Joint Stock Commercial Bank Raiffeisenbank Ukraine

MIGA has issued an $18.1 million guarantee to Raiffeisen Zentralbank Österreich AG of Austria covering its subordinated shareholder loan to Joint Stock Commercial Bank Raiffeisenbank Ukraine (RBUA). The guarantee, for a period of up to seven years, provides coverage against the risks of transfer restriction and expropriation.

The subordinated loan is part of a larger funding package RZB is providing to strengthen RBUA’s capital base to position it for growth. The loan is specifically meant to increase RBUA’s Tier II capital to help the bank expand its domestic loan portfolio, especially in the small and medium-size enterprise sector. RBUA is by far the largest international bank in Ukraine and also has the largest portfolio of local lending clients. It is ranked first in total assets per employee, a measure of operating efficiency.

This project will help to strengthen a major banking player in Ukraine and support the stability of the financial sector in a time of uncertainty. MIGA’s coverage also sends a positive message to the market about the World Bank Group’s support for Ukraine. RBUA plays an important role in developing Ukraine’s financial sector by providing know-how, technical solutions, and new products. Foreign bank involvement in Ukraine has been modest, especially in comparison with other transition economies. RZB’s continued support for its subsidiary will provide a model in the sector for corporate governance and anti-money laundering.