MICROCAPITAL BRIEF: EBRD, EFSE, GGF lend $9 million to Bank Lviv to help Ukrainian SMEs adapt to war

The European Bank for Reconstruction and Development (EBRD), a multilateral institution, is arranging a loan package of up to 10 million euros ($10 million) for Ukraine’s Bank Lviv to support small and medium-sized enterprises (SME). The loan responds in part to the EBRD’s commitment to invest EUR 1 billion ($1 billion) this year in the Ukrainian economy to supporting private businesses, “including customers in the food security sectors and those who relocated their businesses to the western part of Ukraine” due to the Russian invasion.

The loan package has an A/B structure, with the A tranche financed by the EBRD to the tune of EUR 4.2 million (USD 4.2 million). Tranche B to date has commitments of €4.8 million ($4.9 million) funded by two public-private partnerships, the European Fund for South Eastern Europe (EFSE) and the green for growth (GGF).

Founded in 1990, Bank Lviv offers deposit, loan, insurance and payment card services. It is based in the city of Lviv and has 19 branches. As of December 2020, the bank had total assets of 4.9 billion UAH (135 million USD), a gross loan portfolio of 3.0 billion UAH (82 million USD) and deposits of customers of 2.8 billion UAH (75 million USD).

EFSE issues ‘long-term’ finance for micro and small businesses as well as households through partner retail institutions. EFSE also manages the EFSE Development Facility, which provides technical assistance, advisory services and training 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 (also known by its German acronym BMZ) and the European Commission for the EU. Its list 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 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. In 2022, the fund has a portfolio of 1.04 billion euros ($1.05 billion) committed to its 73 partner lenders, of which microfinance institutions represent around half.

GGF, founded in 2009 by the EU’s European Investment Bank and German development bank Kreditanstalt für Wiederaufbau (KfW), supports financial institutions and small businesses with the aim of increasing energy efficiency and promoting the use of renewable energies in South-Eastern and Eastern Europe. than the Middle East and North Africa. In 2022, the organization holds an investment portfolio of 1.3 billion euros (1.3 billion dollars), distributed to 63 partner institutions in the form of loans ranging in size from 1 million euros (1 .1 million) to 40 million euros ($44 million). GGF investors include the World Bank Group’s International Finance Corporation; the Netherlands Development Finance Corporation, also known by its Dutch acronym FMO; and the German bank Gemeinschaftsbank für Leihen und Schenken (GLS).

Founded in 1991 and based in the United Kingdom, the EBRD seeks to support a “transition to open market economies, while promoting sustainable and inclusive growth” in 38 countries in Central Asia, Eastern Europe and from North Africa. It does this by providing business advice, supporting trade finance, and investing debt and equity in micro and SME lenders. The institution disbursed around EUR 10.4 billion ($11.1 billion) for 413 projects in 2021. EBRD shareholders include 71 countries in addition to the EU and the European Investment Bank.

By Nithin Naren, Research Associate

Sources and additional resources

EBRD press release

Bank Lviv homepage

Bank Lviv Financial Statements

EFSE homepage

GGF homepage

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