Project description
and objectives:
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The project consists of a facility for Kereskedelmi és Hitel Bank, Hungary, in the form of a convertible subordinated bond of US$ 30 million for a term of seven years.
The principal objectives of the project are to:
- improve K&H's capitalisation;
- facilitate K&H's privatisation and encourage interest from a strategic investor;
- enable K&H to expand its business activities, to improve its information technology and to renovate its branch network.
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Transition impact:
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By helping the restructuring and privatisation of the last major state-owned bank in Hungary, the EBRD will contribute to the promotion of a sound private banking system in that country and will facilitate the financing of private corporate customers.
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The client:
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K&H is one of the largest commercial banks in Hungary in terms of total assets and branch network following its merger with its retail banking subsidiary IBUSZ Bank. In 1995 a new management team transformed the institution into a leading universal bank with its primary focus on wholesale activities.
The Government of Hungary has approved a decree on the privatisation of K&H, requiring a strategic investor to hold a minimum of 25 per cent of K&H by the end of 1997 and requiring the Government to fully divest its shareholding in K&H by that time.
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EBRD finance:
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A subordinated bond which will form part of K&H's capital base, with an option to convert into ordinary registered shares of K&H.
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Total project cost:
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Up to the equivalent of US$ 30 million (ECU 23.4 million), all of which will be financed by the EBRD.
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Environmental impact:
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The project has been classified as medium. K&H will carry out its operation in accordance with the EBRD's Environmental Procedures for Local Banks, which provide for the integration of environmental due diligence into its credit and investment appraisal processes, and for a requirement that borrowers comply with national and local health and safety and environmental regulations and standards. K&H will submit annual environmental reports to the EBRD.
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Technical
cooperation:
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Technical cooperation funds for the external due diligence have been made available under the Framework Contract for Financial Institutions.
For consultant opportunities for projects financed by technical cooperation
funds, visit procurement
of consultants.
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Company contact:
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EBRD contact:
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Anne Fossemalle, Operation Leader: fossemaa@ebrd.com
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Business opportunities:
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For business opportunities or procurement, contact the client company.
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General enquiries:
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EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168; Fax: +44 20 7338 7380
Email: projectenquiries@ebrd.com
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