- EBRD establishes a US$ 25 million trade finance line for Ukraine’s biggest bank, Privatbank
- Deal supports Privatbank’s growing trade finance business, safeguards Ukraine food exports
- EBRD has invested €4 billion in Ukraine since 2022, with food security, trade among priorities
The EBRD expands cooperation with Privatbank, Ukraine’s largest systemically important bank, by making available a US$ 25 million trade finance limit to support the Ukrainian player’s growing trade finance business.
Since Russia began its full-scale war on Ukraine in 2022, access to financing for Ukrainian importers and exporters has been severely constrained, with international banks shying away from taking direct risk on Ukrainian trade finance transactions.
The EBRD’s own Trade Facilitation Programme (TFP) – a key part of EBRD efforts to support the restoration of the global and regional food and energy supply chains – has supported €972 million in 355 trade transactions for the most crucial goods for the Ukrainian economy since then. Trade and food security are two of the EBRD’s five investment priorities in Ukraine, along with energy security and support for vital infrastructure and the private sector. Privatbank will join eleven other TFP partner banks of EBRD in Ukraine.
By providing this trade finance limit for Privatbank, the EBRD is playing an important role in facilitating continued trade activities in Ukraine. This is critical not only for keeping the flow of essential goods moving but also for generating revenue for the country. A functioning trade sector will help Ukraine rebuild its war-torn economy, create jobs, and ultimately strengthen its overall resilience.
In 2023, the EBRD started a strategic cooperation with Privatbank through its arrangement to guarantee lending by Ukrainian partner banks, the Resilience and Livelihood Guarantee (RLG). The facility, which was signed with Privatbank last year, covered €240 million of new loans to private business, mostly micro-, small- or medium-scale enterprises operating in agribusiness or other critical industries.
Privatbank, founded in 1992, is currently state-owned. The bank has benefited from Ukraine’s ongoing reform of state-owned banks and has performed well in the past two years. It generated around 43 per cent of the Ukrainian banking system’s net profit in 2023 and has proved to be agile in responding to war risk, switching quickly to remote banking to limit the risk of infrastructure damage, protecting itself from cyber-attacks, and starting to develop its own trade finance business.
Signing the trade finance agreement in Kyiv, EBRD First Vice President Jurgen Rigterink said: “With a strong franchise across Ukraine and a focus on business with agricultural producers, Privatbank has the potential to find its own niche in the trade finance business and support the EBRD's efforts to restore the food supply chain – which in turn will effectively align Privatbank`s operations with EBRD standards and thus enhance its privatisation prospects in the future.”
“PrivatBank is honoured to sign the second large agreement with EBRD within one year, which contributes to enhance stability, resilience of the market and expands the platform for reconstruction of Ukraine. Thanks to the EBRD guarantees, the cost of banking services for documentary operations is significantly lower than standard loans. This new agreement allows us to issue confirmed letters of credit with post-import financing, which in turn gives opportunities for our clients to increase the period of payment deferral for foreign economic contracts. We are confident that all groups of customers who import goods - importers of production equipment, agricultural machinery, machines, machine tools, aggregates, along with small and medium consumer goods businesses will benefit from this major deal between EBRD and PrivatBank. - said Gerhard Boesch, CEO of PrivatBank.
The EBRD, Ukraine’s biggest institutional investor, substantially increased its financing there in the wake of the Russian invasion. It has made €4 billion available to Ukraine in the first two years of the war. It has also recently secured from its Governors a capital increase of €4 billion to continue lending at these levels, with the potential for more investment once the time comes for reconstruction.
