The FINANCIAL -- IFC, a member of the World Bank Group, the Ministry of Finance of Ukraine, and Ukrgasbank signed a Memorandum of Understanding on November 15 that will help set the stage for the privatization of Ukrgasbank, Ukraine’s fourth-largest lender.
The partnership is a key component of IFC’s strategy to establish a transparent and competitive process for the privatization of the country’s state-owned banks, to increase credit growth and significantly reduce the high number of non-performing loans.
As pre-privatization support, IFC will help Ukrgasbank strengthen its corporate governance, ensure its operational autonomy, and refine its commercially-driven banking model.
The MOU is part of a larger effort by Ukraine’s government, which controls more than half the country’s banking sector, to reform and strengthen state-owned banks before their eventual privatization. The signing was attended by the World Bank Group President Jim Yong Kim, who is on his first visit to Ukraine this week, and Ukrainian Prime Minister Volodymyr Groysman, according to IFC.
“This partnership is a strong signal that Ukraine is seriously committed to attracting private investments in the banking sector and transforming Ukrgasbank,” said Finance Minister Oleksander Danyliuk at the signing ceremony. “We are working to create conditions that will support banking sector development, and large-scale renewal of financing to businesses large and small, supporting economic growth.”
Kyrylo Shevchenko, CEO of Ukrgasbank, said, “Over the past year, Ukrgasbank has made significant progress towards becoming a more efficient, transparent, and innovative banking institution, also becoming Ukraine’s first bank to offer green financing. This partnership will help further strengthen the bank’s market position and boost its investment attractiveness.”
“IFC is committed to supporting fundamental reforms in Ukraine’s banking sector,” said Tomasz Telma, IFC’s regional director for Europe and Central Asia. “The successful transformation and eventual privatization of Ukrgasbank will be an important achievement for the country’s banking industry, and help underscore Ukraine’s investment potential for international investors.”
In September, IFC provided Ukrgasbank with a $20 million trade finance guarantee. Since the start of the partnership in May 2016, Ukrgasbank has financed green projects worth over 5 billion hryvnias ($200 million) and developed a robust pipeline of projects worth a total of 12 billion hrvynias ($440 million).