ProCredit Bank Ukraine recently agreed to borrow the approximate equivalent of USD 30 million from the UK-based European Bank for Reconstruction and Development (EBRD) and the EU. The funds, which are denominated in a mix of euros and Ukrainian hryvnia, are to be used for on-lending to micro-, small and medium-sized enterprises (MSMEs). The wholesale loan is part of the EU4Business-EBRD Credit Line, which finances investments by MSMEs in Georgia, Moldova and Ukraine to align with EU directives, thus accessing new market opportunities. In particular, the MSMEs may use the loans to “invest in equipment, machinery and technology that meets European Union (EU) standards for product quality, health and safety measures as well as environmental protection.”
Of the wholesale loan, 70 percent is earmarked for investments that reduce environmental impacts. ProCredit Bank Ukraine funds technologies such as solar panels, biogas generators, high-efficiency production equipment, waste recycling systems and no-till agricultural equipment.
In addition, the EU is supporting the retail loans with non-repayable funds for: (1) technical assistance to help end-borrowers select green technologies; and (2) incentivizing borrowers with 15-percent matching grants upon implementation of their projects.
ProCredit Bank Ukraine is a member of Germany-based ProCredit Group. It began operating in February 2001 and offers MSMEs as well as individuals loans, deposit facilities and cash management services. The bank operates eight outlets and had USD 960 million in total assets as of the end of 2020.
ProCredit Holding banks operate in Albania, Bosnia and Herzegovina, Bulgaria, Ecuador, Georgia, Germany, Kosovo, Moldova, North Macedonia, Romania, Serbia, and Ukraine. As of December 2020, the group reported assets of EUR 7.76 billion (USD 9.14 billion), a gross loan portfolio of EUR 5.25 billion (USD 6.18 billion) and customer deposits of EUR 4.90 billion (USD 5.79 billion).
Founded in 1991, 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 MSMEs. With a focus on “the promotion of private and entrepreneurial initiative,” the bank disbursed approximately EUR 11 billion (USD 13.3 billion) to 411 projects during 2020. EBRD’s shareholders comprise 69 countries plus the EU.
By Divya Deshmukh, Research Associate
Sources and Additional Resources
EBRD press release
https://www.ebrd.com/news/2021/ebrd-eu-provide-fresh-funds-for-ukrainian-msmes-via-procredit-bank.html
EU4Business-EBRD Credit Line homepage
https://www.eu4business-ebrdcreditline.com/
ProCredit Bank Ukraine homepage
https://en.procreditbank.com.ua/
ProCredit Bank Ukraine annual report
https://en.procreditbank.com.ua/assets/Uploads/IFRS-FS-2020-ProCredit-eNG.pdf
ProCredit Holding homepage
https://www.procredit-holding.com/
ProCredit Holding annual report
https://www.procredit-holding.com/wp-content/uploads/2021/03/2020_EN_PCH_AR_L.pdf
Previous MicroCapital article on EBRD
https://www.microcapital.org/microcapital-brief-ebrd-loans-2-4m-to-procredit-bank-bosnia-and-herzegovina-for-energy-efficiency-homeowners-eligible-for-eu-grants/
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