Investment in OTP Mortgage Bank covered bonds

Location:

Hungary

Project number:

48989

Business sector:

Financial institutions

Notice type:

Private

Environmental category:

FI

Approval date:

08 Feb 2017

Status:

Signed

PSD disclosed:

02 Mar 2017

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.

Project Description

Investment of up to HUF 40 billion (approx. EUR 130 million), in any case up to 20% of the size of each issuance, in series of HUF denominated covered bonds to be issued by OTP Mortgage Bank ("OTP MB") over a period of 3 years on the Hungarian capital market.

Project Objectives

The covered bond transaction will support OTP MB to access medium- to long-term funding outside OTP Group and to comply with the mortgage funding adequacy ratio introduced by the National Bank of Hungary ("NBH") with the objective to improve the maturity mismatch between HUF-denominated assets and liabilities in the banking sector.

Transition Impact

ETI score: 60

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 initiative to strengthen banks' balance sheets through reduction of the asset - liability maturity mismatch in the banking sector, where long-term mortgage assets are predominantly funded by very short-term deposits and additionally (iii) improving the environment for mortgage funding.

Client Information

OTP BANK NYRT COVERED BONDS

OTP MB is a mortgage bank established in May 2001 under the Hungarian legislation. It is 100% owned subsidiary by OTP Bank Plc., the largest bank in Hungary, holding close to one-fifth of total banking assets in the country.

EBRD Finance Summary

HUF 44,734,860,000.00

Up to HUF 40 billion (approx. EUR 130 million)

Total Project Cost

HUF 200,600,000,000.00

Up to HUF 300 billion (approx. EUR 975 million).

Environmental and Social Summary

Category FI. OTP Mortgage Bank is a new client, but EBRD has a good track record of projects being implemented by OTP Bank and other OTP Group's subsidiaries in line with the Bank's Environmental and Social requirements. Due diligence has involved the completion of a detailed Environment, Health and Safety (EHSS) questionnaire by OTP MB, and subsequent review of this information by the Bank. Due diligence also included a review of OTP Group's performance on previous Projects with the Bank. Due diligence identified that the current Project will have little environmental or social risk associated with its implementation. OTP MB will be required to comply with the EBRD's Performance Requirements 2, 4 and 9.

Technical Cooperation and Grant Financing

None.

Company Contact Information

Tamás Soós, OTP Mortgage Bank, Treasury & Issuance
soos.tamas@otpjzb.hu
+36 1 354 7473
+36 1 354 7482
www.otpjzb.hu
OTP Jelzálogbank, 1051 Budapest, Nádor utca 21, Hungary

Implementation summary

The Project helped OTP MB to strengthen its balance sheets through reduction of the asset-liability maturity mismatch and provided important support for the successful placement of OTP MB's covered bond issuances, facilitating the bank's compliance with the newly-introduced MFAR requirement. The Project helped to improve the environment for mortgage funding and to revitalise the Hungarian corporate bond market.

PSD last updated

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

OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both 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. All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. 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 sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations following its entry into force on 1 January 2020. 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 (e.g. 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 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; how to submit a Request for review; or contact IPAM  via email ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.

 

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