Shareholders of Ukraine’s Megabank have increased their stakes on a pro-rata basis, injecting much-needed liquidity into the organisation and showing confidence in the country’s eventual recovery.

The new capital includes €1.8mn (UAH43mn) from the European Bank for Reconstruction and Development (EBRD), KfW and the International Finance Corporation (IFC), which together hold a 36% stake in the bank.

The majority shareholder (at 61%) is Megabank founder Viktor Subotin, and the remaining 3% is held by 240 legal entities and individuals including residents and non-residents.

Anton Usov, senior advisor for external affairs at the EBRD, tells GTR: “Megabank principal shareholders approached all other shareholders last year saying that because the situation in the country is so difficult, they needed more liquidity to support their clients and continue lending operations, and they suggested increasing capital. We had negotiations and eventually all shareholders decided to increase their stakes on a pro-rata basis.”

The funds will be used across the bank’s operations, including small business funding, energy and efficiency lending, and trade finance – a segment largely supported by the EBRD’s trade facilitation programme (TFP).

The EBRD increased its TFP limit for Megabank by US$4mn in December 2014.

“Last year we were very ambitious with trade finance because in current circumstances where lending is almost non-existent in Ukraine this is pretty much the only tool which allows us to support cross-border trade,” adds Usov.

He explains that despite the geopolitical turmoil in the region, there is “quite a lot of trade still going on”, including to and from Russia.

In terms of outlook, the Minsk ceasefire agreement has provided relief, and Usov believes with the financial commitment of organisations such as the EBRD, KfW, the IFC or even the International Monetary Fund – which recently granted a US$17.5bn bailout programme to the troubled country – investor confidence could soon start to pick up.

“The [Megabank capital increase] signing was very important politically – to show the rest of the world that financial institutions still trust Ukraine. The IMF facility is very good news because that’s confidence for investors and rating agencies.

“But having said that, 2015 will be a very difficult year because we still forecast GDP at -5% for this year, and next year is a big question. There are big problems with the national currency, which is not stable at all. It’s going to be a difficult year but our financial commitment is there, and if the reforms are there and there is no conflict, Ukraine will eventually make it through, but it will be a bumpy ride,” he adds.

EBRD support to Ukraine amounted to around €300mn in 2014 – most of which formed part of the TFP.

As a part of a broader support package to Megabank, KfW also provided it with a US$4.75mn, seven-year subordinated debt facility last December.