BlackRock and JP Morgan have established a “reconstruction bank” to aid Ukraine

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BlackRock and JPMorgan Chase are reportedly collaborating to assist the Ukrainian government in establishing a reconstruction bank, which could attract significant private investment for rebuilding projects. The Financial Times highlighted that Ukraine’s reconstruction costs, in the wake of Russia’s attacks, have surged to approximately $411 billion and are still rising.

The Ukraine Development Fund is currently in the initial stages of creating the reconstruction bank, and prospective investors will gain insights into its framework during an upcoming London conference.

In response to the substantial rebuilding expenses, the Ukrainian government reached out to BlackRock in November to explore possibilities for attracting investments. JPMorgan joined the initiative in February. Ukrainian President Volodymyr Zelensky recently confirmed his collaboration with these financial institutions and McKinsey consultants.

BlackRock’s Vice-Chair, Philipp Hildebrand, emphasized the importance of blended finance for addressing contemporary long-term challenges, such as this reconstruction endeavor. He noted the necessity of such mechanisms for mobilizing capital on a significant scale.

While BlackRock and JPMorgan are contributing their expertise, they are also likely to be given priority access to potential investments within Ukraine. The report underscored that this development further strengthens JPMorgan’s relationship with its established client, Ukraine. The bank has facilitated Ukraine in raising over $25 billion in sovereign debt since 2010 and played a leading role in the country’s $20 billion debt restructuring in 2022.

BlackRock has advocated for the establishment of a “development finance bank” for Ukraine, focusing on infrastructure, climate initiatives, and agricultural opportunities. This strategy aims to enhance the country’s appeal to other long-term investors. JPMorgan’s involvement in the collaboration is rooted in its expertise in debt management.

Stefan Weiler, JPMorgan’s Head of Debt Capital Markets for Africa, Europe, and the Middle East, explained that the fund’s purpose is to enable both public and private sector investors to participate in specific projects and sectors. Various sectoral funds will be established to address Ukraine’s priorities and maximize capital involvement.

However, it appears that substantial investments in Ukraine might not materialize until the conflict with Russia concludes. Russian President Vladimir Putin mentioned during a meeting with the African Union that Ukraine had purportedly signed a treaty in spring 2022, but the country withdrew from it after Russia agreed to the terms.

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