LONDON, ENGLAND — The European Bank for Reconstruction and Development (EBRD), KfW, the German development bank on behalf of the German Ministry for Economic Cooperation and Development, and the International Finance Corporation (IFC) said on March 17 they are participating in a €1.8 million ($2.66 million) equity deal with Ukraine’s MEGABANK, one of the key regional banks in the eastern Ukraine.
The international financial institutions, which already hold stakes in MEGABANK, have decided to participate in a pro rata capital increase thus keeping their collective stake in the bank at a level of 36%.
The project shows that international financiers remain committed to Ukraine and are ready to support good businesses, like MEGABANK, in extremely adverse geopolitical and macroeconomic situation, the groups said. It is expected that the agreed capital increase will help MEGABANK to boost its capital base and strengthen stakeholders’ confidence. Additional resources will also help the bank remain an important provider of SME finance in the region.
As a part of a broader support package to MEGABANK, KfW has recently provided it with a $4.75 million subordinated debt facility and the EBRD correspondingly increased its Trade Facilitation Program limit for MEGABANK by $4 million in December 2014.
By making this equity investment, the EBRD is continuing to support Ukraine’s banking sector, which attracted over €300 million from the bank in 2014.