MIGA Supports Ukrainian Financial Sector Resilience with New Guarantee
Washington, Jan. 12, 2023 – The Multilateral Investment Guarantee Agency (MIGA) issued a guarantee of 100 million euros (approximately $106.76 million) to Raiffeisen Bank International AG (RBI) to cover equity investments in its subsidiary, Raiffeisen Bank Joint Stock Company (RBUA) in Ukraine, against the risk of expropriation of funds with respect to the mandatory cash reserves held at Ukraine’s central bank - National Bank of Ukraine. The period of coverage is one year and one day.
Local banking regulations mandate that RBUA maintain mandatory reserves with the National Bank of Ukraine to have operations in the country. MIGA’s capital optimization guarantee will reduce the risk weight applicable to those reserves on the level of RBI Group according to European banking regulations to zero, freeing up funds that RBUA can use to expand local lending to individuals, small businesses, and corporate clients in critical industries and increase the volume of essential non-credit banking operations (e.g. payments, cash, merchant acquiring, FX transactions, etc.).
The additional RBUA lending enabled by MIGA’s guarantee will bolster employment and stimulate economic activity at a time when conflict and instability threaten the Ukrainian economy, businesses, and individual and family livelihoods.
“MIGA’s guarantee will increase the World Bank Group’s humanitarian and economic support for Ukraine at a time when the ongoing war presents a major threat to the health and welfare of the Ukrainian people,” said Hiroshi Matano, Executive Vice President of MIGA. “At this time of conflict compounded by economic stress and the lingering impact of COVID-19, it is critical to enhance access to credit for the people of Ukraine.”
By alleviating lending constraints and accelerating liquidity, MIGA’s capital optimization product has been an effective and widely deployed tool in the region that has helped to counter factors such as war, rising commodity prices, surging inflation and interest rates, and slowing economic growth.
RBI is a major banking and financial services group based in Austria, and its subsidiary RBUA is the largest private bank in Ukraine and the largest bank with foreign capital in terms of total assets and loan volume.
“MIGA’s guarantee is a valuable component in our measures to optimize our portfolio structure,” said Thomas Matejka, Chief Financial Officer at RBUA. “It enables us to balance risk considerations with continued credit assistance for our customers, in times where the Ukrainian economy needs all available support.”
MIGA was created in 1988 as a member of the World Bank Group to promote foreign direct investment in emerging economies by helping mitigate the risks of restrictions on currency conversion and transfer, breach of contract by governments, expropriation, and war & civil disturbance; and offering credit enhancement to private investors and lenders.
Since its creation, MIGA has issued nearly $70 billion in guarantees across 122 developing countries in support of nearly 1,000 projects.
About Raiffeisen Bank International AG
RBI regards Austria, where it is a leading corporate and investment bank, as well as Central and Eastern Europe (CEE), as its home market. Twelve markets of the region are covered by subsidiary banks. Additionally, the RBI Group comprises numerous other financial service providers, for instance in leasing, asset management, or M&A.
Around 44,000 employees service more than 17 million customers through approximately 1,700 business outlets, by far the largest part thereof in CEE. RBI's shares are listed on the Vienna Stock Exchange. The Austrian regional Raiffeisen banks own around 58.8 percent of the shares; the remainder is in free float. Within the Austrian Raiffeisen Banking Group, RBI is the central institute of the regional Raiffeisen banks and other affiliated credit institutions.
Elizabeth Howton, (202) 458-5922, email@example.com
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