The European Bank for Reconstruction and Development (EBRD) is providing a risk-sharing guarantee without upfront financing to Raiffeisen Bank to expand financing and provide new loans to Ukrainian businesses in the amount of EUR200 million. The relevant agreement was signed in London on September 9.
“The EBRD instrument will cover up to 50% of Raiffeisen Bank’s credit risk under new financing agreements for businesses operating in Ukraine. Under this mechanism, the bank will provide sub-loans to companies operating in critical sectors of the economy, such as agriculture, industrial production, pharmaceuticals, transport, and logistics,” the Ukrainian bank said in a press release on Wednesday.
According to the press release, this is already the fourth such risk-sharing agreement concluded by the EBRD with Raiffeisen Bank.
It is noted that 20% of the sub-loans covered by the EBRD guarantee will be provided to MSMEs for long-term investments in EU-compliant technologies and green technologies, strengthening the competitiveness of such enterprises in domestic and foreign markets.
Sub-borrowers who meet the conditions will also be able to receive EU-funded technical support and investment incentives, such as grants to complete their investment projects, under the EU4Business initiative. Larger incentives will be provided to businesses and households most affected by the war (e.g., those whose assets have been destroyed, damaged, or relocated), as well as to sub-borrowers that promote the reintegration of war veterans, people with special needs, internally displaced persons, and/or enterprises located in areas most severely affected by the war.
The EBRD guarantee will be supported by partial coverage of first-loss risk received from France and the EU under the Ukraine Investment Framework.
Since the start of the full-scale Russian-Ukrainian war, the EBRD has enabled more than EUR 3 billion in financing to Ukrainian borrowers through 37 similar instruments in partnership with 12 financial institutions.
Raiffeisen Bank is the largest privately owned bank in Ukraine and the fourth largest overall, with total assets of UAH 252.23 billion (6.5% of the system’s total assets) as of mid-year.
Raiffeisen Bank was founded in 1992. According to the financial institution, 68.21% of its shares are owned by Raiffeisen Bank International AG (RBI), 30% by the EBRD, and the remaining 1.79% by minority shareholders.
