EBRD develops local currency lending to SMEs in Ukraine
First synthetic local currency facility to mitigate the currency risks
The EBRD is providing fresh funds to develop local currency lending and SME support mechanisms in Ukraine. The use of local currency gives greater comfort to potential borrowers, who will not be exposed to foreign exchange risks.
The EBRD is providing a four-year local currency loan in Hryvnia (UAH) worth US$ 25 million equivalent to PJSC ProCredit Bank Ukraine (PCBU).
For the EBRD this will be one of the first UAH-denominated loans to a commercial bank in Ukraine as well as the first synthetic local currency facility hedged through a cross-currency swap with the TCX fund. This mechanism will allow providing Ukrainian SMEs with lending in local currency.
Grant funding provided through the EU Neighbourhood Investment Facility will help reduce the interest rate cost of the foreign exchange (FX) risk hedge in order to achieve better cost of funding in local currency (UAH).
Francis Malige, EBRD Managing Director for eastern Europe and the Caucasus, said: “We are lending to a well-known and well-established financial institution in Ukraine. This loan will support ProCredit Bank’s growth strategy focused on the expansion of SME lending much needed in the country. We are confident that the instrument we employ has a good potential for replication and will contribute to the development of local currency lending in this country.”
Victor Ponomarenko, General Manager of ProCredit Bank Ukraine, said: “Access to local currency funding will contribute to the further development of SMEs. As a bank that aims to be the “Hausbank” for small and medium-sized enterprises in Ukraine, we are confident that this will support our efforts in providing them with affordable finance for their investments.”
The Netherlands-based Currency Exchange Fund (TCX) is a special purpose fund that provides over-the-counter derivatives to hedge the currency and interest rate mismatch. Its shareholders include most major development finance institutions in the world and a number of specialised microfinance investors.
About the EBRD:
The EBRD is the largest international financial investor in Ukraine. To date, the Bank has made a cumulative commitment of almost €11.6 billion through 383 projects since the start of its operations in the country in 1993.
About ProCredit Bank Ukraine:
ProCredit Bank Ukraine is a development-oriented commercial bank offering excellent customer service to small and medium enterprises and to private individuals who would like to save. The bank is part of the international ProCredit group, whose parent company is the Germany-based ProCredit Holding. More information: http://www.procreditbank.com.ua
About ProCredit group:
ProCredit Holding AG & Co. KGaA, based in Frankfurt am Main, Germany, is the parent company of the development-oriented ProCredit group, which consists of banks for small and medium enterprises (SMEs) and whose operational focus is on South-Eastern and Eastern Europe. In addition to this regional focus, the ProCredit group is also active in South America and Germany. The company’s shares are traded on the Prime Standard segment of the Frankfurt Stock Exchange. The anchor shareholders of ProCredit Holding AG & Co. KGaA include the strategic investors Zeitinger Invest and ProCredit Staff Invest (comprising the investment vehicles for ProCredit staff), the Dutch DOEN Participaties BV, KfW Development Bank and IFC (part of the World Bank Group). As the group’s superordinated company according to the German Banking Act, ProCredit Holding AG & Co. KGaA is supervised on a consolidated level by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin) and the German Bundesbank. For additional information, please visit https://www.procredit-holding.com