The European Bank for Reconstruction and Development (EBRD) is supporting food security and critical industries in Ukraine by opening a Trade Facilitation Programme (TFP) limit for guarantees and cash advances to enhance KredoBank's product offer and has entered into a new risk-sharing agreement with the Ukrainian bank.

Instruments issued or guaranteed by participating banks in the TFP may be secured by guarantees issued under the TFP. These include documentary letters of credit (L/Cs); trade-related standby L/Cs from issuing banks; deferred payment L/Cs, and L/Cs with post-financing advance payment bonds.

Export and import support

The EBRD has opened a limit of up to EUR 25 million (US$27 million) for KredoBank, a subsidiary of PKO Bank Polski, available under the TFP. By participating in the programme, the Ukrainian bank will be able to step up support to Ukrainian exporters and importers.

The TFP will equip KredoBank with an important financial instrument which will strengthen its expertise in trade finance and address an increased demand from local businesses to support foreign trade.

Risk sharing agreement

Under the risk-sharing agreement for KredoBank, the EBRD provides a EUR 25 million unfunded risk-sharing instrument, which covers 50 per cent of the credit risk of newly originated financing provided by KredoBank up to a total value of EUR 100 million, subject to a portfolio cap of 50 per cent.

The EBRD's facility is provided in two equal tranches and is designed to help KredoBank to provide access to finance for Ukrainian companies operating in critical industries such as primary agriculture and agricultural services, food processing, transport and logistics, retail and pharmaceuticals.

It also aims to help safeguard food security and preserve livelihoods in Ukraine, where core economic sectors have been severely impacted by Russia's invasion last February.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.