Bank Lviv
BIO has granted a EUR 3 M loan to Bank Lviv, a small Ukrainian regional bank only financing SMEs.
Amount
€ 3,000,000.00
Type of investment
Debt
Development impacts
- Local economic growth
- Promotion of ESG best practices
Beneficiary locations
Investment field
Financial Institutions
Activity
The project consists in providing EUR 3M of senior debt to fund growth of Bank Lviv’s foreign currency loan portfolio to SMEs, for which it expects a funding gap in the coming years due to a limited growth of its hard currency deposits. It will help in diversifying and providing a stable long-term funding. Finally, to mitigate the country risk, the transaction has qualified for the MSME+ EU guarantee that covers 50% of the exposure that we consider on the Bank Lviv (EUR 1,5M) for both political and commercial risks.
Development impacts
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Local economic growth
The project aims to enhance SMEs’ access to financing by supporting Bank Lviv in expanding its SME loan portfolio in hard currency through a targeted use of funds. It also supports the bank’s SME strategy and strengthens its expertise in delivering tailored financial products, notably by streamlining procedures to make them simpler and faster for SME clients, with particular attention to export-oriented businesses. In this context, the bank focuses on key sectors that contribute to economic resilience—namely wholesale and retail trade, manufacturing, and agriculture—which together account for 76% of the gross loan portfolio. In parallel, the project supports the mobilization of local deposits, primarily term deposits, which currently represent 55% of total deposits. Over the next four years, the bank’s strategy is to significantly expand its deposit base, with the objective of achieving a more diversified funding structure and offering more competitive pricing on the lending side.
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Promotion of ESG best practices
The project supports a bank that has an Environmental and Social Management System (ESMS) and a Sustainable Development Policy in place, demonstrating a clear commitment to systematic environmental and social risk assessment and monitoring of financed projects. The policy promotes ecological sustainability, corporate social responsibility, climate change mitigation and adaptation measures, and safe working conditions. Its implementation is guided by detailed internal procedures, and a dedicated E&S team of three full-time equivalents delivers regular training to all relevant staff. In addition, the project supports Bank Lviv in strengthening its human resources policies and practices, notably through the development of a worker grievance mechanism, the provision of first-aid training to staff, and the consideration of extending written employment contracts to all employees, which are currently provided only to certain management positions.
E&S
BIO and the client agreed on the following improvement measures :
Improvement of the E&S management system, by (i) including the notion of IFC PS triggered transactions and ensuring these transactions are assessed and monitored by qualified external consultants against the IFC PS (ii) assessing, visiting and drafting of E&S actions plans for the larger and higher risk transactions by the E&S team (iii) including incident reporting for all clients;
Training on IFC PS for the E&S team;
Human resources improvements: (i) clarifying and detailing the HR policies (ii) development of a grievance mechanism for workers to raise complaints (iii) providing first aid training to employees.
Bank Lviv has an E&S policy and an E&S management system in place, which defines how environmental and social risk management is integrated in the investment cycle. The ESMS aims to ensure borrowers’ compliance with local laws and regulations. The Bank applies the EDFI exclusion list, including the fossil fuel items.
E&S responsibility lies with (i) the Deputy CEO for general oversight (ii) the Head of Sustainable Development Programs who coordinates the sustainable development strategy and its implementation (iii) two technical engineers. There are two ESG committees, one at Supervisory Board level, the other within the organization and reporting to the Executive Management.
The environmental and social classification of the Borrower: Medium- risk B
𝘛𝘩𝘦 𝘪𝘯𝘷𝘦𝘴𝘵𝘮𝘦𝘯𝘵 𝘪𝘯 Bank Lviv 𝘣𝘦𝘯𝘦𝘧𝘪𝘵𝘴 𝘧𝘳𝘰𝘮 𝘌𝘋𝘍𝘐 𝘔𝘚𝘔𝘌 𝘗𝘭𝘢𝘵𝘧𝘰𝘳𝘮, 𝘢 𝘨𝘶𝘢𝘳𝘢𝘯𝘵𝘦𝘦 𝘮𝘢𝘯𝘢𝘨𝘦𝘥 𝘣𝘺 𝘌𝘋𝘍𝘐 𝘔𝘢𝘯𝘢𝘨𝘦𝘮𝘦𝘯𝘵 𝘊𝘰𝘮𝘱𝘢𝘯𝘺 𝘢𝘯𝘥 𝘧𝘶𝘯𝘥𝘦𝘥 𝘣𝘺 𝘵𝘩𝘦 𝘌𝘶𝘳𝘰𝘱𝘦𝘢𝘯 𝘜𝘯𝘪𝘰𝘯 𝘶𝘯𝘥𝘦𝘳 𝘵𝘩𝘦 𝘌𝘍𝘚𝘋+ 𝘱𝘳𝘰𝘨𝘳𝘢𝘮𝘮𝘦, 𝘢𝘴 𝘱𝘢𝘳𝘵 𝘰𝘧 𝘵𝘩𝘦 𝘌𝘜’𝘴 𝘎𝘭𝘰𝘣𝘢𝘭 𝘎𝘢𝘵𝘦𝘸𝘢𝘺 𝘴𝘵𝘳𝘢𝘵𝘦𝘨𝘺.
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