OTP Bank Hungary - senior preferred bond

Overview
Project Summary Document
Environmental and Social Documentation
Procurement
Complaints

Overview

The EBRD invested €40 million in a 3.25NC2.25 senior preferred bond issued by OTP Bank Plc. ("OTP"), as part of its €650 million public bond issuance. The bonds are rated BBB (S&P) and listed on the Luxembourg Stock Exchange. This was followed by $20 million investment in 10.25NC5.25 Tier2-eligible subordinated bonds, as part of its $650 million public issuance that was listed on the Luxembourg Stock Exchange. OTP will allocate the equivalent amount of the EBRD's investment in green projects in Hungary and up to 10 regions outside Hungary where OTP has subsidiaries, in particular: Albania, Bulgaria, Croatia, Moldova, Montenegro, Romania, Serbia, Slovenia, Ukraine and Uzbekistan (once acquisition is completed).

Project ID 54111

Status Signed

Location

Regional

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

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

Project ID 54111

Status Signed

Location

Regional

Business Sector

Financial Institutions

Notice Type

Private

Approval Date

15 Nov 2022

Disclosure date

02 Dec 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.

Project description

Project objectives

The project supports the resilience and regulatory compliance of the largest bank in Hungary, helps develop and deepen capital markets, and delivers on the Bank's green agenda and national green economy priorities in Hungary and other EBRD's countries of operation where OTP is present.

Transition impact

ETI Score:64

project will contribute to the Resilient transition quality by (i) supporting OTP's resilience through a build-up of its MREL-eligible funding base and continued lending to the real economy in its wide region of presence; (2) supporting capital markets development for issuers from Hungary and facilitating investor diversification.

The project also contributes to the Green transition quality by supporting the Bank's Green Economy Transition ("GET") approach in Hungary and Central and South-Eastern Europe through OTP allocating an amount equivalent to 140% of the EBRD's investment in Regular Bonds and Social Bonds to GET-eligible projects.

Client information

OTP BANK NYRT

OTP is the largest bank in Hungary, with circa 28 per cent market share by domestic assets, and is one of the important regional market players actively operating in Central and South-Eastern Europe, with operations in 11 countries and serving around 15.6 million customers. OTP is listed on the Budapest Stock Exchange and is rated BBB/Baa1 (S&P/Moody's).

EBRD Finance Summary

€58,679,369 euro equivalent as of 17 February 2023 (€40,000,000 plus $20,000,000)

Total project cost

€1,257,079,493 euro equivalent as of 17 February 2023 (€650,000,000 plus $650,000,000)

Additionality

The project is additional as it (i) supports OTP to estbalish itself as a regular issuer in DCM and successfully raise sizable loss-absorbing funding , and (ii) contributes to OTP's green agenda.

Environmental & Social Summary

Categorised FI (ESP 2019): OTP is an existing EBRD client and will be required to comply with EBRD's Performance Requirements (PRs) 2, 4 and 9; implement the applicable EBRD's E&S Risk Management Procedures for Micro, SME and Corporate Lending, and submit Annual Environmental and Social Reports to the Bank. OTP will be required to apply the updated Exclusion List introduced with ESP 2019 as well as the Referral List. As for all capital market transactions, Category A projects are excluded. The funding allocated towards GET-eligible projects will need to follow the E&S Eligibility Criteria for Wind, Solar, Hydro, Bioenergy and Geothermal projects, if such projects are being financed.

Technical Cooperation and Grant Financing

N/A

Company Contact Information

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

PSD last updated

20 Feb 2023

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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OTP Bank Hungary - 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)