RLF - AS LHV Group Bail-in Senior Preferred Bond

Overview
Project Summary Document
Environmental and Social Documentation
Procurement
Complaints

Overview

A standalone investment of up to EUR 25 million, but not more than 50 per cent of the issue size, in MREL-eligible senior preferred bonds ("SP Bonds") to be issued by AS LHV Group.

On 7 November 2022, EBRD invested EUR 15 million in the issuance of EUR 100 million senior preferred bonds.

Project ID 54069

Status Complete

Location

Estonia

Business Sector

Financial Institutions

Notice Type

Private

Project timeline

Exploratory
Passed Concept Review
Passed Structure Review
Passed Final Review
Board Approved
Signed
Implementing
Completed

Company Contact Information

Kadri Haldre
Kadri.Haldre@lhv.ee
+372 680 2756
https://www.lhv.ee/
TARTU MNT 2, TALLINN 10145

Project ID 54069

Status Complete

Location

Estonia

Business Sector

Financial Institutions

Notice Type

Private

Environmental Category

Approval Date

21 Oct 2022

Disclosure date

18 Nov 2022

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.

As per section 1.4.2 (iii) of the Directive on Access to Information: "For Projects approved by Bank management where the Board of Directors has delegated the approval authority, the PSD shall be disclosed at the start of the relevant no-objection notification period to a member country of the Bank in accordance with Article 13 (iii) of the Agreement Establishing the EBRD."

RLF - AS LHV Group Bail-in Senior Preferred Bond (Estonian) (PDF, 0.21MB)

Project description

A standalone investment of up to EUR 25 million, but not more than 50 per cent of the issue size, in MREL-eligible senior preferred bonds ("SP Bonds") to be issued by AS LHV Group.

On 7 November 2022, EBRD invested EUR 15 million in the issuance of EUR 100 million senior preferred bonds.

Project objectives

The Project aims to support the resilience of LHV Group, the largest domestically owned financial group in Estonia in building up loss absorption capacity and maintaining access to capital markets with bail-in-able instruments at times of heightened geopolitical and macroeconomic uncertainty and reduced investors' appetite. In addition, the Project aims at ensuring uninterrupted lending to SMEs in Estonia, directly or indirectly affected by economic consequences of the war on Ukraine.

Transition impact

ETI Score:65

ected transition impact of the Project stems from its contribution to the Resilient and Inclusive transition qualities. The operation contributes to the Resilient transition quality by supporting LHV in meeting its respective regulatory requirements towards loss absorbing funding base as well as building its resilience to market and regulatory shocks. The Inclusive quality is underpinned by LHV's commitment to financing of businesses in Estonia, MSMEs and corporates, which have been directly and indirectly impacted by the ongoing war on Ukraine and its economic spill-over effects on the regional economies.

Client information

AS LHV GROUP

AS LHV Group is the fourth largest financial services group with ca. 14 per cent market share by total assets in Estonia and is categorised as a domestic systemically important group. It operates as a financial holding company, consolidating several subsidiaries including a banking subsidiary (LHV Pank, an EBRD client). The Group has been listed on the Tallinn Stock Exchange since 2016 with 30.6 per cent of the shares held by the two founders and the remaining 59.4 per cent of the shares in the free float. LHV Group has an investment grade rating of Baa3/positive by Moody's.

EBRD Finance Summary

EUR 15,000,000.00

EBRD invested EUR 15 million in the issuance of EUR 100 million senior preferred bonds.

Total project cost

EUR 100,000,000.00

Additionality

Financing Structure - Given the adverse capital market conditions resulting from the increased geopolitical and macroeconomic uncertainty that have suppressed the private investor demand, the project will be closing the funding gap and ensuring LHV raises enough bail-in-able funding to meet its regulatory requirements while maintaining uninterrupted access to capital markets.

Environmental & Social Summary

Categorised FI (ESP 2019). LHV Group and its banking subsidiary AS LHV Pank are the existing clients and will need to continue to comply with PRs 2, 4 and 9 to the allocation of EBRD proceeds in the bond and make sure that no high risk and no Cat A projects are financed through this instrument. Furthermore, LHV will be required to continue to implement EBRD's Environmental & Social (E&S) Procedures for Micro, SME and Corporate Lending and to submit annual environmental and social reports to the Bank.

Technical Cooperation and Grant Financing

None.

Company Contact Information

Kadri Haldre
Kadri.Haldre@lhv.ee
+372 680 2756
https://www.lhv.ee/
TARTU MNT 2, TALLINN 10145

PSD last updated

18 Nov 2022

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 the EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

Environmental and Social Policy (ESP)

The ESP and its associated Environmental and Social Requirements (ESRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”. The ESP and the ESRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation, and to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about the environmental and social (E&S) 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 also requires its clients to disclose information, as appropriate, about the risks and impacts of 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 of the Bank's activities 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 EBRD believes that identifying and resolving issues in the project assessment and approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts andhelps to monitor integrity risks in projects post-investment.

OCCO is further responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, either within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. OCCO will follow-up all matters reported. It will review all matters reported. 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, which entered into force on 1 January 2025, sets out how the EBRD discloses information and consults with its stakeholders to promote better awareness and understanding of its strategies, policies and operations. 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 (for example, 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 the 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 and how to submit a Request for review. Alternatively, contact IPAM by email at ipam@ebrd.com for guidance and more information on IPAM and how to submit a request.

Environmental and Social Documentation is not available for this project.

Selected procurement notices related to this project may be shown below. Further procurement opportunities related to this and other projects, if available, maybe be viewed in the EBRD Procurement Portal.

The EBRD's Environmental and Social Policy (ESP), Access to Information policy (AIP) and Project Accountability Policy (PAP) enable sound and sustainable development in its projects. The Independent Project Accountability Mechanism (IPAM) deals with complaints about environmental, social and disclosure matters related to the Bank’s investments.

No complaints about this project have been made so far.

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RLF - AS LHV Group Bail-in Senior Preferred Bond

Overview

Project timeline

Company Contact Information

Project description

Project objectives

Transition impact

Client information

EBRD Finance Summary

Total project cost

Additionality

Environmental & Social Summary

Technical Cooperation and Grant Financing

Company Contact Information

PSD last updated

Understanding transition

Business opportunities

General enquiries

Environmental and Social Policy (ESP)

Integrity and compliance

Access to Information Policy (AIP)

Independent Project Accountability Mechanism (IPAM)