EBRD Launches Risk-Sharing Framework with ProCredit Bank Kosovo to Boost SME Financing and Sustainability

EBRD Launches Risk-Sharing Framework with ProCredit Bank Kosovo to Boost SME Financing and Sustainability

(IN BRIEF) The European Bank for Reconstruction and Development (EBRD) has initiated a risk-sharing framework for Kosovan banks, with ProCredit Bank Kosovo (PCBK) becoming the first partner bank to join. This framework allows the EBRD to share partner banks’ exposure to local enterprises through an unfunded risk participation mechanism, similar to a guarantee. PCBK is set to benefit from this framework for an open-ended period. The arrangement is designed to support PCBK’s growth strategy in Kosovo’s small and medium-sized enterprise (SME) segment while enabling it to meet the financing requirements of larger clients. In addition to the unfunded risk-sharing agreement, the EBRD has approved an environmental, social, and governance (ESG) incentive payment to assist sub-borrowers in enhancing their ESG practices, providing grants of up to 10% of the loan amount, with a maximum of €50,000 per sub-borrower. This initiative aligns with the EBRD’s commitment to promoting sustainability and inclusivity, ultimately contributing to Kosovo’s economic development. ProCredit Bank Kosovo, as the leading SME bank in Kosovo, aims to make a sustainable impact on the local economy through this partnership with the EBRD. This joint effort aims to enhance access to finance for local SMEs, which play a vital role in Kosovo’s economy. The EBRD and PCBK held an event in Pristina to present the risk-sharing framework and ESG incentives to local SMEs, signifying the beginning of this impactful collaboration.

(PRESS RELEASE) LONDON, 19-Dec-2023 — /EuropaWire/ — The European Bank for Reconstruction and Development (EBRD) has launched a risk-sharing framework for Kosovan banks, with ProCredit Bank Kosovo (PCBK) the first to sign up as a partner bank.

The framework is designed to allow the EBRD to share partner banks’ exposure to local enterprises through an unfunded risk participation, which is similar to a guarantee. PCBK will benefit from an unfunded risk-sharing framework for an open-ended period.

The risk-sharing framework will support PCBK’s strategy for continued business growth in Kosovo’s small and medium-sized enterprise (SME) segment, while allowing it to meet the financing needs of large clients.

A funded risk-sharing framework has also been approved and will be launched in the near future, with the EBRD participating in the same amount of risk and providing funding for up to half of the loans in question.

With PCBK, the EBRD is establishing an unfunded risk-sharing agreement for up to €10 million in total and will participate in up to 65 per cent of the risk on sub-loans for eligible clients. In addition, the Bank has approved an environmental, social and governance (ESG) incentive payment to support sub-borrowers to improve their ESG practices. These payments, in the form of grants, will total up to 10 per cent of the loan amount, to a maximum of €50,000 per sub-borrower.

EBRD Head of Kosovo Sergiy Maslichenko said: “We are pleased to launch the EBRD’s risk-sharing framework in Kosovo, boosting access to finance for local SMEs, which constitute the backbone of the country’s economy. The ESG-linked grants serve as an important component, exemplifying our commitment to sustainability and inclusivity on a granular level. We believe that this project will be another success story in our long-standing partnership with ProCredit Bank Kosovo.”

Interim CEO of ProCredit Bank Kosovo Visar Paçarada said: “As the leading SME bank in Kosovo, we are focused on having a sustainable impact in the economy in which we operate. The risk-sharing framework and ESG-linked grants will be a valuable tool that will ease our clients’ path towards sustainability.”

The EBRD and PCBK held a joint event in Pristina, attended by 40 local SMEs, to present the risk-sharing framework offering, as well as the ESG incentive payment. At the event, the first incentive payment agreement was signed with EBC Distribution, the first sub-borrower under the framework.

The EBRD has a long history of cooperation with ProCredit Bank Kosovo, which was founded in 2000. The Bank was initially a minority shareholder in 2001-07. Their cooperation resumed in 2018 in the form of credit lines and continues to this day. The EBRD currently owns an 8.7 per cent stake in PCBK’s parent company, ProCredit Holding.

ProCredit Bank Kosovo is the third-largest bank in Kosovo in terms of loan portfolio (€675 million), with a market share of 15.6 percent as of end of 2022. It is the country’s leading SME bank, with a market share of 19.6 percent as of end 2022.

The project aligns with the EBRD’s 2022-27 country strategy for Kosovo to support private firms by providing direct and indirect financing, including risk-sharing, to companies and SMEs, and for renewable energy projects.

Including this project, the EBRD has invested more than €640 million in Kosovo to date.

Media Contact:

Tel: +44 207 338 7805
Email: press@ebrd.com

SOURCE: EBRD