The European Bank for Reconstruction and Development (EBRD) has set up a CHF 500 million swap facility for OTP Bank for medium-term cross currency basis swaps for Swiss francs and the Hungarian forint, EBRD said on its website.
EBRD did not reveal the timeframe for the facility or the term of the swaps available under the scheme.
The program was created to assist OTP Bank to extend the maturity profile of its existing swap book and is subject to conditions on future forex-lending.
The main reason for EBRD's involvement in the project is to support the currency hedging of a strong bank with a regional presence throughout Central and Eastern Europe and systemic importance in most of the markets where it operates, EBRD said. The transaction will support OTP Bank in the process of adapting its business model to the changing macroeconomic environment.
The project is a part of a broader cooperation with OTP Bank.
EBRD granted OTP Bank a €200 million market-term subordinated loan, to be drawn over six months, and agreed to buy €20 million in OTP treasury shares in July. EBRD bought 1,585,559 OTP treasury shares under the agreement in the middle of August. The investment was part of a joint EBRD-World Bank Group-European Investment Bank pledge to provide over €24.5 billion in support for the banking sectors in Central and Eastern Europe and to fund lending to businesses hit by the global crisis.
A large part of the lending portfolio of Hungarian banks is in Swiss francs, as rates on these loans were earlier much lower than for forint loans. After the crisis, banks cut back sharply on their CHF-based lending because of the forex risk to borrowers. (MTI – Econews)