EBRD CFO explains how additionality, on-the-ground presence and structured risk-sharing have allowed it to crowd in private capital to create wide-ranging impacts
Speaking at Private Markets Profile’s Inside the Deal, CFO Burkhard Kübel-Sorger described the European Bank for Reconstruction and Development (EBRD) as an institution designed to operate where commercial banks and investors often hesitate. It makes emerging and frontier markets investible, to crowd-in private capital, while ensuring sustainability impacts.
Established in 1991 in response to the collapse of the Soviet Union, the EBRD’s mandate remains rooted in supporting private sector development and economic transition. Today, 75% of its investments are in the private sector, with a focus spanning green transition, human capital and economic governance.
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Crucially, profitability is not assessed in isolation. “Some of the debates are extremely long, and it’s not [only] about profitability, it’s about the impact. Is the impact story credible?” Kübel-Sorger said.
A second test is additionality: “Are we really bringing something to the client that the private sector couldn’t do?”
If a transaction could be easily executed by a commercial lender, the bank may step aside. Instead, it focuses on markets and projects where capital is scarce – accepting that a portfolio approach is required. More mature markets such as Poland are expected to generate stronger returns, effectively cross-subsidising higher-impact projects in frontier economies.
Perceptions of emerging market risk, Kübel-Sorger argued, are often overstated. Drawing on a global database compiled across more than 25 multilateral development banks, he noted default rates of around 3.3% across MDB portfolios, with recovery rates near 70% – metrics that compare favourably with many commercial banking benchmarks.
A key differentiator is local presence. Teams on the ground originate transactions, monitor performance and measure impact against predefined criteria, an approach the bank believes reduces information asymmetry and improves risk management. “We have people on the ground from Uzbekistan to Beirut,” he said.
For institutional investors, the question is how to participate at scale. Historically, mobilisation has occurred deal by deal, including through B-loan structures that allow private lenders to benefit from the EBRD’s preferred creditor status. But Kübel-Sorger acknowledged that this model is not attractive to all allocators.
The bank is exploring broader solutions, including significant risk transfer transactions and programmatic debt fund structures launched at inception rather than retrofitted deal by deal. The challenge, he said candidly, is return. “The question is, can we offer the right return?”
With a AAA rating and strong shareholder backing – including a recent capital increase dedicated to Ukraine – the EBRD positions itself as both risk mitigator and capital catalyst.
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