LONDON - In response to the ongoing conflict in Ukraine, the European Bank for Reconstruction and Development (EBRD) is contemplating a significant capital increase to bolster its investment capacity in the country. The EBRD's Board has recommended a €4 billion paid-in capital increase, which, if approved by year-end, will mark the institution's third capital boost since its inception.
The proposed increase would expand the bank's current shareholding from €30 billion and enable an annual wartime investment of €1.5 billion in Ukraine—triple the pre-war average. This move aligns with the EBRD's commitment to support Ukraine as a priority while maintaining strategic investment priorities across all economies it operates in.
The EBRD's focus on Ukraine has been unwavering during the past 30 years, with the bank being the largest institutional investor in the country. It has invested more than €18 billion across over 500 projects, reflecting a strong partnership despite geopolitical tensions and economic challenges. As recently as October 2023, the EBRD achieved a milestone by deploying at least €3 billion of financing in Ukraine’s real economy, underscoring its dedication to addressing climate crisis challenges alongside other pressing needs.
Governors at the EBRD's Annual Meeting in May 2023 agreed on additional shareholder support and recognized a paid-in capital increase as an efficient mechanism to provide such support. The potential capital enhancement would not only increase investments in Ukraine but also strengthen the EBRD's balance sheet and reduce risk sharing through guarantees and grants.
If the proposal receives approval, the first payments from this capital increase are expected to commence in early 2025. The bank could potentially enhance its annual investment in Ukraine up to €3 billion, significantly contributing to the country's economic resilience and recovery amid Russia's full-scale invasion.
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