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EBRD, Aval Bank to finance Ukrainian agribusiness sector
The European Bank for Reconstruction and Development is extending a $10
million credit line to Aval Bank for financing local agribusiness companies.
The deal is part of a pilot project to help speed up development of a
warehouse receipts system in Ukraine. The key such a system will be the
ability to use agricultural commodities stored in warehouses as collateral.
Ukraine is preparing legislation which will allow farmers, processors and
traders in the agribusiness sector to borrow working capital from local banks
using the warehouse receipts system. Hans Christian Jacobsen, the EBRD's
Director for Agribusiness, said the legislation will be vital to Ukraine's
agribusiness sector because it will allow more efficient, and therefore
cheaper, financing. The joint EBRD-Aval Bank initiative will provide both
parties with useful working experience crucial for introduction of the system.
Since 1998, the EBRD has helped set up warehouse-receipt financing in 10
countries. The choice of Aval Bank for piloting the system in Ukraine is not
surprising because it has the highest exposure in the agribusiness sector
among Ukrainian banks, Mr Jacobsen said.
Serhiy Vovchenko, Deputy Chairman of the Management Board of Aval Bank, said
the scheme would aid further development of the Ukrainian agribusiness sector.
He expressed hope that the EBRD's support would help to establish a legal and
institutional framework enabling further expansion of lending against
agricultural commodities.
Aval Bank has been working with the EBRD under SME lines of credit and the
Trade Facilitation Programme since 1995. It intends to increase lending to
producers and traders in the agricultural sector with the assistance of EBRD
loan resources. Aval Bank's strong presence in the Ukrainian market has been
developed through prudent lending procedures and sound business judgement.
Aval Bank has assets of around UAH 6.7 bln.
The EBRD has signed over 174 projects worth €3 billion to assist the
agribusiness sector throughout central and eastern Europe and the Commonwealth
of Independent States. In Ukraine, the EBRD's cumulative investments stand at
€1.4 billion through 57 projects.
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