EBRD to provide Bank Lviv with 15 mln euros for MSME loans and 7.5 mln euros in guarantees
MOSCOW. Aug 11 (Interfax) - The European Bank for Reconstruction and Development is providing a financial package to Bank Lviv, comprising a local-currency loan for the equivalent of 15 million euros and a 7.5 million euro risk-sharing instrument to support 30 million loans to private micro-, small- and medium-sized enterprises (MSMEs).
Ukrainian media quoted an EBRD press release as saying the loan was divided into two tranches - 10 million euros committed and 5 million uncommitted, each maturing after three years. It will "help Bank Lviv to maintain a sustainable and diversified funding base to provide continuing access to medium-term finance for businesses," the press release said.
The loan's funding costs will be reduced by the local currency interest rate subsidy from the European Union's EU4Business initiative in Ukraine.
The 7.5 million euros unfunded risk-sharing instrument will be provided in two equal tranches, each covering 50% of the credit risk of Bank Lviv's newly originated loans up to a total value of 30 million euros, subject to a portfolio cap of 50%. This facility will help Bank Lviv to provide access to finance for Ukrainian companies operating in critical industries such as primary agriculture and agricultural services, food processing, transport and logistics, retail and pharmaceuticals, the EBRD said.
In addition, up to 4.5 million euros of the total 30 million euros covered portfolio will support private MSMEs' long-term investments in EU compliant and green technologies. Eligible sub-borrowers will also receive EU-funded technical assistance and investment incentives upon completion of their investment projects.
The EBRD said the project was made possible by a 50% donor-funded first-loss risk cover.
The EBRD board approved the project on July 18 and the necessary paperwork was signed on August 10.
The EBRD said JSC Bank Lviv, owned by European shareholders, was one of the fastest-growing banks in the west of Ukraine: the loan portfolio increased from $35 million in 2017 to $133 million in the first quarter of 2023. The bank, headquartered in Lvov, has 19 branches in the Lvov region and six in other regions.
The bank was the 27th largest of the 65 banks operating in Ukraine as of the beginning of June with assets of UAH 8.15 billion, according to the National Bank of Ukraine's website.
The bank says on its website that its shareholders at the beginning of 2023 were the Swiss investment fund responsibility with 48.56%, Icelandic private investor Margeir Petursson with 37.47% and Nordic Environment Finance Corporation (NEFCO) with 13 .94%.
The EBRD is Ukraine's largest institutional investor. It allocated 1.7 billion euros to the country in 2022 and raised another 200 million euros in support from partners.