Erste Bank successfully realises the first Croatian bank bond issue in the international capital market

Back

Erste Bank successfully concluded its first bond issue in the international market in the so-called 'senior preferred' format, in the total nominal amount of EUR 400 million, maturing in 2028, with a call option after the expiry of six years. The bond issue was realised at an annual interest rate of 0.75% and a yield to maturity of 0.835%. By realising the transaction, Erste Bank made a new breakthrough and added its first international euro bond to its existing securities circulating in the domestic capital market. Erste thus became the first bank in Croatia to successfully realise an own bond issue in the international capital market too.

The primary purpose of the issue is to fulfil the so-called MREL regulatory requirement (minimum requirement for own funds and eligible liabilities) that the Bank has until 1 January 2024 to comply with, and until 1 January 2022 to fulfil the first binding requirement in the transitional period. The MREL is a part of the EU regulatory framework aimed at strengthening the financial system, with an emphasis on credit institutions, to increase resilience to shocks and unanticipated stress scenarios, and to prevent system risks. The funds raised by this issue will be used for general financing purposes and for the promotion of green and sustainable investments. They will also help further diversify the Bank’s funding sources.

The issue was designed for institutional investors in the international market. International financial institutions are prevalent in the final allocation (39%), followed by investment funds (32%), banks (15%) and pension funds and insurance companies (14%). More than 70 highly geographically diversified institutional investors participated in the issue (41% from the UK and Ireland, 27% from Germany and Austria, 11% from CEE countries, 6% from France, and the remainder from Switzerland, Benelux countries and other countries). BofA Securities Europe SA, Erste Group Bank AG, Landesbank Baden-Württemberg and Societe Generale were the joint issue agents.

“Erste Bank is the most active bond issuer among the financial institutions in Croatia, this being its sixth issue, and its first issue in the international capital market. After we successfully realised the so-called senior preferred bond issue, amounting to EUR 45 million, at the beginning of the year, the first such issue in the Croatian capital market under the so-called MREL regulatory requirement, we are keeping on track with this successful international euro bond issue. In line with our funding strategy, we further diversified our funding sources with this bond issue, and will use the funds raised for our core business, continuing to build Erste Bank’s successful and sustainable business course in the Croatian market”, commented Krešimir Barić, Erste banka's CFO.