Focus on agri-food sector and other critical industries, with EU support for competitiveness upgrades
By Nigina Mirbabaeva
The European Bank for Reconstruction and Development (EBRD) is extending an unfunded portfolio risk-sharing facility to Ukraine’s OTP Leasing to unlock €160 million(US$173.3 million) of new finance for Ukraine’s businesses amid Russia’s ongoing war on Ukraine.
The EBRD’s facility will cover up to 50 per cent of OTP Leasing’s credit risk on new leasing finance worth €160 million to businesses operating in Ukraine. This credit enhancement mechanism enables OTP Leasing to provide sub-leases to companies in critical industries such as agribusiness, manufacturing, pharmaceuticals, transport and logistics. The facility will support the operations of Ukrainian companies and preserve access to critical goods as a vital step in Ukraine’s recovery.
This is the fifth such facility the EBRD has provided OTP Leasing, building on the successful cooperation between the two institutions since the start of the war. Total enabled financing under similar EBRD guarantees to Ukraine’s financial institutions signed since the start of Russia’s war on Ukraine amounts to more than €2 billion.
Up to 30 per cent of the risk-shared loans will support the long-term investments of private micro, small and medium-sized enterprises (MSMEs) in European Union-compliant and green technologies, helping to boost their competitiveness on domestic and foreign markets under the EU4Business-EBRD Credit Line. Eligible sub-borrowers will also receive EU-funded technical assistance and investment incentives upon completion of their projects under the EU’s Ukraine Investment Framework (UIF).
The EBRD has already allocated €70.8 million of EU grant support for Ukrainian MSMEs under the EU4Business-EBRD Credit Line.
In addition, the risk-sharing facility will prioritise financial inclusion and support the well-being, skills and productivity of those among vulnerable groups severely impacted by the war, such as war veterans, war-affected and internally displaced persons. And sub-borrowers, whose assets have been destroyed, lost or relocated due to the war, or those engaged in reintegrating veterans into the workforce, will be supported by additional investment incentives.
The EBRD facility will be backed by first-loss risk cover funded by France.
OTP Leasing is an existing EBRD client and the leading leasing company in Ukraine, providing financial leases and fleet management services to corporate and MSME clients across the country. It is a fully owned subsidiary of OTP Bank, a leading regional financial group headquartered in Hungary.
The EBRD is the largest institutional investor in Ukraine, with cumulative investment of more than €22 billion in over 600 projects. Since the start of Russia’s full-scale invasion, the Bank has deployed more than €6 billion in Ukraine’s real economy.
