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EBRD invests 19.6 mln euro in Serbia's Raiffeisen Banka MREL bonds

Jun 14, 2024, 9:56:42 AMArticle by Iskra Pavlova
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June 14 (SeeNews) - The European Bank for Reconstruction and Development (EBRD) said it has invested 2.3 billion dinars (equivalent to 19.6 million euro) in the 6 billion dinars issue of debt securities by the Serbian unit of Austria's Raiffeisen Bank International (RBI) - Raiffeisen Banka Beograd.

EBRD invests 19.6 mln euro in Serbia's Raiffeisen Banka MREL bonds
Photo: EBRD

Raiffeisen Banka's bonds represent the first issuance in the Western Balkans of debt that meets the requirements for minimum requirement for own funds and eligible liabilities (MREL), the EBRD said in a statement on Thursday.

"The financing will support lending to micro, small and medium-sized enterprises (MSMEs), a market instrumental for the sustainable development of the Serbian economy. At least 30 per cent of the EBRD's investment will be dedicated to green projects under the EBRD’s Green Economy Transition approach, further supporting Serbia's green transition," the statement read.

On June 6, Raiffeisen Banka sold 300 bonds at 20 million dinars each, equal to their par value. The bonds have an interest rate of 3-month BELIBOR plus 2.50% and will mature on June 6, 2028. BELIBOR is the benchmark rate offered on dinar deposits by Serbian banks in the interbank market.

"The investment in local currency bonds aligns with the National Bank of Serbia's strategy on dinarisation and strengthens Raiffeisen Banka ad Beograd's compliance with regulatory requirements as part of the EBRD's commitment to enhancing financial sector resilience. The bonds will be listed on the Belgrade Stock Exchange, contributing significantly to the development of the local capital market," the EBRD said.

It noted that the issuance was conducted through a placement to international financial institutions and local professional investors, setting a new standard for raising MREL-eligible funding for local banks in Serbia and the wider region.

"Raiffeisen Banka ad Beograd's initiative sets a precedent for other local banks, encouraging the adoption of robust financial standards and enhancing overall market stability. This collaboration between the EBRD and Raiffeisen Banka ad Beograd marks a significant milestone in the ongoing development of Serbia's financial sector," the EBRD concluded.

Belgrade-based Raiffeisen Banka was established in 2001 as one of the first greenfield foreign banks in Serbia. Out of 20 active banks in Serbia at the end of March, Raiffeisen Banka was the third largest in terms of assets, behind the local unit of Italy's Intesa Sanpaolo - Banca Intesa Beograd (BIB), and OTP Banka Srbija, according to central bank data.

The EBRD has invested in Serbia more than 9 billion euro through 354 projects, most of which in support of the private sector. The Bank’s work in the Balkan country is focused on developing private sector competitiveness, green energy transition and sustainable infrastructure.

(1 euro = 117 dinars)

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