The European Bank for Reconstruction and Development (EBRD) has agreed to a risk-sharing agreement with Ukraine’s state-owned Ukreximbank to provide €40mn of new financing for local businesses.

The €10mn unfunded portfolio risk-sharing agreement will cover up to half of Ukreximbank’s credit risk on new loans collectively worth €40mn to private sector companies in Ukraine.

The risk-sharing instrument is subject to a 50% portfolio cap, an EBRD spokesperson says, and half of any potential losses incurred by EBRD will in turn be covered by a first loss risk cover provided by the US through the bank’s Crisis Response Fund.

The EBRD says the facility will allow Ukreximbank to boost its lending capacity to clients in the agriculture, manufacturing, construction, transport and pharmaceutical industries.

Up to 20% of the loans provided under the agreement will go to “long-term investments in EU-compliant and green technologies” by MSMEs, according to the bank.

The EBRD, a multilateral lender headquartered in London, says it has deployed €4bn in Ukraine since Russia’s February 2022 invasion, including €900mn through guarantees to lenders.

In June last year the bank announced a €50mn loan to Ukreximbank, half of which was also covered by the Crisis Response Fund.