1 Jun 2023 22:10

Ukraine's Kredobank, EBRD preparing new risk-sharing agreement for 100 mln euro for Ukrainian businesses

MOSCOW. June 1 (Interfax) - The European Bank for Reconstruction and Development (EBRD), which agreed last year to share Ukraine's Kredobank credit risks under its 35 million euro loans to Ukrainian businesses, is preparing a new agreement to partially cover Kredobank's loans for 100 million euros.

The EBRD Board of Directors plans to consider the matter at a meeting on July 12, Ukrainian media reported with reference to the EBRD website.

The EBRD will cover up to 50% of the credit risk of the financing provided by Kredobank for a total of 100 million euros subject to a portfolio cap of 50%. The EBRD estimated its involvement at 25 million euros, with 50% of its own risks to be covered by donor financing.

The new agreement, unlike the previous one, will include a sub-limit under the SME Competitiveness Program in the European Union's (EU) Eastern Partnership (EaP SMEC) of 15 million euros, or 15% of the covered portfolio to finance long term capital investments of micro-, small-, and medium sized enterprises (MSME) to upgrade their technologies and equipment to EU standards, including investments in sustainable and green technologies (70% of EaP SMEC sub-limit).

Eligible sub-borrowers will also receive technical assistance funded by the EU and grant support in the form of investment incentives upon the completion of their investment projects, it said.

"Owing to the risk-sharing agreement signed with the EBRD, we will relieve ourselves of some of credit risks and will be able to offer loans on more favorable terms to Ukrainian businesses," Kredobank Management Board President Jerzy Jacek Szugajew said in December 2022, in commenting on the previous agreement with the EBRD.

Kredobank was founded in Lvov in 1990, is rated as a systemically critical bank, and is wholly owned by PKO Bank Polski SA, Poland's leading financial institution.

As of the early April 2023, Kredobank ranked 14th by total assets (43.86 billion hryvni, or 1.7% of the market share) out of 65 Ukrainian banks, finishing Q1 with net profit of 277.91 million hryvni.

The bank operates 67 branches and has over 56,000 corporate and 590,000 retail clients.