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NBU Welcomes IFC’s Plans to Invest in Ukrgasbank

NBU Welcomes IFC’s Plans to Invest in Ukrgasbank

The NBU welcomes the signing of a loan agreement between the Ministry of Finance of Ukraine, IFC, a member of the World Bank Group, and Ukrgasbank. The agreement comes with an option to convert loan funds into authorized capital. 

Ukrgasbank will be Ukraine’s first state-owned bank to go private. The new EUR 30 million loan lays the groundwork for the bank’s transformation by enabling IFC to have the loan converted into a stake in the bank’s capital. Since 2017, IFC has helped Ukrgasbank prepare for privatization by improving its corporate governance practices, commercializing its operations, and reducing government participation in its decision-making. Good corporate governance, professional activities, and a focus on sustainable financing will make Ukrgasbank an example for the future privatization of Ukrainian banks.

Ukraine has one of the world’s most energy-intensive economies, in part due to a massive industrial base powered by largely outdated production technologies. Over the past 20 years, the country has joined a number of global climate initiatives as it seeks to increase energy efficiency in various sectors of the economy and raise the share of renewable energy sources in the energy balance from 8% to 17% by 2030. By providing financing for the modernization of Ukrainian businesses, the IFC loan will bring Ukraine closer to achieving that goal. This will reduce energy consumption and mitigate its impact on the environment.

President of Ukraine Volodymyr Zelenskyy emphasized that the reform of the public banking sector is one of the key prerequisites for strengthening the stability of Ukraine’s financial system and increasing its credit and investment potential.

"We remain committed to our goal of creating a reliable and competitive banking system that will be mainly privately owned and that will allow public sector banks to become effective market participants," said the President of Ukraine.

The Prime Minister of Ukraine Denys Shmyhal: "The signed agreement is an example of successful reform of the public banking sector. For the first time, a successful Ukrainian state-owned bank will have an international partner. This is the best indicator for increasing confidence on the part of international investors. I am confident that the partnership with IFC will accelerate the implementation of the world's best practices in banking governance".

"The signing of this agreement is the result of effective cooperation between Ukrgasbank, the government, as represented by the Ministry of Finance, and International Finance Corporation. This event comes as a true victory for the entire banking sector. The goal that we should pursue jointly with the government in the coming years is to continue to adopt best practices in corporate governance. This will raise the investment attractiveness of our state-owned banks and create opportunities for quality investors to participate in the capital of these banks. I am confident that we will succeed," said NBU Governor Kyrylo Shevchenko. 

"We are grateful to IFC for its long-term partnership and appreciate its decision to become our investor. IFC’s participation in the bank's capital will be the first time an international financial institution has acquired a stake in a Ukrainian state-owned entity. This step comes as a key milestone in privatizing Ukrgasbank and curtailing the government’s share of the banking sector. We are confident that this partnership will help us adopt the world’s best practices and make the bank even better," said Andrii Kravets, Chairman of Ukrgasbank’s Board. 

"The withdrawal of the state from the capital  of Ukrgasbank and, if possible, the transfer of a minority stake to one of the international financial institutions is one of the tasks of the Ministry of Finance under the implementation of the strategy of reforming the  state-owned banking sector. Today we have taken one of the key steps to achieve this goal. In addition, the implementation of this transaction is a fulfillment of one of Ukraine’s obligations under the joint with the IMF Stand-By Program. "It will be a strong signal to all investors that the country is fulfilling its obligations to reform Ukraine's banking sector and building a sustainable banking model based on the best international practices", - noted the Minister of Finance Sergii Marchenko during the signing ceremony of the tripartite agreement.

Stephanie von Friedeburg, Interim Managing Director and Executive Vice President at IFC said, "Over the past few years, IFC has been supporting Ukrgasbank’s aspirations by helping it lead the way in the green finance sector. Ukrgasbank will set an example for other state-owned banks that are planned for privatization. This investment is a key stepping stone in our partnership that paves the way for Ukraine’s green future."

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