IFC, a member of the World Bank Group, will provide US$20mn in financing to Megabank, a leading commercial bank in Ukraine’s Kharkiv region, to help the bank increase access to finance for small and medium businesses.
IFC’s financing consists of a US$10mn subordinated loan and a US$10mn convertible senior loan, giving IFC an option to acquire equity in the bank. It provides the bank with liquidity and strengthens its capital base, while increasing the availability of banking services and financial products in a frontier region of a country hard hit by the global financial crisis.
“IFC’s investment comes at a challenging time for the Ukrainian banking sector,” says Olena Zhukova, CEO of Megabank. “This financing will help Megabank improve its stability, despite the financial crisis, and enable us to increase our lending to small and medium businesses. IFC’s funding is a strong indication of support and will increase the confidence of clients and depositors.”
IFC has worked with Megabank in Ukraine since 2005, when it provided the bank with advisory services to help align the bank’s corporate governance practices with international standards.
Jyrki Koskelo, IFC vice-president, comments: “As part of our regional crisis-response initiatives, IFC is pleased to expand our partnership with Megabank to help restore confidence in Ukraine’s banking sector. Our investment in Megabank should boost access to finance for local enterprises, helping preserve jobs, and contributing to the economic recovery in Ukraine’s frontier regions.”
IFC, through its crisis-response initiatives in sectors including banking, infrastructure, and trade as well as through its traditional investment and advisory services, is expected to contribute up to €2bn to Central and Eastern Europe.
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