An investment of up to € 50 million senior preferred (SP) bonds to be issued by AS Citadele Banka and dually listed on the Irish Stock Exchange plc trading as Euronext Dublin and Nasdaq Riga AS. The project represents the first SP bond issuance out of Latvia since the introduction of the EU Bank Recovery and Resolution Directive and the EU minimum requirement for own funds and eligible liabilities (MREL) guidelines in the country.
The project aims to support the resilience and regulatory compliance of the second largest bank in Latvia and contributes to the capital market development by attracting international investors to the Baltic region. The project will also support the EBRD's Green Economy Transition (GET) approach with most of the Bank's investment allocated for financing GET-eligible subprojects.
The expected transition impact stems from contribution to the "resilient" and "green" qualities:
i Resilient: The bond will contribute to (i) capital market development by expanding the range of capital market instruments by the Latvian issuer and attracting international investors to the Baltic region and (ii) the resilience of Citadele by helping to diversify its funding sources through capital market issuances and closing the regulatory funding gap.
i Green: The bond will support Latvia's and Citadele's green agenda. The issuer is committed to allocate a significant part of the EBRD's investment for financing green projects in line with the Bank's GET-eligibility criteria.
CITADELE BANKA AS
AS CITADELE BANKA
Citadele is Latvia's second largest bank by total assets with c. 19 per cent market share as of end-2020. It is classified as a systemic bank and directly supervised by the European Central Bank. The bank is rated BAA2/stable by Moody's, the rating agency. Citadele is owned by the consortium of investors led by Ripplewood Advisors, which holds a 75 per cent stake in the bank with the remaining 25 per cent held by the EBRD.
EBRD Finance Summary
Total Project Cost
Additionality mainly stems from: (i) supporting Citadele to successfully issue a sizable first SP bond, (ii) supporting Citadele to widen the investor base by sending a positive signal to other investors, and (iii) contributing to Citadele's green agenda by requiring to allocate a multiple of the proceeds from the EBRD's investment, and hence encouraging the bank to set ambitious green financing targets.
Environmental and Social Summary
Categorised FI (ESP 2019). Citadele is an existing client and is in compliance with PRs 2, 4 and 9. The Issuer will be required to continue to comply with the EBRD's Environmental requirements and submit annual environmental and social reports to the Bank. Renewable energy projects financed with the EBRD's use of proceeds will need to follow the E&S Eligibility Criteria for such projects. Solar sub-projects will be managed in line with 'The Proposed Management Approach for Solar Supply Chain Risk Management' (CS/FO/21-35) and any subsequent guidance developed under that approach.
Company Contact Information
SC "Citadele bank", Republikas laukums 2A, Riga, LV-1010, Latvia
PSD last updated
12 Nov 2021
Further information regarding the EBRD’s approach to measuring transition impact is available here.
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