSD was deferred in accordance with paragraph 1.4.4 of the Directive on Access to Information.

Project Description

Investment of up to EUR 70 million in a series of covered bonds issued by AS LHV Pank ("LHV") under its Covered Bond Programme ("programme") over a period of 3 years and admitted for trading on the Irish Stock Exchange. EBRD's investment in each issue will be limited to up to 20% of the aggregate principal amount of each issue.

On 02 June 2020, EBRD invested EUR 37 million in the first covered bond issuance of EUR 250 million under the programme.

Project Objectives

The objective of the project is to support the establishment of a still novel capital market instrument in Estonia. The project supports the second ever issuance of covered bonds in Estonia and it is fully consistent with Bank's policy engagement aimed at development of regional capital markets in the Baltics. 

Transition Impact

ETI score: 62

The project supports the resilience of the financial sector and markets by (i) increasing the supply of investable listed instruments for local and international investors, and (ii) helping LHV diversify funding sources and improve the asset liability mismatch. The operation provides LHV with a stable source of long-term financing. The well-governed quality is underpinned by the Bank's extensive policy engagement in the Baltics aiming at the development of the capital markets and which led to the adoption of the Estonian Covered Bond Act ("ECBA") by parliament.

Client Information


AS LHV PANK is the banking arm of LHV Group ("the Group") which was founded in 1999 as a brokerage operations and obtained a banking license in 2009. LHV Pank has rapidly grown to become the largest bank by domestic capital (total assets of EUR 3 billion) with a market share by total assets of c. 10% at end-2019 and fourth largest in the country. It is fully-owned by LHV Group, an entity listed on the Tallinn Stock Exchange.

EBRD Finance Summary

EUR 70,000,000.00

For the first covered bond issuance, EBRD invested EUR 37 million

Total Project Cost

EUR 250,000,000.00

The size of the first covered bond issuance was EUR 250 million.

The total size of the Programme is EUR 1 billion.


Endorsing a newly developed asset class consistent with policy engagement undertaken in Estonia,

supporting access to international capital markets for relatively new issuer and domestically-owned bank,

providing comfort to other investors given the Bank's role as a significant investor in covered bonds.

Environmental and Social Summary

Categorised FI (ESP 2019): AS LHV bank is a new client and will be required to comply with PRs 2, 4 & 9, and further, implement and comply with the relevant EBRD's Environmental & Social (E&S) Procedure for Mortgage Lending. The use of proceeds of this transaction is destined to mortgages, which are considered a low/medium risk activity from an environmental and social standpoint. LHV has certain components in place to manage such a portfolio, and a plan has been agreed to formalise and complement the environmental and social procedure so that it is adequate for the type of risk.  LHV will be required to submit annual environmental and social reports to the Bank.

Technical Cooperation and Grant Financing


Company Contact Information

Kadri Haldre
+372 680 2756

PSD last updated

10 Jun 2020

Understanding Transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

Business opportunities

For business opportunities or procurement, contact the client company.

For business opportunities with EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794

General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

Environmental and Social Policy (ESP)

The ESP and the associated Performance Requirements (PRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”.  The ESP and the PRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation as well as to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about environmental and social performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD additionally requires its clients to disclose information, as appropriate, about the risks and impacts arising from projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.

More information on the EBRD’s practices in this regard is set out in the ESP.

Integrity and Compliance

The EBRD's Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all activities of the Bank in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The Bank believes that identifying and resolving issues at the project assessment approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts, and also helps to monitor integrity risks in projects post-investment.

OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. Reports can be made in any language of the Bank or of the Bank's countries of operation. The information provided must be made in good faith.

Access to Information Policy (AIP)

The AIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations following its entry into force on 1 January 2020. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.

Specific requests for information can be made using the EBRD Enquiries form.

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 more about IPAM and its mandate; how to submit a Request for review; or contact IPAM  via email to get guidance and more information on IPAM and how to submit a request.


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