The European Bank for Reconstruction and Development (EBRD) plans to provide EUR140 million in guarantee financing to state-owned PrivatBank (Kyiv), which will cover up to 50% of the credit risk on new loans of EUR400 million in equivalent.
According to information on the bank’s website on Thursday, its board of directors intends to consider this project on July 24, 2024.
It is specified that the guarantee funding will be provided to PrivatBank in two equal tranches, each of which will provide partial coverage of risks under new loans worth EUR 200 million, while only one tranche has been agreed upon so far.
The project also provides for a sub-limit of up to EUR 60 million to finance long-term investments by micro, small and medium-sized enterprises (MSMEs) to modernize technologies and equipment in accordance with EU standards, including investments in sustainable and green technologies (70% of the sub-limit), thereby increasing the competitiveness of enterprises.
It is noted that eligible sub-borrowers will also receive EU-funded technical assistance and grant support in the form of investment incentives after the completion of investment projects.
According to the EBRD website, the financing is intended primarily to support Ukrainian companies in primary and secondary agriculture, as well as other critical sectors necessary to ensure the country’s energy security.
“At the same time, priority will be given to MSMEs and corporate borrowers investing in projects that increase energy security and efficiency in Ukraine,” the release says.
As reported, EBRD Vice President Matteo Patrone and PrivatBank CEO Gerhard Bösch signed a letter of intent to start working on a risk-sharing agreement during the Ukraine Recovery Conference in Berlin on June 11-12.
According to the National Bank of Ukraine, as of May 1, 2024, PrivatBank ranked 1st in terms of assets (UAH 857.00 billion) among 63 banks operating in the country. The financial institution’s net profit last year amounted to UAH 37.8 billion. The EBRD notes that the state-owned bank’s network currently includes 1,200 branches across the country, 6,800 ATMs and 1,040 terminals.
JSC “OTP BANK” offers Ukrainian enterprises a number of loan programs that will allow them to become energy independent and ensure uninterrupted business operation in the face of electricity shortages. This was stated by Valeriy Terno, Head of Sales to Medium Corporate Clients at OTP Bank, during a roundtable discussion on energy independence organized by the Financial Club.
“The bank has set itself the goal of stimulating the development of the market for energy-independent solutions and providing support to businesses in financing such projects. We prepare optimal offers and favorable conditions for each client. We are talking about low interest rates and the possibility of implementing them under government programs, as well as cashback, and with additional guarantees from the state, the EBRD, and other institutional investors, we will be able to further expand the decision-making criteria for implementing certain projects. We already have successful cases in this direction,” said Mr. Terno.
In particular, small and medium-sized businesses can count on financial support from OTP Bank under the program “Affordable Loans 5-7-9%”, which is being implemented by the government at the initiative of the President of Ukraine through the Entrepreneurship Development Fund.
Also, the joint program with the European Bank for Reconstruction and Development allows us to offer investment loans to SMEs with the possibility of compensating part of the costs financed by the Bank’s credit funds. This loan can be used for long-term investments in green technologies (energy-efficient equipment, solar panels for power plants to meet their own needs) that meet European Union standards and will help increase the competitiveness of enterprises in domestic and foreign markets. After the implementation of the projects, customers will be able to apply for investment incentives (cash compensation, cashback).
“By installing solar panels or other elements, including gas turbine or gas piston stations, entrepreneurs will be able not only to ensure their own energy independence but also to sell the remaining energy produced to the grid, thereby contributing to the country’s energy security,” added the Head of Sales to Medium Corporate Clients at OTP Bank.
The European Bank for Reconstruction and Development (EBRD) will provide an additional EUR300 million loan to Ukrzaliznytsia (UZ) for the purchase of 80 modern electric freight locomotives, the UZ press service said on Wednesday.
The agreement, which the company announced in late May, was backed by a memorandum between Ukrzaliznytsia, the EBRD and the Ministry of Community Development, Territories and Infrastructure, which was signed in Berlin on the sidelines of the Ukraine Recovery Conference (URC2024).
“The issue of renewing the locomotive fleet for Ukrzaliznytsia is critical and crucial (…) Obtaining new and high-tech electric locomotives will significantly increase the efficiency of freight transportation,” said Yevhen Lyashchenko, chairman of the board of UZ.
At the end of May, the company announced the allocation of a $190 million grant from the United States through the World Bank Trust Fund as part of the Restoration of Critical Logistics Infrastructure and Network Connectivity (RELINC) project.
The proposal for the purchase of 80 electric locomotives with a total value of about $400 million has already been published on the EBRD tender portal. The tender requirements stipulate that the winner, in addition to supplying the locomotives, must create conditions for their maintenance and warranty repair in Ukraine.
One of the largest grain market operators in Ukraine, JV Nibulon LLC, and Pravex Bank, part of the Intesa Sanpaolo group, have entered into a bilateral agreement to extend the restructuring of a $5.5 million loan for six years with preferential interest rates and a grace period for debt repayment, the grain trader’s press service reported on its Facebook page.
