The European Bank for Reconstruction and Development (EBRD) starts a strategic cooperation with PrivatBank, Ukraine's largest systemically important (nationalised in 2016), by issuing €60 million of risk-sharing instrument to support €240 million of newly originated loans to agribusiness and other critical industries in Ukraine.
Food security and the private sector are two of five areas of focus for EBRD support for wartime Ukraine’s real economy.
PrivatBank is fully state-owned and specialises in servicing retail and micro- small and medium-sized enterprises (MSMEs). The EBRD’s unfunded risk-sharing facility will help the bank to support more private companies operating in agri-related and other industries. It will also increase financial support to private businesses affected by the war, contributing to preserving their human capital, and stimulate the uptake of greener technologies.
The facility, composed of two elements, will back up to 50 per cent of the credit risk in PrivatBank’s newly originated loans, subject to a portfolio cap of 50 per cent. The risk sharing project brings the total volume of the EBRD’s enabled financing in Ukraine to €708 million since the start of the war.
At least 80 per cent of the facility falls under the EBRD’s Resilience and Livelihoods Framework for Ukraine and neighbouring states, created as a response to the Russian invasion of Ukraine last year and designed to mitigate its economic impact by protecting the country’s resilience and preserving livelihoods.
Up to 20 per cent (€48 million) of risk-shared loans will support private MSMEs’ long-term investments in EU compliant and green technologies. Eligible sub-borrowers will also receive EU-funded technical assistance and investment incentives upon completion of their investment projects.
The EBRD, which has committed to raise its investment in Ukraine to €3 billion in 2022-23 in response to Russia’s war on the country, shares risk on its own investments there with donors and partners. In this case half of its risk from the new exposure will be mitigated by First Loss Risk Cover from the EBRD Crisis Response Special Fund.
As well as food security and the private sector, the EBRD’s investment focus in wartime Ukraine is on energy security, vital infrastructure and trade. In addition to a resilience package for Ukraine and neighbouring countries affected by the war, the EBRD has pledged to help finance Ukraine’s reconstruction once conditions permit.
PrivatBank is fully owned by the state and is the largest systemically important bank in Ukraine with 23 per cent of market share by assets (US$ 15 billion) at the end of 2022. It specialises in servicing retail and MSME clients through a country-wide network of 1,100 branches and 5,000 ATMs.
