The European Bank for Reconstruction and Development (EBRD), a multilateral institution, is arranging a loan package of up to EUR 10 million (USD 10 million) for Ukraine’s Bank Lviv to support small and medium-sized enterprises (SMEs). The loan fulfills part of a pledge by EBRD to invest EUR 1 billion (USD 1 billion) this year into the Ukrainian economy to support private businesses, “including clients from food security sectors and those who relocated their businesses to the western part of Ukraine” due to the invasion by Russia.
The loan package has an A/B structure, with the A tranche funded by the EBRD in the amount of EUR 4.2 million (USD 4.2 million). The B tranche so far has commitments of EUR 4.8 million (USD 4.9 million) funded by two public-private partnerships, European Fund for Southeastern Europe (EFSE) and Green for Growth Fund (GGF).
Established in 1990, Bank Lviv provides deposit, lending, insurance and payment-card services. It is based in the city of Lviv and has 19 branches. As of December 2020, the bank reported total assets of UAH 4.9 billion (USD 135 million), a gross loan portfolio of UAH 3.0 billion (USD 82 million) and customer deposits of UAH 2.8 billion (USD 75 million).
EFSE issues “long-term” funding for micro- and small enterprises as well as households via partner retail institutions. EFSE also operates the EFSE Development Facility, which provides technical assistance, consulting and training services to support capacity building within these institutions. EFSE was established in 2005 by the German development bank Kreditanstalt für Wiederaufbau (KfW) with financial support from the German Federal Ministry for Economic Cooperation and Development (which is also known by its German acronym BMZ) and the EU’s European Commission. Its slate of investors also includes private banks, funds and family offices. The fund is privately managed, with Oppenheim Asset Management Services of Luxembourg acting as fund manager and Finance in Motion of Germany acting as fund advisor. EFSE operates in 16 countries: Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Georgia, Kosovo, Moldova, Montenegro, North Macedonia, Romania, Serbia, Turkey and Ukraine. As of 2022, the fund reports a portfolio of EUR 1.04 billion (USD 1.05 billion) committed to its 73 partner lenders, of which microfinance institutions comprise roughly half.
GGF, founded in 2009 by the EU’s European Investment Bank and the German development bank Kreditanstalt für Wiederaufbau (KfW), supports financial institutions and small businesses in an effort to increase energy efficiency and promote the usage of renewable energy in Southeastern and Eastern Europe as well as the Middle East and North Africa. As of 2022, the organization holds an investment portfolio of EUR 1.3 billion (USD 1.3 billion), distributed to 63 partner institutions in loans that range in size from EUR 1 million (USD 1.1 million) to EUR 40 million (USD 44 million). GGF’s investors include the World Bank Group’s International Finance Corporation; the Netherlands Development Finance Company, which is also known by its Dutch acronym FMO; and Germany’s Gemeinschaftsbank für Leihen und Schenken (GLS) Bank.
Founded in 1991 and based in the UK, EBRD seeks to support a “transition to open, market economies, whilst fostering sustainable and inclusive growth” in 38 countries in Central Asia, Eastern Europe and North Africa. It does this by providing business advice, supporting trade finance, and investing debt and equity in funders of microenterprises and SMEs. The institution disbursed approximately EUR 10.4 billion (USD 11.1 billion) to 413 projects during 2021. EBRD’s shareholders comprise 71 countries in addition to the EU and the European Investment Bank.
By Nithin Naren, Research Associate
Sources and Additional Resources
EBRD press release
https://www.ebrd.com/news/2022/ebrd-supports-ukraines-bank-lviv-with-10-million-loan-for-onlending-to-smes-affected-by-war.html
Bank Lviv homepage
https://www.banklviv.com
Bank Lviv financial statements
https://www.banklviv.com/finansova-zvitnist/
EFSE homepage
https://www.efse.lu
GGF homepage
https://www.ggf.lu
Previous MicroCapital article on Bank Lviv
https://www.microcapital.org/microcapital-brief-european-bank-for-reconstruction-and-development-ebrd-lending-8-1m-to-bank-lviv-for-smes-in-ukraine/
Previous MicroCapital article on EBRD
https://www.microcapital.org/microcapital-brief-ebrd-loans-23m-to-tbc-bank-tbc-leasing-to-boost-technology-investments-by-msmes-in-georgia/
Previous MicroCapital article on EFSE
https://www.microcapital.org/microcapital-brief-efse-lending-2-4m-to-bt-leasing-md-to-support-mses-in-moldova-during-coronavirus-pandemic/
Previous MicroCapital article on GGF
https://www.microcapital.org/microcapital-brief-green-for-growth-fund-ggf-loans-1-7m-to-microfinance-institution-alter-modus-to-finance-energy-efficiency-in-montenegro/
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