Tashkent, Uzbekistan (UzDaily.com) – The European Bank for Reconstruction and Development (EBRD) is extending a US$ 50 million convertible loan to O’zsanoatqurilishbank (SQB), Uzbekistan’s second-largest lender. The loan can be converted, in full or in part, into ordinary shares of SQB.

SQB will on-lend the funds to local small and medium-sized enterprises (SMEs), and at least 20 per cent of the proceeds will be channelled to support green investments, including energy efficiency or renewable energy projects. As part of the transaction, SQB will receive corporate climate governance (CCG) technical assistance, resulting in the development of an action plan to manage climate risks, in line with the recommendations of the Task Force on Climate-related Financial Disclosures.

EBRD Managing Director for Central Asia, Zsuzsanna Hargitai, said: “This transaction is part of a broader commitment of the EBRD, alongside fellow international financial institutions, to support the transformation and privatisation of the Uzbek state-owned banks.  This is the EBRD’s first convertible debt transaction in Uzbekistan. With this transaction, in these troubled times marked by volatility in the broader region, we send an important message of confidence to investors.”

Since 2017, Uzbekistan has undertaken major reforms, particularly in its banking sector, aiming to reduce state involvement and modernise its economy. This convertible loan supports that strategy. The EBRD’s potential equity investment, if conversion takes place, would reduce state ownership below 50 per cent, while also strengthening SQB’s corporate governance and resilience.

To date, the EBRD has invested more than €3.38 billion through 111 projects in Uzbekistan.