The European Bank for Reconstruction and Development (EBRD) and KfW Entwicklungsbank (The German development bank) are providing a financing programme worth of approximately €28.9 million to MegaBank, a regional bank in the eastern Ukraine.
The programme envisages joint acquisition by EBRD and KfW of up to 30% of shares in MegaBank, a senior loan of an equivalent of €10.4 million from EBRD and a subordinated loan of an equivalent of €2.5 million from KfW. It will support MegaBank’s liquidity position and capital base in this period of continuing banking market turbulence in Ukraine. The other objective of the transaction is to provide MegaBank with long-term funding for on-lending to local borrowers as soon as the market stabilises.
As part of this deal, EBRD and KfW are organising a technical assistance programme in a total amount of up to $0.9 million aimed at improving MegaBank’s risk management. Through this project the EBRD intends to support to the Ukrainian banking sector. It has already provided finance to banks worth over $500 million since the beginning of the year. In this particular case, it has been reported that, the support will be provided through additional capitalisation of a medium-sized local bank of a regional importance with a potential to become a significant national player.
