The EBRD will help finance Ukraine’s privatization: what this entails
18 May 15:58
The European Bank for Reconstruction and Development supports efforts to privatize shares in Ukrainian banks and other nationalized industries and may be prepared to provide financing for these efforts, its president said. Reuters reports, according to "Komersant Ukrainian".
“Prime Minister Yulia Svyrydenko said this month that Ukraine aims to raise about 13 billion hryvnia ($295 million) from privatization this year to shore up a budget battered by more than four years of war with Russia and help fund reconstruction,” the agency reports.
Kyiv is seeking buyers for some key assets, including two large profitable banks, Sense Bank and Ukrgasbank, as it seeks to reduce state dominance in the sector and attract foreign capital. The state controls over 50% of the banking sector.
“Depending on who the buyers are, we could provide some financing for future privatizations,” said EBRD President Odile Renaud-Basso, without specifically mentioning the banks.
Reno-Basso reported that investors have shown “considerable interest” in the tender for the operation of two terminals at the port of Chornomorsk in the Odesa region, announced in December.
Under a 40-year concession, a private investor will operate and modernize the port facilities. In recent months, Chornomorsk has been periodically subjected to airstrikes as Russia attacks the Black Sea port’s infrastructure.
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The EBRD and the International Finance Corporation (IFC)—the World Bank’s private sector lending arm—are supporting the government in structuring the concession and overseeing the tender process.
“As part of yet another effort to stimulate private investment, the EBRD is collaborating with the National Bank of Ukraine, the National Securities and Stock Market Commission, and the Ministry of Finance on securities market reform aimed at creating a vertically integrated stock exchange that will handle clearing and depository activities,”— the agency reports.
According to bank representatives, legislation is currently being drafted, and the goal is to attract a strategic investor to manage the platform.
The EBRD is also financing energy projects following Russian attacks on the electrical infrastructure. Reno-Basso stated that he has a funding reserve for approximately 700 megawatts of renewable energy.
The construction of protective shelters for electrical transformers is also being funded. According to her, out of approximately 135 key facilities across the country, about 118 are expected to be protected by the end of the year.
What is known about bank privatization
As a reminder, Sense Bank is to be privatized this year without any delays, as stated by Volodymyr Zelenskyy. According to him
State-owned banks require liberalization and the expansion of business opportunities.
In addition to Sense Bank, Ukrgasbank is also a priority for privatization. The relevant preparatory processes for this are already underway. Prime Minister Yulia Svyrydenko previously stated this to .
She said that the Ministry of Finance, together with the National Bank and other agencies, must analyze the effectiveness of Sens Bank’s management bodies and accelerate its privatization.
Svyrydenko emphasized that this bank must be privatized by 2026. She added that personnel decisions must also be made if necessary.
Ukrgasbank is also a priority for privatization, and the relevant preparatory processes are underway, she said in her statement.
It is worth noting that Ukrgasbank was nationalized during the 2008–2009 crisis. Sense Bank was nationalized following the full-scale invasion due to its owners’ ties to the aggressor country.
Sense Bank (JSC “Sense Bank”)—formerly Alfa-Bank Ukraine—is one of Ukraine’s largest banks, founded in the 1990s and previously known as Alfa-Bank Ukraine, which, prior to the full-scale war, was part of an international group of Russian origin. In 2022, the financial institution underwent a rebranding, changing its name to “Sense Bank,” and in July 2023, it was nationalized: the state, represented by the Ministry of Finance, acquired 100% of the bank’s shares. This decision was made in light of risks to financial stability and the previous owners’ ties to Russian business.
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