The European Bank for Reconstruction and Development, the development bank for the former Soviet bloc, made record investments last year of €9.4bn, up from €8.9bn in 2014. It expects to make a net profit of around €0.8bn, after reporting a loss of €0.6bn in 2014 largely because of its exposure to Russia and Ukraine.
The EBRD said its investments came at a time when emerging markets were suffering the worst year for capital inflows since the start of the global financial crisis in 2008 and as banks continued to reduce their exposure to a number of EBRD economies.
The bank has forecast that economic conditions will remain challenging in 2016, with the continuing weakness in commodity and energy prices likely to carry on putting pressure on some of the larger resource-dependent EBRD countries.
The EBRD financed 381 individual projects in some three dozen countries. Turkey was again the leading recipient, with EBRD investment there rising to €1.9bn from €1.4bn. Ukraine ranked second with investments of just under €1bn. Last year was the first full year when the bank has been unable to make new investments in Russia – once its largest investment area – following a shareholder decision in response to Moscow’s annexation of the Ukrainain region of Crimea.
In 2015 the EBRD made its first investments in Greece, which has become a temporary country of operations until 2020. Its debut funding in Greece aimed to stabilise the financial sector and the EBRD took shares worth a total of €250mn in the four leading Greek banks.
Among other significant regional trends, EBRD funding in Kazakhstan rose strongly to €708mn from €576mn, investments in Poland rose to €647mn from €593mn, and investments in the southern and eastern Mediterranean countries rose to €1.5bn from €1.0bn.
A key funding trend was that the EBRD mobilised more than €2.3bn via syndicated loans in over 40 projects in 15 countries, nearly double 2014’s figure and the highest level for syndicated lending since the start of the crisis.
“It was especially important that we were able to secure this robust level of commercial bank finance for our projects as access to funding generally remained difficult last year,” said Lorenz Jorgensen, the EBRD’s director for loan syndications. Notable syndications last year included financing for the Oyu Tolgoi copper-gold mining project in Mongolia, which raised €755mn as part of a total package of €4.1bn.
In 2015 the EBRD’s sustainable resource funding – which includes resource efficiency and renewable energy projects – accounted for 30% of the €9.4bn total annual investment. The EBRD envisages climate finance rising to 40% of annual investments by 2020.