The European Bank for Reconstruction and Development (EBRD) has launched the risk-sharing framework for Kosovan banks, with ProCredit Bank Kosovo (PCBK) the first to join as a partner bank.
The risk-sharing framework cooperation will support PCBK’s strategy for continued business growth focusing on SME segment while allowing it to meet financing needs of large clients.
This framework is designed to allow the EBRD to share partner banks’ exposures to local enterprises through unfunded risk participation, which is similar to a guarantee. PCBK will benefit from unfunded risk sharing framework, with an open-ended period of availability.
Additionally, a funded risk-sharing framework has been approved and will be launched in the near future, where the EBRD will participate in the same amount of risk and will also provide funding for up to half of the loans.
The EBRD will establish with PCBK an unfunded risk-sharing for up to €10 million in total and will participate in the risk for up to 65 per cent of sub-loans for eligible clients of the bank. 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, which are in the form of grants. will be up to 10 per cent of the loan amount with a maximum of €50,000 per sub-borrower.
The 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.”
The Interim CEO of ProCredit Bank Kosovo, Visar Paçarada, conveyed contentment in becoming the inaugural bank in the country to participate in the EBRD's risk-sharing framework: “As the leading SME bank in Kosovo, we are focused towards having a sustainable impact in the economy we operate. Therefor the risk sharing framework and ESG-linked grants will be a valuable tool that will ease our client’s path towards sustainability.”
The EBRD and PCBK held a joint event in Pristina with 40 local SMEs to present the risk-sharing framework offering as well as the ESG incentive payment. At the event, the first incentive payment 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, initially becoming a minority shareholder in 2001-2007. The cooperation resumed in 2018 in the form of credit lines and continues to this day. At present, the EBRD owns 8.7 per cent shares in PCBK’s parent company, ProCredit Holding.
ProCredit Bank Kosovo is the third largest Bank in Kosovo in terms of its outstanding loan portfolio of 675 million Euro- with a market share of 15.6 percent as of end of 2022 - and the leading SME bank in the country with a market share of 19.6 percent as of end of 2022.
The project aligns with EBRD’s 2022 - 2027 country strategy for Kosovo to support private firms by providing direct and indirect financing, including risk-sharing, to corporates and SMEs, and for renewable energy projects.
Including this project, to date the EBRD has invested more than €640 million in Kosovo.
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