“PRAVEX Bank approaches each case of debt restructuring individually, taking into account the specifics of the business and the needs of its clients. This approach allows us to provide the most effective financial solutions and maintain stable partnerships,” commented Yuriy Lytvynenko, Director of the bank’s Loan Management Department.
Nibulon noted that the loan restructuring will help it optimize its financial flows and focus on implementing strategic projects aimed at strengthening and developing the agricultural sector of Ukraine.
“We are confident that this step will be an important incentive for the company’s further growth and prosperity, strengthening our market position and contributing to the country’s economic development,” said Nibulon’s CFO Irina Levkovskaya.
As reported earlier, Nibulon Group has more than 25 Ukrainian and foreign creditors, with the vast majority of whom have already signed restructuring agreements.
Nibulon JV LLC was established in 1991. Prior to the Russian military invasion, the grain trader had 27 transshipment terminals and crop reception complexes, capacity to store 2.25 million tons of agricultural products at a time, a fleet of 83 vessels (including 23 tugs), and owned the Mykolaiv Shipyard.
“Before the war, Nibulon cultivated 82 thousand hectares of land in 12 regions of Ukraine and exported agricultural products to more than 70 countries. In 2021, the grain trader exported the highest ever volume of 5.64 million tons of agricultural products, reaching record volumes of supplies to foreign markets in August – 0.7 million tons, in the fourth quarter – 1.88 million tons, and in the second half of the year – 3.71 million tons.
Nibulon’s losses due to Russia’s full-scale military invasion in 2022 exceeded $416 million.
Currently, the grain trader is operating at 32% of capacity, has created a special unit to clear agricultural land of mines, and was forced to move its headquarters from Mykolaiv to Kyiv.
In 2024, state-owned Ukrgasbank (Kyiv) provided UAH 40 million in loans to farmers working in high-risk military areas, up from UAH 120 million a year earlier, said Tetyana Korinenko, director of the Small and Medium Business Department.
“Of course, a client who wants to get a loan must meet the bank’s requirements. A very negative factor for a significant share of clients who would like to receive financing is (requirement – IF-U) to be located in a safe territory. We also have requirements that the client must operate in an area no more than 50 km from the front line. But we also have cases using guarantee instruments provided by the state in the form of a guarantee from the Cabinet of Ministers and the Partial Guarantee Fund. We have already come closer to 22 km to the front line,” she said at Grain Ukraine in Kyiv on Friday.
According to Kornienko, Ukrgasbank has four clients from the agricultural sector in Kherson region who received loans to operate within a 30-kilometer zone from the military operations. In their case, state guarantee instruments cover 50-80% of the loan issued by the bank.
“This is a cool tool that allows us to help clients from the agricultural sector who work as close as possible to the area of active military operations,” the expert said.
Kornienko clarified that in 2024, Ukrgasbank lent about UAH 40 million to farmers working in the high military risk zone. A year earlier, this figure was 120 million.
“Of course, this is not much compared to our annual UAH 5 billion loans to the agricultural sector. But with each such client, we understand that we are giving the market an impetus, showing that it is possible to work in this way. It is also possible to have credit relations with such clients. And this risk is acceptable thanks to government instruments,” summarized the Ukrgasbank representative.
JSB “Ukrgasbank” was established in 1993. The state, represented by the Ministry of Finance, owns 94.9409% of the financial institution’s shares.
State-owned Oschadbank (Kyiv) has entered into a UAH 26.5 million loan agreement with spice exporter and producer Natur Svit, and provided an UAH 8 million grant under the e-Work program to Sumy Textile Company, the bank’s chairman of the board, Serhiy Naumov, said on Facebook.
He clarified that the loan to Natur-Svit was issued under the state program “Affordable Loans 5-7-9%” and in cooperation with the Export Credit Agency (ECA) as part of the initiative to insure foreign economic contracts.
According to Naumov, the grant to Sumy Textile Company, which produces hosiery, was provided in the area of processing.
The Oschadbank CEO noted that over the past year, the financial institution’s loan portfolio for MSMEs in Sumy region grew by 29% to almost UAH 1 billion, and the bank’s market share in the region was 25% at the beginning of the year.
According to the Clarity Project, Natur Svit (Kyiv) was registered in November 2008, with Andriy Inshyn listed as the ultimate beneficiary. The company’s revenue in 2023 decreased by 10.9% to UAH 220.8 million, while net profit increased by 4.7% to UAH 29.5 million.
According to the Clarity Project, Sumy Textile Company’s revenue in 2023 decreased by 34.9% to UAH 151.1 million, while net profit decreased by 4.6 times to UAH 7.47 million. The company was registered in April 2022 and is owned and operated by Oleksandr Karpov.
According to the National Bank of Ukraine (NBU), as of February 1 this year, Oschadbank ranked second in terms of total assets (UAH 369.56 billion) among 63 banks operating in the country.
