This summary covers the expansion of operations of Joint Stock Commercial Bank for Social Development Ukrsotsbank (USB) of Ukraine, funded by a $260 million shareholder loan from UniCredit Bank Austria AG (UBA), a sub-holding company of UniCredit Group of Italy. The investor has applied for a MIGA guarantee of $247 million to cover the shareholder loan for a period of up to seven years against the risks of transfer restriction, expropriation, and war and civil disturbance.
USB, which was acquired by the Group through UBA in January 2008, is Ukraine’s fourth largest bank. UBA’s long-term shareholder loan is expected to improve USB’s asset-liability management and allow the bank to expand its operations in a prudent manner. While there is a demand for long-term loans in Ukraine, there is a shortage of local long-term funding. This loan is designed to help USB to fill the gap and improve the bank’s structural liquidity ratio. This would be MIGA’s second guarantee in support of USB.
The project is a Category FI under MIGA’s environmental review procedures.
One of the two pillars of the World Bank Group’s country partnership strategy for Ukraine is sustaining growth and improving competitiveness, which places emphasis on the need to make the country’s financial sector deeper and more stable in order to facilitate business growth and support private investment.
By supporting this project, MIGA will encourage international strategic investors to participate in Ukraine’s banking sector. The activities of foreign banks in the country are expected to help develop the financial sector with capital injections, new product development, and industry best practices in terms of sophisticated risk management techniques and improved transparency.