Erste Bank Hungary has completed the first international bond auction in its history, issuing EUR 350 million worth of securities with a significant oversubscription of more than 40%, the financial institution informed the state news agency MTI on Wednesday.
The statement said that the bonds, with a fixed interest rate of 1.25% per annum and a maturity date of February 4, 2026, were sold at a yield of 1.307%.
The auction took place because banks are required to raise funds under the MREL requirements, the first such bond issue in Hungary, they noted.
It was recalled that the central bank's MREL requirements apply to own funds and to liabilities that can be written off or converted. The proceeds of the issue will be used only to meet these MREL requirements, they said.
Gábor Kosárszky, head of asset and liability management at Erste Bank, said in a statement that the success of the bond issue is a recognition of the bank's solid performance. "The pricing of the bonds, the interest and the broad investor base confirm that we are on the right track with our strategy," he stated.
Erste Bank's after-tax profit jumped to HUF 45.1 billion in the first nine months of 2021 from HUF 12 billion in the same period last year, according to the financial institution's latest prospectus. Loans and bonds were 10% higher than a year earlier at HUF 1,978 billion, while new lending rose 6% to HUF 344 billion.


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