EBRD And EU Support Union Bank with €25M Portfolio Guarantee To Boost SME Lending, Green Projects, And Financial Inclusion In Albania

The European Bank for Reconstruction and Development (EBRD), in partnership with the European Union (EU), is supporting Union Bank in Albania with an unfunded portfolio guarantee of up to €25 million. This innovative risk-sharing arrangement is designed to encourage lending to small and medium-sized enterprises (SMEs), including green projects, and to promote financial inclusion across the country.

The guarantee, provided under the EBRD’s portfolio risk-sharing framework, will cover up to 50 percent of the credit risk on a newly generated SME loan portfolio of up to €50 million originated by Union Bank. The operation also includes first-loss coverage of up to €2.5 million provided by the EU through the European Fund for Sustainable Development Plus, further strengthening the risk mitigation of the arrangement.

This initiative is the first of its kind in Albania and builds on the success of the Albania Agribusiness and Tourism Support Facility. It represents a significant expansion of the EBRD’s product offerings in the country, aiming to de-risk partner financial institutions, address persistent SME financing gaps, and enable banks to channel their own liquidity into new lending. The structure also provides capital relief and enhances the resilience of the banking sector, opening up opportunities for underserved segments.

At least 30 percent of the guaranteed funding will be dedicated to green projects aligned with the EBRD’s Green Economy Transition approach, supporting Albania’s shift towards a more sustainable economy. A technical cooperation package funded by the EU will accompany the project to assist with capacity building, implementation, and green transition efforts.

Ekaterina Solovova, EBRD Head of Albania, said, “We are pleased to partner with Union Bank to launch portfolio risk sharing in Albania. By sharing risk and supporting green investments, we are helping to unlock new financing for SMEs and promote financial inclusion. This project demonstrates our commitment to Albania’s economic growth and sustainable development.”

Ritva Heikkinen, Head of Cooperation at the EU Delegation to Albania, added, “The European Union continues to support Albania’s private sector as a driver of growth, jobs, and social inclusion. Through this guarantee, we are helping commercial banks expand access to finance for SMEs, especially in rural areas, while promoting green and innovative investments aligned with the EU Green Agenda. This support contributes to Albania’s green transition and progress towards EU accession.”

Flutura Veipi, Chief Executive Officer of Union Bank, said, “We are proud to deepen our partnership with the EBRD and the EU through this pioneering portfolio risk-sharing guarantee. This initiative strengthens our capacity to offer broader and more affordable financing to Albanian SMEs, which are the backbone of our economy. By dedicating a significant share of funds to green investments, we are also supporting businesses in their transition to more efficient and environmentally responsible practices. This project is an important step in Union Bank’s strategy to foster inclusive growth and contribute to Albania’s long-term economic development.”

Union Bank, a commercial bank in Albania specialising in SME and retail lending, has been a long-standing client of the EBRD, which was a shareholder in the bank from 2008 to 2021. Since beginning operations in Albania in 1991, the EBRD has invested over €2.4 billion across nearly 180 projects in the country.