By KYIV. Dec 16 (Interfax-Ukraine) – The Multilateral Investment Guarantee Agency (MIGA) plans to provide guarantees in the amount of up to EUR50 million for the additional capitalization by Raiffeisen Bank International AG (RBI) of its Ukrainian subsidiary Raiffeisen Bank.
The purpose of the proposed MIGA guarantee is to help RBI mitigate risk on some of its assets, resulting in a reduction in RBI’s risk-weighted assets (RWA) on a consolidated basis. The released RWA is expected to help Raiffeisen Bank maintain lending, thereby supporting employment and economic activity in a country at war, the agency said.
According to the report, RBI has submitted an appropriate application to the agency to cover the risks of expropriation of funds, which is necessary to cover the mandatory cash reserves for a period of one year and one day.
The MIGA Board of Directors will consider this project on December 20, the agency points out.
It clarifies that the matter concerns the use of additional capitalization, in particular, retained earnings of the bank.
As of September 2022, Raiffeisen Bank’s loan portfolio included retail loans – about 10%, loans to large/medium corporations – 78% and loans to small and medium businesses – 12%. The portfolio of large/medium corporations is dominated by short-term working capital and trade finance loans with a limited number of long-term project finance loans. The main supported sectors include wholesale and retail trade, agriculture (agribusiness, livestock and crop production) and food and beverage production.
Raiffeisen Bank in terms of assets (UAH 169.19 billion) as of the end of October ranked fourth among all 67 operating Ukrainian banks. Its net profit for the ten months of this year amounted to UAH 2.51 billion.
