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.
Italian Intesa Sanpaolo Group, one of the leading banking groups in Europe, has decided to increase the capital of its 100% Ukrainian subsidiary PRAVEX Bank by UAH 1.1 billion at the expense of additional shareholder contributions after the National Bank of Ukraine announced the need to recapitalize the bank earlier this year.
“The capital increase is an additional support to ensure financial stability and increase the capital level of PRAVEX Bank. The strategic decision of the shareholder will have a significant positive impact on PRAVEX Bank’s capital ratios, maintaining liquidity, financial stability and reliability of the institution for all stakeholders,” PRAVEX Bank said on Monday.
The recapitalization will also strengthen the ability to withstand the risks faced by PRAVEX Bank and its customers in the event of a full-scale invasion, the financial institution added.
It is specified that Intesa made this decision on March 28.
The bank recalled that Intesa Sanpaolo Group has always provided full support to its Ukrainian subsidiary, which was demonstrated in various crisis periods in previous years, starting in 2008.
Pravex-Bank was founded in 1992. Its sole shareholder since June 2008 is Intesa Sanpaolo S.p.A. (Italy).
According to the National Bank of Ukraine, as of February 1, 2024, PRAVEX-Bank ranked 27th among 63 banks operating in the country in terms of total assets (UAH 10.96 billion). Its authorized capital amounted to UAH 979.09 million, and its equity capital was UAH 1 billion 14.87 million.
Last year, the bank’s net loss decreased to UAH 92.9 million from UAH 415.2 million a year earlier. Last year, PRAVEX Bank’s assets increased from UAH 10.55 billion to UAH 11.23 billion, while its reserves decreased from UAH 0.34 billion to UAH 0.27 billion.
In early January of this year, the NBU announced the need to recapitalize state-owned Ukreximbank, Pravex Bank and MTB Bank by a total of UAH 10 billion based on the results of an assessment of their sustainability for the next three years under the baseline macroeconomic scenario.
According to the data provided by the NBU, after assessing the quality of assets and the acceptability of collateral for credit transactions, taking into account adjustments, the regulatory capital adequacy (N2) of Ukreximbank was 5.93% as of April 1, 2023, with a minimum of 10%, and core capital (N3) was 2.98% with a minimum of 7%. For MTB, these figures were 7.71% and 6%, respectively, and for PRAVEX Bank – 15.61% and 14.39%.
At the same time, according to the NBU, PRAVEX Bank’s capital would have become negative from the second year under the baseline macro scenario, and in the third year its adequacy ratios would have fallen to minus 16.51%. In the case of MTB, the capital would have gone into a slight negative in the first year, and in the third year, its adequacy ratios would have deteriorated to minus 4.15%.
For Ukreximbank, the ratios would have fallen from minus 3.67% to minus 8.04% over three years.
The European Bank for Reconstruction and Development (EBRD) on December 1 approved the allocation of up to EUR 25 million to Pravex Bank (Kyiv) under the guarantee of the parent company Intesa Sanpaolo S.p.A. (Italy) to finance small and medium-sized enterprises (SMEs).
“The project will support Pravex Bank to sustain portfolio growth at least in line with the market. The proposed project will channel much-needed funding support to real-economy clients helping to mitigate the economic consequences of the pandemic crisis,” the EBRD said on its website.
This crisis response project is aimed to bridge a liquidity gap due to adverse market conditions related to COVID-19 crisis, the press release reads.
