By Nigina Mirbabaeva
The European Bank for Reconstruction and Development is providing a €12.5 million(US$13.3million) unfunded portfolio risk-sharing facility to Ukrgasbank, to unlock €50 million of new financing for Ukraine’s private sector amidst the ongoing war in the country.
The EBRD’s facility will cover up to 50 per cent of Ukrgasbank’s credit risk on newly issued sub-loans worth €50 million to private businesses operating in Ukraine.
The agreement was signed in Kyiv on the margins of a conference on the reintegration of war veterans into civilian life.
Total enabled financing under similar EBRD guarantees signed since the start of Russia’s full-scale war on Ukraine amounted to close to €900 million by end-2023.
This facility will enhance Ukrgasbank’s lending capacity, enabling the lender to provide much needed funding to Ukrainian private companies operating in critical industries such as agriculture, manufacturing, construction, transport and pharmaceuticals. This will support companies to continue their operations and safeguard livelihoods, which is crucial for fostering economic resilience and enabling Ukraine to rebuild in the aftermath of the war.
The United States of America, through the Crisis Response Special Fund, will provide first-loss risk cover to partially mitigate the risk associated with the new exposure.
Up to 20 per cent of the risk-shared loans will support private micro-, small- and medium-sized businesses’ (MSMEs’) long-term investments in EU compliant and green technologies, improving Ukrainian MSMEs’ competitiveness on domestic and foreign markets.
Eligible sub-borrowers will also receive EU-funded technical assistance and investment incentives upon completion of their investment projects under its EU4Business initiative. MSMEs that suffered destruction and/or loss of assets due to the war on Ukraine will be eligible to receive additional investment incentives for reconstruction of their businesses as part of the EBRD-EU “Enterprise Renaissance” window within the EU4Business initiative.
As part of the investment, the EBRD will work with Ukrgasbank to develop a veteran reintegration support programme for the lender and its clients. This will include developing veteran-friendly Human Resources (HR) policies and practices, a more inclusive financial services offering, as well as physical adaptations required by war veterans and other persons with disabilities and/or trauma. Eligible MSMEs will receive additional investment incentives provided by the CRSF to partially compensate their eligible investment costs, facilitating re-integration and financial inclusion of war veterans.
PJSC Ukrgasbank is the fifth largest bank in Ukraine, and one of 15 systemic banks in the country. It operates a country-wide network of 220 branches servicing around 1.5 million individuals and over 87,000 corporate and SME customers.
The EBRD has deployed €4 billion in Ukraine since the start of the war. As well as support for the private sector, its strategic priorities in the country are supporting energy security, vital infrastructure, food security and trade.
