Investments of up to EUR 200 million in a series of senior bonds (incl. Senior Preferred and Senior Non-Preferred bonds) to be issued by Luminor Bank AS in Estonia ("the Issuer") under the Euro Medium Term Note Programme ("Programme") until November 2022 and admitted for trading on the Irish Stock Exchange. EBRD's investment in each issue will be limited to up to 20% of the aggregate principal amount of each issue.
On 10 October 2018, EBRD invested EUR 60 million in the issuance of EUR 350 million senior bonds under the Programme.
On 11 June 2019, EBRD invested EUR 40 million in the issuance of EUR 300 million senior bonds under the Programme.
On 25 November 2020, EBRD invested EUR 18 million in the issuance of EUR 300 million senior preferred bonds under the Programme.
The project aims to support the Issuer raise medium-term funding in the capital markets in order to diversify the funding sources, build the funding base to comply with the Minimum Required Own Funds and Eligible Liabilities (MREL), and establish itself as a self-sustainable pan-Baltic financial institution. In addition, EBRD investments in November 2020 and afterwards will support EBRD's Green Economic Transition (GET) objectives in the Baltics with the Issuer agreeing to allocate 100% of the EBRD's invested amount into GET-eligible projects.
ETI score: 61
The project will support the resilience of the financial sector and markets by (i) increasing the supply of investable listed instruments for local pension funds and other institutional investors (incl. Senior Preferred and Senior Non-Preferred bonds), (ii) helping the diversification of the funding sources for the Issuer, and (iii) supporting an orderly replacement of two Nordic banks, while mitigating the risk to stable and competitive financial intermediation in the Baltic countries. The Competitive transition quality is underpinned by the Issuer's ability to derive efficiency gains from further operational restructuring and improved funding mix.
LUMINOR BANK AS
Luminor was established in October 2017 through the merger of Nordea Bank Abp's and DNB Bank ASA's operations in the Baltics. Based in Estonia (with banking branches in Latvia and Lithuania), it is the third largest banking group in the Baltics with market share of 17.4% in lending across the Baltics. In October 2019, a consortium of private equity funds managed by Blackstone acquired a majority stake in Luminor. It is a systemic bank directly supervised by the European Central Bank ("ECB").
EBRD Finance Summary
In the first issuance under the Programme, EBRD invested EUR 60 million.
In the second issuance under the Programme, EBRD invested EUR 40 million.
In the first issuance of MREL-eligible Senior Preferred Bonds under the Programme, EBRD invested EUR 18 million.
Total Project Cost
The size of the first issuance under the Programme was EUR 350 million, the size of the second issuance was EUR 300 million, and the size of the first issuance of MREL-eligible Senior Preferred bonds was EUR 300 million. The total size of the Programme is EUR 3 billion.
Additionality stems from supporting the intorduction of MREL-eligible senior preferred (and potentially senior non-preferred) as new instruments for banks in Baltics in an environment adversely affected by COVID-19, the allocation of EBRD's invested amount into GET-eligible projects, and the modest levels of oversubscription in the first two issuances.
Environmental and Social Summary
Categorised FI (ESP 2014). Due diligence has shown that Luminor Bank (Luminor) has designated staff in each country responsible for oversight of Environmental & Social issues, and whilst they do not have a formal Environmental and Social Management System in place Luminor does have a Corporate Social Responsibility Policy which set out it's E&S policy commitments. For this transaction Luminor will be required to comply with PRs 2, 4 and 9 and submit Annual E&S Reports to the Bank on implementation of the E&S requirements and compliance with the PRs. To support their implementation of the EBRD's PRs, Luminor has been provided with guidance on how to implement PRs 2 and 4 as well as the E&S Due Diligence Toolkit; EBRD's E&S Risk Management Procedures for Corporate, SME and Micro Lending; access to the EBRD's E&S e-Learning training programme and to EBRD's sub-sectoral industry guidelines.
Technical Cooperation and Grant Financing
Company Contact Information
+372 628 3300
Luminor Bank A.S. Liivalaia 45 10145 Tallinn Estonia
PSD last updated
16 Dec 2020
Further information regarding the EBRD’s approach to measuring transition impact is available here.
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Environmental and Social Policy (ESP)
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More information on the EBRD’s practices in this regard is set out in the ESP.
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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.
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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 email@example.com to get guidance and more information on IPAM and how to submit a request.