US/EBRD SME - ProCredit Bank Ukraine

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Formerly Microfinance Bank Ukraine, ProCredit Bank Ukraine (PCU) was established in December 2000 to provide financial services to micro and small enterprises (MSEs) in Ukraine. In 2003 EBRD participated in the capital increase of PCU for a total amount of USD 5.1 million in order to strengthen the bank’s equity base, and enable it to further expand its lending activities to MSEs in Ukraine. Due to the dynamic development of PCU’s lending operations, there may be need for near term future capital increases. EBRD plans to continue to support PCU to maintain its shareholding. EBRD also plans to provide a syndicated loan of up to USD 30 million to PCU. By providing permanent access to financial services for MSEs throughout Ukraine, the project will give direct support to private sector development. It will also have a strong demonstration effect, encouraging other Ukrainian banks to enter this market segment and follow sound banking principles. The project is expected to have a significant impact on the transition process. ProCredit Bank Ukraine will continue to provide support to MSEs that would otherwise have little or no access to formal sector finance. PCB Ukraine also supports the development of the financial sector by operating as a best practice institution committed to the principles of complete transparency and strong corporate governance. PCU was established in December 2000 by EBRD (20.0%), together with IFC (20.0%), Western NIS Enterprise Fund (20.0%), the German-Ukrainian Fund (20.0%), IMI (12.0%), and the Doen Foundation (8.0%) with a total equity capital of EUR 10.0 million (USD 9.0 million). Since the start of operations, PCU has expanded its lending activities into a total of 19 cities, and further regional expansion is planned for 2006-2007. As of March 2006 PCU had disbursed almost 84,000 loans to MSEs for a volume of nearly USD 500 million and an average loan amount of USD 5,944. The outstanding loan portfolio consisted of 32,148 loans for a total amount of USD 199.2 million. Initial investment: Equity investment of EUR 2.0 million for a 20.0% share and a senior loan of USD 9.0 million for on-lending to MSEs. The first capital increase in the amount of USD 1.0 million was accompanied by a senior loan of USD 11.0 million for on-lending to MSEs, which was partially syndicated in the commercial market. The EBRD intends to participate in the next capital increase for a total amount of up to USD 3.0 million. The EBRD also intends to provide a syndicated loan of up to USD 30 million to PCU. Total project cost will be up to USD 33 million. ProCredit Bank Ukraine will continue to carry out its operations in accordance with the EBRD's “Environmental Procedures for Micro and Small Loans”. In implementing these procedures, it will require its borrowers to comply, at a minimum, with national/local health, safety, environmental, and public consultation requirements. Over time the EBRD has supported PCB Ukraine with direct technical assistance funds provided by USAID and funds provided under the Ukraine Micro Lending Programme (UMLP). However, the USAID contract finished in October 2005. Dirk Haboeck General Manager ProCredit Bank Ukraine Prospekt Peremohy 107a 03115 Kyiv, Ukraine Phone +38 044 5901020 Fax +38 044 5901001 Email: d.haboeck@procreditbank.com.ua