EBRD may issue 20 mln euro loan to Bank Lvov, cover up to 50% of risk in new loans totaling 30 mln euros

MOSCOW. April 25 (Interfax) - The European Bank for Reconstruction and Development (EBRD) may provide a hryvnia-denominated loan of up to 20 million euro equivalent to Bank Lvov and cover up to 15 million euros of the credit risk in sub loans with the total value 30 million euro equivalent.

The EBRD Board of Directors is expected to review these two projects at a meeting on May 29, Ukrainian media said, citing the EBRD website.

The loan will be provided in four equal tranches of 5 million euros each to enable Bank Lvov's further support to private small and medium sized enterprises (SMEs) in Ukraine, while the guarantees will be disbursed in two equal tranches of 7.5 million euros each to support lending to Ukrainian private companies operating in the primary and secondary agriculture and other critical industries, including food processing, retail and logistics, it said.

Under the terms of the deal, 20% of the covered portfolio loans will be used to support long-term capital investments of MSMEs in sustainable and green technologies (at least 70% of the sub-limit), thereby enhancing businesses' competitiveness on the domestic and foreign markets.

"The EU and the U.S. complement the offer with incentive grants and technical assistance under its EU4Business initiative," the EBRD said.

At least 30% of all financed sub-loans under the project are to be directed on a best effort basis to support projects compliant with EBRD Green Economy Transition (GET) approach. The expected source of donor funds for the LCY Interest Rate Subsidy is the United States' SME Local Currency Lending Program in Ukraine.

According to the National Bank of Ukraine, Bank Lvov was Ukraine's 28th largest bank by assets (10.66 billion hryvni) out of 63 banks operating in the country as of March 1, 2024.

The EBRD describes Bank Lvov as a regional MSME-focused bank in the western part of Ukraine with a loan portfolio of $183 million (ranked 17th, 1% market share). The bank has a head office in Lvov and operates through 13 branches in the Lvov region, one in Kiev, and five in other major cities in western Ukraine.