Since the beginning of June, the banks have received from businesses 1,356 loan applications worth a total of UAH 40.1 billion to fund energy infrastructure recovery projects. The banks have already approved UAH 3.97 billion worth of applications (agreements have been or will soon be signed). Clients have already been using UAH 607 million in financing – the gross value of the portfolio of loans made to legal entities for energy capacity development.
The following results are from an NBU survey that polled 20 banks about the loans they issued between 1 June and 4 August 2024 to businesses for projects to rebuild energy infrastructure.
Specifically, from 29 July through 4 August:
- 162 applications for a total of UAH 1.05 billion were filed.
- 110 applications for a total of UAH 403 million were approved.
- 43 loans worth a total of UAH 94 million were issued.
An overall 50.4 megawatts (MW) of capacity was financed by the loans made to businesses (according to early data that covers about 85% of the portfolio). Most of the funds went towards the construction of solar power plants (13 MW) and gas-piston cogeneration plants (13 MW). Purchases of diesel or gasoline generators are also being financed. Financing has commenced in 21 oblasts of Ukraine.
In addition, the banks are also making loans to people. Over the past week, 191 loans worth a combined UAH 15 million have been granted to households. The gross portfolio of loans to meet households’ energy needs now stands at UAH 27 million.
“The survey of the banks highlighted their proactive position. Our call for supporting the energy sector received a rapid response that materialized in a joint Memorandum on Preferential Lending. By standing united on this matter, the otherwise fierce competitors have shown that the banking sector is committed to social responsibility. The recovery of our energy independence relies on the joint efforts of the state, businesses, and every one of us,” said NBU Governor Andriy Pyshnyy.
As previously reported, with the NBU’s aid, 20 banks owning more than 85% of net assets signed a memorandum in June 2024 on readiness to finance energy recovery. The banks’ offers take into account the needs of different types of SMEs and large businesses, and the preferences of households. Specifically, entrepreneurs can raise financing for projects to build solar, wind, and biogas plants, as well as gas-turbine and gas-piston power plants, and to purchase industrial batteries, storage devices, and more.
The base lending rate under the memorandum starts at 13.5% per annum (or UIRD3M + 0.5% for the first year of financing, and no more than UIRD12M + 3% thereafter).
In line with its Lending Development Strategy, the NBU maintains a balance between tightening the requirements for the banks to stay resilient and preserving their capability to lend to the economy and, in particular, boost power generation through lending.
Steps taken to keep this balance:
• For the duration of martial law and 12 months after it expires or is lifted, temporary specifics of credit risk assessment have been established for specialized loans. This measure makes it easier for the banks to finance investment projects.
• Increased collateral liquidity ratios have been introduced for collateral that comes in the form of equipment used in power generation and distributed generation in particular. The higher ratios apply where such equipment is accepted as collateral against loans issued after 1 June 2024 to buy said equipment.
The new capital requirements are to be implemented within a one-year transition period intended to help safeguard the potential for stepping up lending.
Moreover, the NBU and the banks are working to unify their consortium lending mechanisms in order to use this instrument to implement large reconstruction projects going forward