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Investment in Erste Jelzalogbank Zrt covered bonds

Project number:


Approval date:

05 Jul 2017



PSD disclosed:

22 Mar 2018

Translated version of this PSD: Hungarian

Project Description

Investment of up to HUF 25 billion (approx. EUR 80 million), in any case up to 20% of the size of each issuance, in series of HUF denominated covered bonds to be issued by Erste Jelzalogbank Zrt ("the Issuer") over a period of 3 years on the Hungarian capital market. For the first investment, the EBRD subscribed HUF 2 billion (approx. EUR 6.4 million) out of HUF 10 billion covered bonds issued with 3 year maturity under the Issuer's HUF 100 billion covered bond programme.

Project Objectives

The covered bond transaction will support the Issuer to access medium- to long-term funding outside Erste Group and to comply with the mortgage funding adequacy ratio introduced by the National Bank of Hungary with the objective to improve the maturity mismatch between HUFdenominated assets and liabilities in the banking sector.

Transition Impact

The Project will contribute to the resilience of the financial sector in Hungary by (i) revitalising the Hungarian covered bond market and (ii) supporting the NBH's initiative to strengthen banks' balance sheets through reduction of the asset - liability maturity mismatch in the banking sector, where long 2 term mortgage assets are predominantly funded by very short-term deposits and, additionally, (iii) improving the environment for mortgage funding.

Client Information

Erste Jelzalogbank Zrt Covered Bonds

Erste Jelzalogbank Zrt. is a mortgage bank established in June 2016 in Hungary. It is 100% owned by 100% owned by Erste Bank Hungary Zrt.

EBRD Finance Summary

HUF 25,000,000,000.00

Up to HUF 25 billion (approx. EUR 80 million)

Total Project Cost

HUF 100,000,000,000.00

up to HUF 100 billion (approx. EUR 320 million)

Environmental and Social Summary

Categorised FI (2014 ESP). While the Issuer is is a new client to the Bank, its parent Erste Bank Hungary and the Erste Bank Group are long standing clients who have a good record of implementing Projects in line with the EBRD's Environmental and Social (E&S) requirements. The tasks undertaken by the Issuer under this Project have negligible E&S impact and as per paragraph 7 of PR9, the Issuer will not be required to develop specific E&S risk management procedures. The Issuer will be required to meet PRs 2, 4 and 9 and submit Annual Environmental and Social Reports to the EBRD on the implementation of the PRs.

Technical Cooperation


Implementation Summary

The project supported Erste Mortgage Bank, a newly established mortgage bank at the time, on its efforts to access capital markets via the successful issuance of covered bonds in order to build its medium- to long-term funding base that is in turn channelled to Erste Bank Hungary and/or any other partner bank. Ultimately, the project supported Erste Bank Hungary (and/or any other partner bank) to improve the asset and liability mismatch and to comply with the mortgage funding adequacy ratio as required by the National Bank of Hungary.  To date, the Bank has invested HUF 2.2 billion in covered bonds issued by Erste Mortgage Bank.

Company Contact Information

Andras Gabor Botos
+36 1 373 2103

Business opportunities

For business opportunities or procurement, contact the client company.

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