Strengthening of local currency debt capital market
The European Bank for Reconstruction and Development (EBRD) invested PLN 60 million in 3-year senior unsecured bonds issued by Bank Millennium S.A. for the aggregate amount of PLN 300 million. Further investments in Bank Millennium’s 3-5 year senior unsecured bonds will also be considered in the amount of the lower of up to PLN 62 million or 20% of the issue size.
Bank Millennium is Poland’s seventh biggest bank by assets and a universal bank with a focus on retail banking and strenghening position in corporate sector. It is listed on the Warsaw Stock Exchange and majority-owned by Banco Comercial Português S.A. The EBRD holds a 2.6 per cent-stake in Bank Millennium.
The bonds will support Bank Millennium’s sustained access to medium-term funding via the domestic debt capital market and facilitate its loan portfolio growth. They will allow the bank to diversify its funding base and strengthen its liquidity profile. As a consequence Bank Millennium will be able to expand its presence and activities on the domestic market which is expected to benefit real sector of the economy.
The EBRD’s investment comes under the Polish Financial Institutions Debt Capital Market Framework launched in December 2013 and extended further in December 2014. The aim of the €600 million framework is to contribute to the development of the Polish corporate bond market, support the diversification of medium-term funding sources of participating financial institutions and improve the maturity structure of their balance sheets thus allowing banks to meet their medium-term liquidity targets in line with Basel III and EU directives.
Lucyna Stańczak-Wuczyńska, EBRD Director, Financial Institutions, said: “Strong local banks are the backbone of a strong and prosperous economy. We are pleased to contribute to the further development and strengthening of Bank Millennium and we expect this to increase the availability of finance to the real economy. Bank Millennium’s bonds will further contribute to building up a critical mass of non-sovereign debt capital market instruments required for the proper functioning of the debt capital market in the country which remains significantly underdeveloped”
Fernando Bicho, Deputy Chairman of the Management Board of Bank Millennium said: “We are extremely glad to have EBRD as participant in another important transaction for Bank Millennium. It not only marks the next step of our long lasting and excellent cooperation, but constitutes also a very valuable support by EBRD of the development of domestic debt capital market infrastructure – an area of top significance from the perspective of further diversification of funding sources for Polish banks.”
Since the beginning of its operations in Poland in 1991, the EBRD has invested €7.6 billion in more than 350 projects in the country. In addition to its wide product range of bilateral facilities for banks and companies, in recent years the Bank has also built a growing portfolio of capital market investments (both equity and debt) in the Polish financial sector, for which demand remains high.