15 Apr 2024 15:06

EU to allocate 121 mln euros for additional capitalization of EBRD to increase assistance to Ukraine

MOSCOW. April 15 (Interfax) - The European Union Council at the level of finance ministers, Ecofin, decided on April 12 to increase the EU's share in the European Bank for Reconstruction and Development (EBRD), Ukrainian media reported, citing a press release from the EU Council.

The EU is expected to subscribe to 12,102 additional EBRD shares at 10,000 euros each by July 30, 2025, thus the EU could allocate more than 121 million euros for additional capitalization of the bank.

"The capital increase should provide support to the bank in the recovery and reconstruction of Ukraine after 2023 and further support in all countries of its activity," according to the press release.

The shares of the additional issue are expected to be paid for in five equal annual payments, and the decision to recapitalize the bank should also gradually expand the geographical coverage of the EBRD's operations to sub-Saharan Africa and Iraq.

The Ecofin board has approved the EU's participation in increasing the EBRD's capital to support Ukraine continuously, and the EU-EBRD partnership has never been stronger, Valdis Dombrovskis, Executive Vice President of the European Commission responsible for the Euro and Social Dialogue, and in charge of Financial Stability, Financial Services and the Capital Markets Union, said about the decision on social media.

As previously reported, the EBRD governors at the end of 2023 approved a resolution to increase the bank's paid-in capital by 4 billion euros, or 13%, to 34 billion euros to finance EBRD projects in Ukraine and other countries of presence. An additional 400,000 shares will be issued for this purpose, and EBRD members may subscribe to them in proportion to their participation interest.

The capital will enable the EBRD to continue to maintain a level of annual investment in Ukraine at around 1.5 billion euros during the conflict, fully supported by its own balance sheet, and have the means to increase its support to 3 billion euros annually once reconstruction begins.

The EBRD currently has 72 national shareholders in addition to the European Union and the European Investment Bank after Iraq became a shareholder in November 2023. Founded in 1991, the EBRD has since invested more than 190 billion euros in over 6,800 projects, including 19.03 billion euros in 559 projects in Ukraine.

Ukraine's share in the subscribed capital of the bank is 0.8%, or 240.1 million euros.