Risk Sharing Framework

Location:

Regional

Project number:

47421

Business sector:

Manufacturing and Services

Notice type:

Private

Environmental category:

FI

Approval date:

08 Apr 2015

Status:

Approved

PSD disclosed:

13 Mar 2015

As permitted by paragraph 2.6 of Section III of the Access to Information Policy, disclosure of this PSD was deferred in accordance with paragraph 1.4.4 of the Directive on Access to Information.

Project Description

The EBRD will create the "Risk Sharing Framework" (RSF) to share risk on Partner Financial Institutions' (PFIs) loans to local companies. The RSF will be modelled on the success of the "Medium-Sized Co-Financing Facility" which it will replace.

Project Objectives

Under the RSF, the Bank will participate in the risk of loans by local PFIs to local companies, with the EBRD's risk participation possible on a funded basis similar to a syndicated loan, or an unfunded basis similar to a guarantee depending on the needs of the PFI.

Under either approach, EBRD's risk participation is an unconditional and irrevocable obligation designed to allow the partner financial institution to achieve capital relief, fully consistent with the rules of the Basel Capital Accord.

Eligible loans will be denominated in local currency or foreign exchange, with EBRD's risk participation capped at EUR 25 million. Maximum tenor can go up to 10 years for corporate loans and 15 years for project finance.

The RSF will provide the EBRD with an integrated instrument covering all countries of operations to meet the growing business needs of local small and medium-sized enterprises, currently not sufficiently supported by other financing sources. The Bank's proceeds will be used for financing acquisitions, expansion, loans to NBFIs and working capital purposes, as well as restructuring of existing exposures and refinancing.

Transition Impact

ETI score: null

Transition impact is expected in the following key areas:

  • Support competitiveness. The RSF will facilitate access to finance for SMEs and help improve standards, including within value chains. The framework will co-finance SMEs or commit PFIs to expand their SME lending, thus broadening access to credit. Supported by advisory services, a number of companies will also be able to improve their operational standards and business skills. As a result, the framework will contribute to business growth and competitiveness.
     
  • The RSF contributes to strengthening the Resilience of banks and companies. Through the framework the EBRD will assist PFIs in establishing a prudent approach in their portfolio risk diversification and managing larger and longer-term facilities. The provision of guarantees can help banks manage their client and sector exposures and use capital relief to free up capital for other lending activities. In addition, RSF financing can help close an existing financing gap in local currency, helping to improve the resilience of sub-borrowers against financial shocks and currency volatility.
  • Loans under the RSF can also contribute to the Green Economy Transition by supporting the adoption of green technologies and improving climate disclosures at the corporate level. This can be achieved by financing green investments specifically, but also by working with clients to improve environmental standards and reporting related to climate risks and environmental performance.
  • Loans can also target Inclusive objectives by providing access to employment and skill development opportunities for target population groups such as women, young people or disabled persons. This can be achieved by introducing better HR standards and practices that support the integration of such target groups, as well as the introduction of workforce training programmes.

Client Information

Partner Financial Institutions: Local private banks and leasing companies in all EBRD countries of operations.

Local companies: Local private enterprises operating in all EBRD countries of operations.

EBRD Finance Summary

EUR 150,000,000.00

EUR 150 million (for the 12 months following the date of Board approval) to share risk on PFI loans to local companies

Total Project Cost

EUR 150,000,000.00

Additionality

Under RSF, additionality stems from the following:

  • EBRD offers an innovative financing structure (e.g. mezzanine financing, risk sharing, etc.) on commercial terms not available from other banks: risk participation to help partner banks with capital and liquidity constraints.
  • EBRD offers a tenor, which is above the market average and is necessary to structure the project.
  • EBRD offers local currency financing on terms not readily available in the market.

Environmental and Social Summary

Sub-projects financed through this framework will be categorised and appraised on a case-by-case basis in accordance with the Bank's Environmental and Social Policy ("ESP"). Where the Bank is investing in projects or companies that present a potentially higher environmental and/or social risk, commensurate studies will be carried out with assistance from external consultants to fully understand all related liabilities and risks associated with a company's operations, as well as to develop and agree upon an environmental action plan as required. Further, the environmental and social due diligence undertaken on a case by case basis will look to identify and/or confirm potential environmental and social benefits to be realised through the delivery of the projects. Target borrowers/ investee companies will be required to comply with the Bank's Performance Requirements and provide the Bank with an annual report on environmental and social issues.

Technical Cooperation and Grant Financing

The RSF will continue benefiting from Technical Cooperation funds raised for the MCFF that it succeeds. The Bank will approach other donors for activities outside the Early Transition Countries.

Company Contact Information

Thea Kokhreidze
kokhreit@ebrd.com

Implementation summary


PSD last updated

19 Jul 2021

Understanding Transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

Business opportunities

For business opportunities or procurement, contact the client company.

For business opportunities with EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

Environmental and Social Policy (ESP)

The ESP and the associated Performance Requirements (PRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”.  The ESP and the PRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation as well as to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about environmental and social performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD additionally requires its clients to disclose information, as appropriate, about the risks and impacts arising from projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.

More information on the EBRD’s practices in this regard is set out in the ESP.

Integrity and Compliance

The EBRD's Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all activities of the Bank in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The Bank believes that identifying and resolving issues at the project assessment approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts, and also helps to monitor integrity risks in projects post-investment.

OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. Reports can be made in any language of the Bank or of the Bank's countries of operation. The information provided must be made in good faith.

Access to Information Policy (AIP)

The AIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations following its entry into force on 1 January 2020. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.

Specific requests for information can be made using the EBRD Enquiries form.

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate; how to submit a Request for review; or contact IPAM  via email ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.

 

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