The European Bank for Reconstruction and Development (EBRD) is extending an unfunded portfolio risk-sharing facility to Ukraine’s OTP Leasing to unlock €80 million of new leasing finance for Ukraine’s business sector amid the ongoing war waged by Russia.
The EBRD’s facility will cover up to 50 percent of OTP Leasing’s credit risk on new leasing finance worth €80 million to businesses operating in Ukraine. This credit enhancement mechanism enables OTP Leasing to finance the agribusiness sector and other critical industries, such as manufacturing, transport and logistics, supporting company operations and preserving access to critical goods as a vital step in safeguarding people’s livelihoods.
Total enabled financing under similar EBRD guarantees signed since the start of Russia’s war on Ukraine amounted to close to €900 million at end 2023.
This agreement between the EBRD and OTP Leasing is an extension of a cooperation in support of Ukrainian businesses that began in 2022. One element of the facility is a programme to enhance the competitiveness of micro, small and medium-sized enterprises (MSMEs) in the European Union’s (EU) Eastern Partnership countries.
Up to 27.5 per cent of the risk-shared loans will support private MSMEs’ long-term investments in EU-compliant and green technologies, improving their competitiveness on domestic and foreign markets. Eligible sub-borrowers will also receive EU-funded technical assistance and investment incentives upon completion of their investment projects under the bloc’s EU4Business initiative.
The EBRD facility will be supported by first-loss risk cover funded by the United States of America through the EBRD Crisis Response Special Fund donors to which include the United States, France, Canada, Italy, Japan, Norway, Switzerland, the United Kingdom, Germany, the Netherlands and Denmark) as part of the Bank’s resilience package arrangements.
LLC OTP Leasing is a fully owned subsidiary of OTP Bank Plc, a leading regional financial group headquartered in Hungary. Established in 2008, OTP Leasing has become the market leader in Ukraine in providing leasing finance and operating leases, as well as car-fleet management services. It had around a 41 per cent share of the country’s leasing portfolio as at end 2023.
The EBRD has deployed more than €4.1 billion in Ukraine since the start of Russia’s full-scale war in February 2022. As well as supporting the private sector, its strategic priorities in the country are to support energy and food security and maintain critical infrastructure.
