MICROCAPITAL BRIEF: EFSE Invests $9m in Kredobank Bond Issue for Small, Medium-sized Enterprise (SME) Lending in Ukraine

The European Fund for Southeast Europe (EFSE), a Luxembourg-domiciled microfinance investment vehicle, recently invested UAH 312 million (USD 11 million) in Public Joint Stock Company (PJSC) Kredobank, a Ukrainian bank owned by the Polish financial services firm, Powszechna Kasa Oszczednosci (PKO) Bank Polski Spolka Akcyjna. EFSE disbursed UAH 250 million (USD 9.1 million) to buy bonds from Kredobank, while the purpose of the remaining UAH 62 million (USD 1.9 million) remains undisclosed. Grzegorz Szatkowski, the Chair of the Board of Kredobank, reportedly said, “We are happy to start this cooperation with EFSE and benefit from the dedicated funding that will allow us to expand financing to our core segment of small and medium enterprises, and to offer much-needed longer-term financing in local currency.”

In addition to this bond issue, Kredobank launched another series of the same size in December 2017. Kredobank was first registered with the Ukraine’s National Securities and Stock Market Commission to issue bonds in November 2017. Both sets of bonds have terms of five-years.

Founded in 1990 in the city of Lviv, Kredobank has 102 branches, through which it offers corporate, investment and retail banking services, with a focus on the agriculture sector. As of December 2017, Kredobank reported total assets of UAH 14 billion (USD 526 million), outstanding loans of UAH 7.9 billion (USD 290 million) and customer deposits of UAH 11 billion (USD 399 million).

Founded in 1919, PKO Bank Polski operates as a retail bank in Poland but is also the parent company of 10 financial service subsidiaries in the Czech Republic, Germany, Poland, Sweden and the Ukraine. As of December 2017, the bank and its subsidiaries reported total assets of PLN 297 billion (USD 85 billion), outstanding loans of PLN 206 billion (USD 59 billion) and customer deposits of PLN 219 billion (USD 63 billion). For 2017, it reported return on assets of 1 percent and return on equity of 9 percent. PKO Bank Polski and its subsidiaries operate 1,192 branches.

German development bank Kreditanstalt fur Wiederaufbau (KfW) founded EFSE in 2005. As of 2018, the fund has EUR 896 million (USD 1.1 billion) outstanding to retail lenders, which have on-lent those funds to 138,000 end-borrowers in the following countries: Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Georgia, Kosovo, Moldova, Montenegro, Romania, Serbia, Ukraine, Turkey and the Former Yugoslav Republic of Macedonia. As of 2018, EFSE holds a microfinance label from the Luxembourg Fund Labeling Agency (LuxFLAG), an NGO that certifies that social investment vehicles actually invest as advertised.

By Nicholas Galimberti, Research Associate

Sources and Additional Resources

EFSE press release
https://www.efse.lu/news-events/news/detail/efse-partners-with-pjsc-kredobank-by-investing-in-sme-dedicated-local-currency-bonds/

Kredobank background
https://www.kredobank.com.ua/stavky.html#.W2ruqy2ZPBI

Kredobank financials
https://www.kredobank.com.ua/img/forall/Kredobank%20IFRS%20Consolidated%202017_ENG(1).pdf

PKO Bank Polski background
https://www.pkobp.pl/pkobppl-en/about-us/

PKO Bank Polski financials
http://www.raportroczny2017.pkobp.pl/sites/pkobpar17/files/consolidated_financial_statements_of_the_group_pko_bank_polski_s.a._2017.pdf

MicroCapital Brief; May 9, 2018; EFSE Lends $24m to BT Leasing for Micro-, Small Enterprises (MSEs) in Romania
https://www.microcapital.org/microcapital-brief-efse-lends-24m-to-bt-leasing-for-micro-small-enterprises-mses-in-romania/

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