OTP Bank subordinated bond

Location:

Hungary

Project number:

51013

Business sector:

Financial institutions

Notice type:

Private

Environmental category:

FI

Target board date:

05 Jun 2019

Status:

Signed

PSD disclosed:

17 Jul 2019

Translated version of this PSD: Hungarian

Project Description

The EBRD invested EUR 60 million in a subordinated bond issued by OTP Bank, as part of a benchmark issuance of EUR 500 million. This is the first MREL-eligible instrument issued by OTP Bank since BRRD introduction and new MREL guidelines, and the bank's return to the Euromarket since pre-crisis times. The Tier 2 capital eligible bonds have a 10-year maturity, are callable after five years and are listed on the Luxembourg Stock Exchange.

Project Objectives

With this investment, the EBRD is seeking to support the resilience of the largest bank in Hungary and one of the important regional banks across CSEE by contributing to the optimisation of OTP Bank's capital structure and increasing the weight of Tier 2 instruments and MREL-eligible funding base, in line with the regulatory requirements to be introduced in Hungary.

EBRD's participation contributed to the mobilization of local and foreign institutional investors and supported OTP Bank in successfully placing the bonds.

Transition Impact

The project will contribute to the "Resilient" transition quality by strengthening the capital adequacy of a systemic financial institution, the largest bank in Hungary, in light of the ongoing M&A activity and organic regional expansion. It will also facilitate building up of MREL-eligible funding base, and capital market development of the country.

Moreover, the project contributes to the "Green" transition quality by supporting the Bank's Green Economy Transition ("GET") approach in Hungary via OTP Bank, allocating the EBRD funds towards funding certified commercial projects and residential projects, as well as renewable energy projects which meet the GET eligibility criteria.

Client Information

OTP BANK NYRT

OTP Bank Nyrt. is the largest bank in Hungary, with an estimated 27% market share by domestic assets and one of the important regional market players, actively operating in CEE and SEE regions. OTP Group operates in 10 countries and serves 18.5 million customers. The bank is listed on the Budapest Stock Exchange and is rated BBB-/Baa3 (S&P/Moody's). The subordinated bond issuance received a Ba1 rating (Moody's).

EBRD Finance Summary

EUR 60,000,000.00

Total Project Cost

EUR 500,000,000.00

Environmental and Social Summary

Category FI (2014 ESP). The Bank has a long track record of projects implemented by OTP Bank and other OTP Bank subsidiaries in line with the Bank's ESD requirements. For this transaction, OTP Bank will be required to comply with PRs 2, 4 & 9; adhere to the appropriate EBRD's E&S Procedures; and submit Annual Environmental and Social Reports (AESRs) to the Bank.

Technical Cooperation

None.

Company Contact Information

Gábor Fazekas
FazekasGa@otpbank.hu
+ 36 1 288 75 36
+ 36 1 298-4896
https://www.otpbank.hu

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