EBRD extends guarantee to Ukraine’s Oschadbank to enable €200 million of new lending

The European Bank for Reconstruction and Development (EBRD) is extending a €50 million unfunded portfolio risk-sharing facility to Oschadbank, to unlock €200 million of new financing for Ukraine’s private sector amidst the ongoing war in the country.

Relevant document was signed on April 9 in Kyiv as part of the Reintegration of Veterans Conference, which was partnered by Oschad.

The EBRD’s facility will cover up to 50 percent of Oschadbank’s credit risk on newly issued sub-loans worth €200 million to private businesses operating in Ukraine.

Total enabled financing under similar EBRD guarantees, signed since the start of Russia’s full-scale war on Ukraine, amounted to close to €900 million by end-2023. 

The EBRD’s guarantee enhances Oschadbank’s lending capacity and enables it to provide much needed funding to Ukrainian private companies operating in critical industries such as agriculture, manufacturing, construction, transport and pharmaceuticals.

This will support companies to continue their operations and safeguard livelihoods, which is crucial for fostering economic resilience and enabling Ukraine to rebuild in the aftermath of the war.

"Thank to EBRD partners for expanding the program. Such instruments give Oshchad the opportunity to support business even in conditions when, due to the objective realities of a great war, there is a lack of assets to pledge. Risk-sharing programs are now extremely important, because without credit support for entrepreneurship, the Ukrainian economy cannot be expected to be sustainable.  Loans are in great demand among our clients," commented on the deal Sergii Naumov, Chairman of the Management Board of Oschadbank.

The United States of America, through the Crisis Response Special Fund, will provide first-loss risk cover to partially mitigate the risk associated with the new exposure. 

Up to 20 per cent of the risk-shared loans will support private micro-, small- and medium-sized businesses’ (MSMEs’) long-term investments in EU compliant and green technologies, improving Ukrainian MSMEs’ competitiveness on domestic and foreign markets. Eligible sub-borrowers will also receive EU-funded technical assistance and investment incentives upon completion of their investment projects under its EU4Business initiative. MSMEs that suffered destruction and/or loss of assets due to the war on Ukraine will be eligible to receive additional investment incentives for reconstruction of their businesses as part of the EBRD-EU “Enterprise Renaissance” window within the EU4Business initiative.

As part of the investment, the EBRD will work with Oschadbank to develop a veteran re-integration support programme for the lender and its clients. This will include developing veteran-friendly Human Resources (HR) policies and practices, a more inclusive financial services offering, as well as physical adaptations required by war veterans and other persons with disabilities and/or trauma. MSME facilitating war veterans’ reintegration will receive additional investment incentives provided by the CRSF to compensate these sub-borrowers’ investment costs, facilitating re-integration and financial inclusion of war veterans.

Oschadbank, is a universal, 100 per cent state-owned bank. It is the second largest bank in Ukraine, providing services to more than 6,2 million retail customers, and more than 4,000 corporate, and 224,000 MSME clients. In addition to supporting the private sector, its strategic priorities in the country are to support energy, food safety and critical infrastructure.