The Black Sea Trade and Development Bank (BSTDB, Thessaloniki) intends to achieve an annual increase in the value of its portfolio by 5-7% in 2021-2030 and increase its volume to EUR 4 billion from the current approximately EUR 2.3 billion, President of the bank Dmitry Pankin told reporters at the conference in Thessaloniki (Greece), which takes place on August 27-28.
“In June 2021, the bank approved a long-term strategy for 2021-2030. Among the goals are signing 30-35 projects per year, increasing commitments (on projects) for the year to EUR 1.7 billion from the current EUR 800 million, in order to achieve EUR 12 billion,” Pankin said.
The President also said that in the face of lower interest rates and increased availability of borrowed funds in most markets where the bank operates, the BSTDB also decided to strengthen its potential for generating projects and subsequently organizing their financing and become a cheaper competitor to leading consulting companies and investment banks.
“Traditionally, development banks have offered long-term cheap financing, but now everyone is ready to provide it. Therefore, our 10-year strategy involves reorienting the bank to a project organizer, a provider of feasibility studies and risk calculation,” Pankin explained.
He added that, unlike consulting companies, BSTDB is ready to take risks in such projects.
In connection with this new strategy, the bank will hire specialists of appropriate qualifications, as well as people for the potential sale of part of the portfolio in order to free up capital for new operating activities, which will also become new in the work of the BSTDB, the president of the bank said. According to him, the BSTDB intends to become more active in marketing and in the search for new projects, whereas clients themselves come to him more often today.
Talking about other institutional goals of the new strategy, Pankin said that the bank would continue to maintain a diversified and balanced portfolio of operations with a public sector share of about 30%, more actively connect to the fast-growing class of “green” investors and remain open to new shareholders – sovereign states and development institutions.
The BSTDB President recalled that member states of the Black Sea Economic Cooperation Organization (BSEC) may become the bank’s shareholders. Since 2014, Serbia has become a member of the BSEC, which has not yet participated in the bank, and since 2021 – Macedonia. According to Pankin, discussions and negotiations are underway with them, but they are still far from over.
Within the framework of the medium-term strategy for 2019-2022, the BSTDB puts an aim of an annual growth of more than 12% and exceeding EUR 2.5 billion of the portfolio at the end of the period, promoting the export of goods and services with a focus on small and medium-sized enterprises, with a special focus on the real economy and infrastructure, including energy, transport and communal infrastructure.
In 2020, the bank signed projects for EUR 624 million, and allocated EUR 785 million for them and for previous projects, increasing the portfolio by 12%. Net profit increased to EUR 14.2 million from EUR 13.7 million in 2019, and the share of bad loans in the bank’s balance sheet is 0.2%.
BSTDB is an international organization uniting 11 states of the Black Sea Economic Cooperation organization. The shares of Turkey, Russia and Greece in the capital are 16.5% each, Romania – 14%, Ukraine and Bulgaria – 13.5% each, Azerbaijan – 5%, Albania – 2%, Armenia – 1%, Georgia and Moldova – each 0.5%. The bank aims to promote economic cooperation, trade and cooperation of the countries of the Black Sea region. The bank’s paid up authorized capital is EUR 0.69 billion, and its long-term credit ratings are “A-” from S&P and “A2” from Moody’s.
The Bank provides medium and long-term corporate loans for up to 10 years, and for project financing – up to 15 years. In the case of the private sector, the volume of a loan can be up to EUR 90 million, for the public sector – EUR 120 million.
At the end of 2020, the largest volume of BSTDB projects was in Turkey – 23.14%, followed by Greece – 18.38% and Russia – 15.6%, while Ukraine accounted for 11.62%, Bulgaria – 7.58%, and Romania – 5.86%.
They were followed by Azerbaijan – 5.09%, Georgia – 4.88%, Armenia – 4.4%, Moldova – 1.77%, and Albania – 1.67%.
The Black Sea Trade and Development Bank (BSTDB, Thessaloniki, Greece) at the next meeting of the Board of Directors in September will offer its member countries to add EUR 250 million to its capital to increase the bank’s capabilities and efficiency, BSTDB President Dmitry Pankin has said.
“Such additional capitalization will show the rating agencies that the member countries are ready to help and support the bank,” Pankin said at a meeting with journalists in Thessaloniki.
According to him, additional capitalization increases the chances of raising the rating, which has been at the “A-” level for a long time with a positive outlook.
The president of the bank added that with the current capital of the BSTDB, its portfolio of projects of EUR 2.3 billion is also close to the ceiling, which is about EUR 2.6 billion.
Pankin noted that the BSTDB, like any other similar development bank, would be happy to increase capital by a larger amount – EUR 3-4 billion, which would allow it to participate in projects with participation in the capital of companies, however, it understands the difficulties of the member countries with their deficit budgets.
The bank told the agency it will be about increasing the subscribed capital by EUR 700-800 million, while direct investments or additional paid-in capital will amount to about a third – EUR 250 million.
BSTDB is an international organization uniting 11 states of the Black Sea Economic Cooperation organization. The shares of Turkey, Russia and Greece in the capital are 16.5% each, Romania – 14%, Ukraine and Bulgaria – 13.5% each, Azerbaijan – 5%, Albania – 2%, Armenia – 1%, Georgia and Moldova – each 0.5%. The bank aims to promote economic cooperation, trade and cooperation of the countries of the Black Sea region. The bank’s charter capital is EUR 3.45 billion, and its long-term credit ratings are “A-” from S&P and “A2” from Moody’s.
