Ukraine will receive support from the EBRD in transforming the Oschadbank and 50 million Euros for the development of Ukrainian business

posted 28 November 2016 12:31

Minister of Finance Oleksandr Danyliuk, EBRD managing director for Eastern Europe and the Caucasus Francis Maleage and Oschadbank board chairman Andriy Pyshny have signed a Memorandum of Understanding stipulating support to the Oschadbank for the improvement of corporate management on November 25. Also, an agreement on joining the trade support program was signed enabling the Oschadbank to receive 50 million Euros from the EBRD for the support of Ukrainian business.

Why is it important?

The Memorandum of Understanding is one of the first steps in the systemic reform of the state-owned banks which is being implemented by the Government of Ukraine with the support of the EBRD and other international partners.

Also, this is one of the key reforms in the financial sector which shall improve the effectiveness, profitability and transparency of the state-owned banks. The state-owned banks shall be released from political influence and will be operating as purely profit-oriented businesses.

What’s the advantage?

The Oschadbank will receive a comprehensive package of technical aid from the EBRD which at the first stage will be used for the development of credit supply to micro, small and medium-sized business as well as for centralization and optimization meant to increase the operational effectiveness of the Oschadbank network, risk management and compliance.

These objectives are crucial for the further successful transformation of the Oschadbank. This also has a positive impact on the bank capitalization and its attractiveness for investors.

One of the key elements in the reform of the state-owned banks is the sale of the minority share package of the Oschadbank and the Ukreximbank by the middle of 2018. The state will remain the major shareholder and at the same time receive more transparency and effectiveness in the management of these banks.

“Our key goal is to make the state-owned banks effective and transparent. This means delivering better services for the customers as well as saving billions of hryvnas of taxpayers’ money now spent annually to recapitalize these banks. The state will be able to use the saved funds for economic development.

The signing of the Memorandum is a positive sign for international investors and a significant proof that the Oschadbank is changing.

The agreement on participation in the trade support program will give small and medium-sized business access to loans at each of more than 4 offices of the Oschadbank”, Minister of Finance Oleksandr Danyliuk said during the signing ceremony.

What’s next?

The signing of the Memorandum is the first step where the parties have declared their further intentions and steps. The next steps include:

1.              The Government shall approved and the Parliament shall adopt the reform of the state-owned banks (draft law on changes in the corporate management of the state-owned banks);

2.              New supervision boards shall be established which shall consist of independent directors and state representatives;

3.              Internal processes and effectiveness of the management of the state-owned banks shall be improved.