The European Investment Bank (EIB) and the European Investment Fund (EIF) – jointly the EIB Group – have signed a guarantee agreement with Oschadbank to support EUR 50m of lending to small and medium-sized enterprises (SMEs) in Ukraine made possible with European Union support through the EU4Business initiative.

This agreement will enable Oschadbank to facilitate access to finance for local SMEs by providing a 70% guarantee on each loan, and subsequently extend financing on favourable terms, including with reduced collateral requirements. This guarantee transaction is expected to unlock additional financing for small and medium-sized businesses and ultimately to sustain jobs and new business opportunities in Ukraine. The guarantee is funded by the European Union through the Neighbourhood Investment Facility under the EU4Business initiative.

The EIB Group joins forces with the European Union to strengthen economic development in the countries that have signed Association Agreements with the EU – namely Georgia, Moldova and Ukraine – by providing financial and technical support targeted at SMEs in these three countries. The EU supports private sector development in the Eastern Partnership countries through its EU4Business initiative by enhancing access to finance for SMEs, improving the business environment and providing advisory services to local businesses.

Oschadbank is a universal banking institution providing a wide range of financial products and services in Ukraine, including retail and corporate banking services, domestic and foreign currency transfers and currency exchange. The bank operates domestically through 23 regional branches and over 4 000 operational outlets spread across the country.

Ambassador Hugues Mingarelli, Head of the EU Delegation to Ukraine, said: “SMEs are the cornerstone of the Ukrainian economy. Today they need better access to affordable and long-term finance in order to continue to grow, to export to the European market and create new jobs across the country. Contributing to improved conditions for access to finance is one of our main priorities under the EU4Business initiative. I am pleased that today we are delivering on this priority.”

Bruno Denis, Head of the EIB Representation in Kyiv, stated: “Support for SMEs is one of the EIB Group’s priorities, as by financing them we are boosting economic growth, innovation and employment. We are confident that this guarantee agreement will support Oschadbank, unlocking additional financing for SMEs and intensifying the bank’s efforts to make a sustainable contribution to the economic, social and environmental development of the country.”

Martins Jansons, Senior Structured Finance Manager at the EIF, noted: “SMEs continue to be drivers of economic growth and in this vein the guarantee will unlock some EUR 50m in loans for hundreds of SMEs in Ukraine. Facilitating access to the finance that small businesses need to innovate and expand is key to boosting investment, employment and growth throughout Ukraine.”

Andriy Pyshnyy, Chairman of the Management Board at Oschadbank, noted: “It is quite logical for Oschadbank to sign this agreement under the EU4Business initiative, since support for SMEs is the priority for our bank's development. Our bank recently announced the launch of its large-scale support programme for small and medium-sized businesses nationwide, both consulting and financial. The key goal of the programme is to assist SMEs at various stages of their business activity. By the end of 2020 Oschadbank intends to be among the top three Ukrainian banks in small business servicing by loan portfolio size.”