OREANDA-NEWS. August 20, 2009. The European Bank for Reconstruction and Development and KfW Entwicklungsbank (The German development bank) are providing a financing programme worth up to EUR28.9 million to MegaBank - one of the strongest regional banks in the eastern Ukraine, reported the press-centre of EBRD.

The programme envisages joint acquisition by EBRD and KfW of up to thirty per cent of shares in MegaBank, a senior loan of an equivalent of EUR 10.4 million from EBRD and a subordinated loan of an equivalent of EUR 2.5 million from KfW. It will support MegaBank’s liquidity position and capital base in this period of continuing banking market turbulence in Ukraine. The other objective of the transaction is to provide MegaBank with long-term funding for on-lending to local borrowers as soon as the market stabilises.

As part of this deal, as well EBRD as KfW are organising a technical assistance programme in a total amount of up to US0.9 million aimed at improving MegaBank’s risk management.

Through this project the European Bank is continuing its support to the Ukrainian banking sector. It has already provided finance to banks worth over US 500 million since the beginning of the year. In this particular case the support will be provided through additional capitalisation of a strong medium-sized local bank of a regional importance with a strong potential to become a significant national player.

KfW?s commitment is part of the bilateral German-Ukrainian Financial Co-operation which started in 2003. KfW is realizing the investment in Megabank on behalf of the German Federal Government within the framework of a EUR30 million “Ukrainian Banks Assistance Programme”, which is being implemented in 2009. The Programme’s objective is to support medium-sized Ukrainian banks mainly involved in SME lending. In addition to the equity investment, KfW will continue supporting the Ukrainian banking sector through further refinancing lines as well as technical assistance, especially in the field of anti-crisis measures.