EBRD invests Kc 1.32 billion in Česká spořitelna local currency bond

By Svitlana  Pyrkalo
@pyrkalo

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  • EBRD to invest Kc 1.32 billion in locally issued bond by Česká spořitelna
  • Support for green economic recovery in the Czech Republic
  • Development of local capital market

The European Bank for Reconstruction and Development (EBRD) is facilitating the introduction of a new financial instrument on the Czech Republic’s capital market by investing more than Kc 1.32 billion in the first senior non-preferred bond issued locally by the country’s second-largest bank Česká spořitelna. The Czech crown-denominated bond will be listed on the Prague Stock Exchange.

This is the first EBRD transaction in the Czech Republic’s financial sector after re-engagement with the country in 2021. It will contribute to the resilience of the local banking sector and help Česká spořitelna meet regulatory requirements.

The Bank’s investment will also encourage green lending to the real sector and support a green economic recovery in the country. Česká spořitelna is committed to allocating the equivalent of 120 per cent of the proceeds from the EBRD investment in the senior non-preferred bond to finance green projects.

Melis Ekmen Tabojer, EBRD Director for European Union (EU) Banks and Structured Finance, said: “We are proud to support the local capital market during the current global geopolitical and macroeconomic uncertainty. The EBRD is supporting Česká spořitelna’s efforts to meet the Minimum Requirement for own funds and Eligible Liabilities (MREL) by helping to raise MREL-eligible funding on the local market. The project is also facilitating green lending in the country.”

Under the regulations of the EU Banking Union, participating banks must meet regulatory targets to be able to absorb losses and restore their capital position, allowing them to continue their economic function during and after a crisis. MREL represents one of the key tools in enhancing banks’ resolvability.

The EBRD has to date invested more than €1.2 billion through 114 projects in the Czech Republic.

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