The Black Sea Trade and Development Bank (BSTDB) is considering a portfolio of projects in Ukraine for possible implementation in the amount of $155 million, including road infrastructure, agribusiness, commercial property, financial facilities, bank’s president Dmytro Pankin said.
In an interview with Interfax-Ukraine, he said that in 2021 the bank has updated its trade financing mechanism in the amount of $5 million with Creditwest Bank, and also completed operations to provide a number of loans: $15 million to Interpipe to support the company in the debt capital markets and modernization of production facilities, some $20 million to a chain of furniture shopping centers Araks to improve energy efficiency, some $23 million to Epicenter to improve agricultural infrastructure.
With regard to the project announced in 2020 with Halnaftogaz, Pankin said the bank was successfully cooperating with the company, but, unfortunately, could not agree on the price of the operation announced last summer.
“The bank is ready to consider other opportunities for mutually beneficial cooperation with the company in the future,” the BSTDB president said.
He also said the bank is developing financing and placement of securities in local currency in member countries to provide loans in local currency to businesses in these countries. According to him, BSTDB was the first multilateral development bank to offer such operations in Azerbaijan and Armenia.
“As for Ukraine, at present the market situation does not allow us to attract local currency by issuing domestic bonds at a cost that would allow us to offer attractive prices for Ukrainian borrowers,” Pankin said.
The Black Sea Trade and Development Bank (BSTDB) is ready to support projects to improve regional cooperation, but is currently focused on financing the health sector and supporting small and medium-sized enterprises (SME), BSTDB President Dmitry Pankin has stated. “Better, solid, and ready to grow conditions might require more financing in the next few years. As such, our bank is ready to provide the necessary support to projects that can further improve regional cooperation and economic development,” he said in an interview with Interfax-Ukraine.
“During the pandemic, investment everywhere slowed down, and BSTDB deferred projects in the infrastructure sector or for corporates looking to expand. Instead, Bank financing shifted more to health sector activities and especially support to SMEs, which found themselves facing difficulties in obtaining financing, particularly at the beginning of the pandemic.,” he stated.
“As ‘normalcy’ returns, we expect investment in expansion and growth to pick up again, and for our portfolio to adapt accordingly,” Pankin added.
The BSTDB was established in 1999 to support the development of the economies of the countries of the Black Sea basin. Its founders are the governments of 11 countries: Ukraine, Greece, Turkey, Bulgaria, Romania, Albania, Azerbaijan, Armenia, Georgia, Moldova, Russia. The headquarters of the BSTDB is located in Thessaloniki. The priority for the bank is the issues of transport communications, energy, agriculture, trade and others. The bank supports economic development and regional cooperation through the provision of loans, credit lines, equity capital and guarantees for projects and trade finance in the public and private sectors of the participating countries.
BLACK SEA TRADE, BSTDB, DEVELOPMENT BANK, REGIONAL COOPERATION
The Black Sea Trade and Development Bank (BSTDB) and the vertically integrated group of mining and metallurgical companies Metinvest have announced the signing of a loan agreement in the amount of EUR 62 million to finance and refinance the purchase of machinery and equipment for its iron ore enterprises (GOK).
“The seven-year credit facility was granted with a two-year grace period for principal repayment,” the group said in a press release.
“This news marks the culmination of significant efforts since July and is an important milestone in our history, as the facility is our first from an international financial institution. At Metinvest, we share the values of BSTDB and intend to use this financing to make our business more efficient, as well as to increase our overall contribution towards the Black Sea region’s economic wellbeing,” Yuriy Ryzhenkov, the Chief Executive Officer of Metinvest, said.
“Working with an international financial institution has been a highly positive new experience for Metinvest. I would like to express my gratitude to the BSTDB team for their continued support throughout the process and for helping to make this transaction happen. We are proud of this new partnership and are eager to develop it further,” Alexander Lyubarev, the Director of Corporate Finance and Treasury at Metinvest, reported.
“We are happy to assist Metinvest, a leading manufacturer and employer in Ukraine, in implementing its development and capital expenditure program focused on improved production technology, efficiency and environmental impact. Given the importance of this sector to the country and its export potential, this operation will have an important developmental impact in Ukraine. As a regional development bank, we welcome that the group plans to buy new equipment from and export its products to other BSTDB member countries, thus strengthening the regional cooperation,” BSTDB President Dmitry Pankin noted.
The Black Sea Trade and Development Bank (BSTDB) has said that the bank is ready to send around EUR 9000 million to help the sectors affected by the coronavirus disease COVID-19 spread.
“The bank intends to refocus its financing of approximately EUR 900 million, planned for new operations in 2020, to assist the sectors and industries most affected by the turmoil caused by the COVID-19 infection,” the bank said in a press release issued on Tuesday.
The bank said that in these difficult times the BSTDB is sympathetic to the efforts its member states make to contain the spread of the coronavirus and reduce the negative impact it has on human lives, societies and economic activity.
“We will offer additional technical assistance to affected clients to facilitate project preparation, including business plans, feasibility studies, environmental impact assessments, etc. The Bank will focus on assisting municipalities, utilities, manufacturing and pharmaceutical companies being on the front line of the fight against COVID-19,” the bank said.
The BSTDB is an international financial institution established by Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Turkey, and Ukraine.
