Provision of a long-term senior loan to OTP Bank AD Belgrade (OTP) for on lending to small and medium-sized enterprises (SMEs).
The project will contribute to the expansion of lending to private businesses through working capital lines and investment loans to SMEs, including enterprises operating in economically less-developed regions of the country. Furthermore, the transaction supports OTP's growth strategy and the diversification of its funding sources
ETI score: 60
The project contributes to the objectives of the EBRD Financial Intermediary Framework, supporting the Competitive and Resilient transition qualities.
The project improves the availability of medium-term funding for SMEs, which are the main source of employment in the private sector and a major contributor to the economy.
With its wide regional outreach and SME-focused strategy, OTP is well-positioned to provide much-needed financing to smaller businesses and to contribute to the development of SMEs in the country.
The focus will also be on lending in the regions outside the capital, attracting new SME clients and maintaining adequate portfolio quality.
OTP BANKA SRBIJA AD
OTP Bank Serbia (OTP) follows a universal banking model with an equal footprint in corporate and retail lending. It operates as a subsidiary of OTP Bank Nyrt from Hungary. OTP is present on the Serbian market since 2006 through acquisition of smaller banks. More tangible footprint has been made: (i) in 2017 with the acqusition of Vojvodjanska banka (number 10 out of 26 banks); and (ii) in 2019 with the acqusition of Societe Generale Serbia (number 2 out of 26 banks). Integration of operations in Serbia is being finalised and OTP is expected to become one of the leading banking groups in the country.
EBRD Finance Summary
Total Project Cost
EBRD provides OTP with both local currency and medium term funding that is scarcely available in the Serbian market. The euroisation of the Serbian banking sector is high with EUR loans making up 68% of the banking sector gross loan portfolio and EUR deposits making up 59% of total deposits at YE 2019. This will support the strengthening of the bank's balance sheet via decreased maturity mismatch and ensure the availability of local currency to SME clients. Moreover, 56.1% of OTP's deposits are short-term. Banks in Serbia are largely funded by short-term deposits (ca. 70% of total liabilities).
OTP Serbia will be following and enforcing clearly defined eligibility criteria for sub-borrowers, EBRD environmental and social standards, higher financial covenants and reporting requirements, thus contributing to the competitiveness and resilience of the financial sector as intended under the FIF Framework.
Environmental and Social Summary
Categorised FI (2019 ESP). OTP Bank currently operates as a former Societe Generale Serbia, which was an existing client and its performance to date for existing exposures has been satisfactory. OTP Bank will be required to comply with EBRD's PRs 2, 4 and 9, including the expanded Exclusion List and FI Referral List for any sub-projects that include activities listed in Appendix A to PR 9 and implement the EBRD's E&S Risk Management Procedures for Micro, SME and Corporate lending and submit annual E&S reports to the Bank. Sub-borrowers financed through OTP Bank's loan will be required to comply with national environmental, health, safety and labour (EHSL) requirements. The overall risk portfolio of the investments foreseen under this facility is low to medium risk, and OTP has appropriate procedures in place to manage such investments.
Technical Cooperation and Grant Financing
Company Contact Information
+381 11 30 11 496
+381 11 30 11 496
Bulevar Zorana Djindjica 50 a/b, Novi Beograd, Serbia
PSD last updated
08 Apr 2021
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