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New EBRD funding for Estonia's largest bank
To provide much-needed long-term debt to Estonia's financial sector, the
European Bank for Reconstruction and Development (EBRD) will provide the
country's largest bank, AS Hansapank, with a DM 15 million (ECU 7.8 million)
10-year subordinated loan.
"Designed to increase Hansapank's capital base, the EBRD's loan will support
the bank's expansion, particularly its lending activities to the private
corporate sector in Estonia," said Kurt Geiger, Co-Director of the Financial
Institutions team of the EBRD. "In addition, the loan will enable Hansapank to
comply with the supervisory and regulatory framework of the Central Bank of
Estonia, which has recently decided to increase capital adequacy ratio
requirements for all licensed banks in Estonia."
Medium-term senior debt of up to five years is now readily available on the
international markets for Hansapank and other top Estonian banks. However, for
instruments of longer maturity, and especially subordinated debt, the EBRD
remains the only institution able to provide this type of instrument, which is
typically available to international banks. The loan replaces an existing DM
12 million credit line which carried a six-year term and for which Hansapank
was able to source from the international market at a competitive rate.
Created in 1991, Hansapank is a universal bank offering its clients both
investment banking and retail banking services. Since its establishment, it
has directed its activities at Estonia's top private sector enterprises as
well as the country's emerging middle class. Hansapank is 100 per cent
privately owned and its shares are quoted on the stock exchanges of Tallinn,
Helsinki and Frankfurt.
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