Ukraine's ProCredit Bank, EBRD drafting new risk sharing agreement

MOSCOW. June 15 (Interfax) - The European Bank for Reconstruction and Development, which agreed last year to share ProCredit Bank Ukraine's credit risks under its 25 million euros of loans to Ukrainian businesses, is preparing a new agreement to partially cover PCBU's loans for 30 million euros.

Ukrainian media quoted the EBRD website as saying that the EBRD board of directors planned to consider the matter on June 28.

The EBRD proposes an unfunded risk-sharing instrument covering up to 50% of the credit risk in newly originated sub-loans with the total value of 30 million euros to be originated by PCBU subject to total 50% portfolio cap. The EBRD estimates its commitment at 7.5 million euros. The project is approved on the basis of minimum 50% of donor funding coverage.

Unlike the previous project, the new one will include a sub-limit under the SME Competitiveness Programme in the European Union's Eastern Partnership (EaP SMEC) of up to 4.5 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), thereby enhancing businesses' competitiveness. 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.

PCBU is a 100%-owned subsidiary of ProCredit Holding AG & Co. KGaA and one of the market leaders in financing of small and medium-sized (SME) businesses in Ukraine. With UAH 38.32 billion in total assets as of May 1, PCBU was among top 15 banks out of 65 operating in Ukraine with a 1.4% market share. The EBRD said bank offers all types of conventional banking products to its 5,000 SMEs and more than 20,000 private clients through eight outlets. SMEs account for more than 99% of the loan book.