The EBRD has expanded its cooperation with Privatbank, Ukraine’s largest systemically important bank, by providing a $25 million trade finance limit to support Privatbank’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 avoiding direct risk on Ukrainian trade finance transactions.
The EBRD’s Trade Facilitation Programme (TFP), a key part of EBRD efforts to support the restoration of 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 facilitating continued trade activities in Ukraine. This is critical not only for maintaining the flow of essential goods but also for generating revenue for the country. A functioning trade sector will help Ukraine rebuild its war-torn economy, create jobs, and strengthen its overall resilience.
In 2023, the EBRD began a strategic cooperation with Privatbank through its Resilience and Livelihood Guarantee (RLG) arrangement to guarantee lending by Ukrainian partner banks.
The facility, signed with Privatbank last year, covered €240 million of new loans to private businesses, mostly micro-, small-, or medium-scale enterprises operating in agribusiness or other critical industries.
Founded in 1992, Privatbank 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 adapted swiftly to war risks, transitioning to remote banking to limit infrastructure damage risk, 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. Importantly, it will also effectively align Privatbank’s operations with EBRD standards, thus enhancing its privatisation prospects in the future.”
Gerhard Boesch, CEO of PrivatBank, said, “PrivatBank is honoured to sign a second large agreement with the EBRD within one year, which contributes to enhancing stability and 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 the EBRD and PrivatBank,” he added.
The EBRD, Ukraine’s largest institutional investor, substantially increased its financing there following the Russian invasion. It has made €4 billion available to Ukraine in the first two years of the war.
It has also recently secured a €4 billion capital increase from its Governors to continue lending at these levels, with the potential for more investment when the time comes for reconstruction.
