EBRD provides Ukrainian KredoBank with guarantee, loan for 25 mln euros each

MOSCOW. July 27 (Interfax) - The European Bank for Reconstruction and Development (EBRD) with partial support from the European Union provides Ukrainian KredoBank with a 25 million euro guarantee to cover the risks of new lending, as well as a 25 million euro loan under the Trade Facilitation Program (TFP) for trade financing of Ukrainian clients, Ukrainian media reported citing the EBRD.

"The new risk-sharing agreement will allow KredoBank to reduce the funding gap, and continued access to financing will help companies to remove bottlenecks in trade in food and agricultural products," EBRD Managing Director for Financial Institutions Francis Malige was quoted in the statement as saying.

The new financing will be available to companies operating in such critical sectors as primary agriculture and agricultural services, food processing, transportation and logistics, retail and pharmaceuticals, it said.

Under the risk-sharing agreement, which the two institutions with prior cooperation experience signed on Wednesday in London, the EBRD is providing a 25 million euro unfunded risk-sharing instrument that covers 50% of the credit risk on KredoBank's new financing totaling 100 million euros, but not more than 50% of the portfolio. The EBRD guarantee is provided in two equal tranches.

Additionally, 15 million euros of the total 100 million euro portfolio covered by the guarantee will be available to finance long-term investments by micro, small and medium-sized enterprises (MSMEs) in technologies and equipment meeting EU standards, including investments in sustainable and green technologies under the EU Eastern Partnership SME Competitiveness Program (EaP SMEC), the EBRD said.

The involvement in the EaP SMEC program will also allow KredoBank and its clients to receive expert assistance in the form of training and advisory support, he added. Eligible borrowers will also receive grant support in the form of investment incentives upon completion of their investment projects.

The EBRD guarantee is backed by a 50% first-loss coverage guarantee financed by donors as part of the sustainability package. The conclusion of this new agreement increases to 468 million euros the total amount of funding supported by such guarantees since the beginning of the crisis.

As for the 25 million euros under the Trade Facilitation Program, the lender noted that participation in this program would allow KredoBank to increase its support to Ukrainian exporters and importers.

KredoBank is one of the leading banks in western Ukraine and as of the beginning of June it ranks 14th (UAH 46.85 billion) out of 65 operating banks in Ukraine in terms of assets. KredoBank is fully owned by PKO Bank Polski SA, the largest systemically important bank in Poland, whose shares are listed on the Warsaw Stock Exchange.