Bigbank Issues New Series of Unsecured Subordinated Bonds with 8% Interest Rate

  • 2023-01-31

Today Bigbank, a provider of digital banking services on European markets, announced a new public offering of Tier 2 subordinated bonds in Estonia, Latvia, and Lithuania with the total volume of 5 million euros within the framework of an earlier 35-million-euro bond program. From today until 10 February investors can subscribe to Bigbank’s ten-year unsecured subordinated bonds with the annual interest rate of 8%, payable quarterly. Bigbank intends to list the newly issued bonds on the Baltic Bond List of the Nasdaq Tallinn Stock Exchange in order to secure liquidity and free trading. 

„Bigbank is specialised in providing digital banking services and loans in nine European countries at present. For several years now, Bigbank has been among the fastest growing banks in Estonia and the Baltic countries as a whole. According to the unaudited data for 2022 we earned a record net profit of 33.7 million euros, the volume of our deposit portfolio grew 52% and loans 50% during the year,” Martin Länts, Chairman of the Bigbank Management Board said, commenting on the success story of the bank. „We want to continue the rapid growth of our home and corporate loans. We shall use the additional capital from the bond offer to finance the group’s growth as foreseen in our strategic plan,” he added.

The public offering undertaken by Bigbank in September 2022 was oversubscribed by more than twice and the bank used the option to increase the volume of the offering from 10 million to 20 million euros. More than 1,600 investors subscribed to the bonds. In case of oversubscription of the present issue the bank also has the right to increase the volume to up to 15 million euros, i.e., 15,000 bonds.

„Bigbank has a highly diversified loan portfolio, made up of private home and consumer loans and corporate development and investment loans. We are a well-managed, and modern bank operating effectively via digital channels,” Länts said. „There are indications about subsiding inflation and a listed security with an interest rate of 8% fixed for ten years is an instrument worth considering for placing one’s savings,” Länts explained. 

Pursuant to the new strategy Bigbank plans to increase its corporate and private loan portfolio in the next five years both by way of natural growth and possible acquisitions. According to Länts, as an important move aimed at extending the client base, the bank intends to start providing services related to daily settlements in addition to loans. As a first step in this direction, the bank started issuing VISA credit cards to the clients last December. 

Bigbank is a commercial bank that started its activities in Estonia and celebrated 30 years in business in 2022. In 2021 its total assets exceeded one billion euros. As on 30 September 2022 the bank’s balance sheet total was 1.5 billion euros and shareholders’ equity 199 million euros. Bigbank shall disclose its 2022 Q4 and whole year unaudited results on 28 February 2023 and the 2022 audited annual report on 10 March 2023 via the Nasdaq system. 

The bank operates in nine countries, has 126,000 active clients and almost 500 employees.

On 1 July 2022 the Moody’s Credit Rating Agency gave the Bigbank bank deposits in foreign and local currencies a rating of Baa3 on the long-term rating scale and Prime-3 on the short-term rating scale. 

Main terms of the public offering of bonds 

During the public offering started today Bigbank offers up to 5,000 unsecured subordinated bonds with the name of EUR 8.00 Bigbank subordinated bond 23-2033, with the nominal value of EUR 1,000 each, the maturity date 16 February 2033 and fixed interest rate of 8% per annum, payable quarterly. In case of oversubscription, Bigbank has the right to increase the volume of the offering to up to 15,000 bonds. Bigbank also has the right to cancel the offering in the volume not subscribed. The unsecured subordinated bonds are offered with the price of EUR 1,000 per one bond. 

The subscription period for the bonds starts today, 31 January 2023 at 10:00 and ends on 10 February 2023 at 15:30. The offering is targeted to retail and institutional investors in Estonia, Latvia, and Lithuania. 

Subordinated bond represents an unsecured debt obligation of Bigbank before the investor. The subordination of the bonds means that upon the liquidation or bankruptcy of Bigbank, all the claims arising from the subordinated bonds shall fall due and shall be satisfied only after the full satisfaction of all unsubordinated recognised claims in accordance with the applicable law. Detailed information is available in the Prospectus and in the summary of the Prospectus.

The general goal of this transaction and offering is to strengthen the capital structure of the group and secure stable access to additional capital in order to finance the group’s budget and growth as foreseen in the Bigbank strategic plan. 

The company intends to use the revenue derived from the bond issue to cover the additional credit risk arising from the growth of the group corporate and home loan portfolio in Estonia, Latvia, and Lithuania, and to meet the additional requirements related to Tier 2 capital prescribed by law. 

The revenue derived within the framework of the bond issue may also be used for redeeming before term the existing unsecured subordinated bonds issued by Bigbank, on the condition that Bigbank has the right to redeem such bonds before term in accordance with the applicable bond terms.  

* Bigbank has submitted an application to Nasdaq Tallinn AS for the listing and admission to trading of the additional issue of subordinated bonds on the Baltic Bond List of the Stock Exchange. The expected date of listing and admission to trading is on or about 17 February 2023. 

The Prospectus and the summary of the Prospectus have been published and can be obtained in electronic format from Bigbank’s website and the website of the Financial Supervision Authority In addition to the above, the Prospectus, the summary of the Prospectus and the translations of the summary into Estonian, Latvian, and Lithuanian are available through the information system of the Stock Exchange. The bond terms of Bigbank’s unsecured subordinated bonds have been published and can be obtained in electronic format from Bigbank’s website