EBRD and EU back €200 million lending facility for Ukraine’s private sector via OTP Bank

The European Bank for Reconstruction and Development (EBRD) has unveiled a new €200 million risk-sharing facility for Ukraine’s JSC OTP Bank (OTPU). This initiative aims to bolster financing for Ukraine’s private sector amidst ongoing challenges brought by the war.

The EBRD’s unfunded portfolio risk-sharing mechanism will cover up to 50% of OTPU’s credit risk on the €200 million sub-loan portfolio. This enhancement will enable OTP Bank to extend financing to critical industries such as agriculture, energy, manufacturing, and transport, supporting businesses vital to Ukraine’s economy. The facility is backed by a first-loss risk cover funded by donors, including the European Union (EU), under the Ukraine Investment Framework (UIF).

This marks the fifth and largest facility of its kind provided by the EBRD to OTP Bank Ukraine, continuing their strong collaboration. Including this initiative, EBRD guarantees have unlocked nearly €2 billion in financing for Ukraine since the start of Russia’s invasion.

Up to 20% of the loans will focus on supporting long-term investments by micro, small, and medium-sized enterprises (MSMEs) in EU-compliant and green technologies. These projects aim to enhance the competitiveness of Ukrainian businesses both domestically and internationally. Eligible sub-borrowers will also benefit from EU-financed investment grants under the EU4Business initiative and technical assistance for their projects.

To date, the EBRD has allocated €66 million in EU grants to support MSMEs in Ukraine under the EBRD-EU4Business Credit Line, including €5 million in projects implemented through OTP Bank Ukraine.

The facility also introduces new provisions for businesses impacted by the war. Sub-borrowers affected by asset destruction, loss, or relocation, or those contributing to reintegrating veterans into the workforce, will qualify for additional investment incentives.

Source: EBRD