Joint Stock Commercial Bank for Social Development Ukrsotsbank

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MIGA has issued a guarantee of $247 million covering a $260 million shareholder loan from UniCredit Bank Austria AG (UBA) to Joint Stock Commercial Bank for Social Development Ukrsotsbank (USB) of Ukraine. The coverage is for a period of up to seven years against the risks of transfer restriction, expropriation, and war and civil disturbance. UBA is a sub-holding company of UniCredit Group of Italy. USB, Ukraine's fourth largest bank, was acquired by UniCredit through UBA in January 2008. The long-term shareholder loan is expected to provide USB with liquidity at the time of limited availability of long-term funding. This is expected to improve USB's asset-liability management. Ukraine is among the Eastern European countries hardest hit by the global financial turmoil. Economic growth averaged above 7 percent in the country between 2000 and 2007, but the global downturn has seen investors and lenders withdraw. The country's stocks, banks, and currency have all suffered. MIGA's support to the country's banking sector is part of the Bank Group's efforts to help crisis-hit countries cope with the turmoil in the global financial markets. Over the medium to long-term, World Bank Group's country partnership strategy for Ukraine places a strong emphasis on improving the environment for private sector development and identifies building financial institutions as a priority area. This project is consistent with the first pillar—sustaining growth and improving competitiveness—of the World Bank's country partnership strategy for Ukraine.

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