By Vanora Bennett
The European Bank for Reconstruction and Development (EBRD) is supporting agribusiness and other critical industries in Ukraine by issuing risk-sharing instruments to three local banks and a leasing company.
The facilities will back up to 50 per cent of the credit risk of €200 million(US$208.060million) in newly originated financing which is being provided by OTP Leasing (€80 million), Credit Agricole (€50 million), ProCredit Bank (€40 million) and OTP Bank (€30 million), subject to a portfolio cap of 50 per cent. The guarantees follow similar facilities signed in May 2022, and bring the total volume of enabled financing to €253 million since the start of the war.
The EBRD’s risk-sharing instruments will help these local financiers lend to Ukrainian private companies operating in critical industries such as primary agriculture and agricultural services, food processing, transport and logistics, retail and pharmaceuticals. They will also help to safeguard food security and preserve livelihoods in Ukraine, where core economic sectors have been severely impacted by Russia’s invasion on 24 February 2022.
The EBRD’s risk share will be supported by a 50 per cent donor-funded First Loss Risk Cover as part of the Bank’s resilience package arrangements.
Boosting Ukraine’s food security during the war is a priority for the EBRD. The Bank’s dedicated food security package envisages supporting €200 million of investment this year in Ukraine. The EBRD is also supporting trade, energy security, vital infrastructure and the pharmaceuticals industry, and has committed to investing up to €3 billion in the country in 2022-23.
The EBRD was swift to condemn the Russian invasion of Ukraine on 24 February 2022 and pledged to stand by Ukraine. In early April the EBRD’s Board of Governors voted to suspend open-endedly the access of Russia and Belarus to EBRD finance and expertise, and the Bank has closed its offices in Russia and Belarus.
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.
OTP Leasing is the leading leasing company in Ukraine with an approximate 45 per cent market share in terms of leasing portfolio. It provides financial leases and fleet management services to corporates and micro, small and medium-sized enterprises across the country and is ultimately owned by OTP Bank Plc., Hungary.
Credit Agricole Ukraine is a 100 per cent owned subsidiary of Credit Agricole S.A., France. It is ranked 10th by assets (US$ 2.0 billion, 3.0 per cent of market share).
ProCredit Bank in Ukraine is a 100 per cent-owned subsidiary of ProCredit Holding AG & Co. KGaA, and one of the market leaders in financing small and medium-sized enterprises (SMEs) in Ukraine. With US$ 1 billion in total assets, it is among the top 15 banks in Ukraine.
OTP Bank in Ukraine is a 100 per cent owned subsidiary of Hungary’s OTP Bank Plc. SMEs and corporates make up 75 per cent of its loan book, and retail clients the remaining 25 per cent. The bank was ranked 9th in Ukraine with a 3.6 per cent share of total banking assets.