The European Union and the European Bank for Reconstruction and Development (EBRD) are backing food security and other key industries in wartime Ukraine through a new risk-sharing agreement in favour of KredoBank, a subsidiary of PKO Bank Polski. This arrangement will also broaden technical know-how and offer investment incentives to qualifying businesses.
A risk-sharing agreement was formalised between the EBRD and KredoBank on 26 July 2023, whereby the EBRD commits to a €25 million guarantee.
This covers 50% of the credit risk for new financing provided by KredoBank, up to an overall value of €100 million and a portfolio cap of 50%. The facility is to be delivered in two equal tranches.
This risk-sharing facility enables KredoBank to extend financing to Ukrainian firms engaged in essential industries, including primary agriculture and agricultural services, food processing, transport and logistics, retail, and pharmaceuticals.
It will also contribute to securing food safety and maintaining livelihoods in Ukraine, where vital economic sectors were profoundly affected by Russia’s invasion last February.
Furthermore, as an aspect of the EU’s SME Competitiveness programme (EaP SMEC), €15 million of the overall €100 million covered portfolio will be open to micro-, small- and medium-sized enterprises (MSMEs) to buy greener technologies and equipment. This aids Ukrainian MSMEs in adhering to EU technical and sanitary norms.
Joining the EaP SMEC programme will also result in KredoBank and its customers gaining access to expert advice through training and support from consultants. Eligible borrowers may obtain grant aid in the form of investment incentives when their investment projects are completed.
The EBRD’s facility will be augmented by a 50% donor-funded first-loss risk cover within the Bank’s resilience package arrangements. The current risk-sharing facility raises the aggregate volume of financing facilitated to €468 million under similar guarantees since the war’s commencement.