EBRD Ready To Help Ukraine

KIEV, Ukraine -- The European Bank for Reconstruction and Development is in talks to help recapitalize Ukraine’s banks and is ready to invest a total of 500 million euros in the country, EBRD’s president said on Feb. 17.

EBRD President Thomas Mirow. Chornobyl gets 135 million euro grant, banks will get 500 million euros.

Ukraine’s banks have been hit by the global credit crunch as its hryvnia currency plummeted, with three banks put in receivership last week, including the country’s seventh largest, Nadra Bank.

"We are in negotiations with a number of banks. The names I wouldn’t like to mention before the agreements have been found,"EBRD President Thomas Mirow told a news briefing.

“The sum that is available in principle is high, meaning something like 500 million euros ($639.7 million), which we would be ready to invest in Ukraine.”

There are over 180 banks operating in Ukraine, many of the larger ones foreign owned. The EBRD has said previously it is likely to focus on banks with which it already has relations.

These include a unit of Hungary’s OTP Bank, Raiffeisen Bank Aval, a unit of Raiffeisen, UkrSibbank, majority owned by BNP Paribas and Ukrsotsbank, owned by UniCredit.

Other banks it works with include Kreditprombank, Forum, Ukreximbank, Prosto Finance Ukraine — a consumer finance arm of Societe Generale, Megabank, Procreditbank, International Mortgage Bank, Kredo Bank and SEB Bank’s unit .

Ukraine’s largest bank is privately owned Privatbank, but is then followed by Raiffeisen, UkrSibbank and Ukrsotsbank.

The country’s No.5 bank, Prominvestbank, was bought by Russian state-controlled VEB bank after spending several months in receivership. Officials said a run on its deposits in October was unconnected to the financial crisis.

Three other banks were placed in receivership last week — Nadra, Bank Kyiv — the country’s 39th largest bank, and Zakhidinkombank, No.72 in the country. Analysts have said that the financial crisis should spark consolidation in the sector.

Chornobyl grant signed

While visiting Kyiv on Feb. 17, Mirow signed an agreement with Yulia Tymoshenko, Ukraine’s Prime Minister, allocating 135 million euros as a grant from the EBRD’s 2008 dividends to fund construction of a new shelter over the decommissioned Chornobyl Nuclear Power Plant, site of the world’s worst nuclear disaster in 1986.

The international community has been involved in the transformation of Chornobyl since the 1990s and appointed the EBRD as administrator of its funds. The EBRD is overseeing the Nuclear Safety Account, through which the nuclear decommissioning of Chornobyl reactors 1-3 is being financed, and the Chornobyl Shelter Fund which deals with the damaged reactor 4.

A major milestone was achieved in September 2007 with the signing of two key contracts, one for the construction of the confinement structure that will be built over reactor 4, the second for the completion of a spent fuels storage facility.

The EBRD grant will be used to support the completion of these two key projects which are currently in preparatory stages with design work nearing completion. Upon completion, the confinement will be the largest such project in the history of engineering.

Final designs for both projects are scheduled in 2009 and completion of the construction works is currently planned for 2012. Further contributions, however, remain essential, according to the EBRD, which said preliminary estimates put the total cost for the new shelter alone in excess of 600 million euros.

“The EBRD grant is therefore seen as a catalyst that will give additional momentum to the efforts of the international donor community,” the EBRD said in a statement.

The Chornobyl Shelter Fund has so far received contributions and donations of almost $800 million from Austria, Belgium, Canada, Denmark, European Community, Finland, France, Germany, Greece, Iceland, Ireland, Israel, Italy, Japan, Korea, Kuwait, Luxemburg, the Netherlands, Norway, Poland, Portugal, Russia, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Ukraine, the United Kingdom, and the United States.

The Nuclear Safety Account has received contributions close to 300 million euros from Belgium, Canada, Denmark, European community, Finland, France, Germany, Italy, Japan, the Netherlands, Norway, Russia, Sweden, Switzerland, the United Kingdom and the United States.

The EBRD, owned by 61 countries and two intergovernmental institutions, is supporting the development of market economies and democracies in countries from central Europe to central Asia.

Source: Kyiv Post