Rating action

Scope Ratings GmbH has today affirmed the European Bank for Reconstruction and Development’s (EBRD or the bank) AAA long-term issuer and senior unsecured debt foreign-currency ratings, along with a short-term issuer rating of S-1+ in foreign currency. All Outlooks are Stable.

The AAA/Stable rating of the EBRD reflects its i) excellent institutional profile, supported by a strong mandate and governance framework, ii) high capitalisation, prudent capital management and sustained underlying profitability, iii) adequate asset quality, reflecting its mandate and operating environment, iv) very high liquidity buffers and an excellent funding profile, and v) excellent shareholder support.

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Rating rationale

High capitalisation, further reinforced by the ongoing paid-in capital increase, and track record to generate and retain earnings

The EBRD’s capitalisation levels are exceptionally strong compared to its peers and will be further strengthened by the ongoing paid-in capital increase up to EUR 4bn, effective since the end of 2024. As of Q1 2025 paid-in capital accounted for 26% of total capital.

Scope’s assessment reflects the bank’s conservative capital framework and its track record of generating and retaining capital through the economic cycle. Its capitalisation level relative to its outstanding assets ranks among the highest among supranationals. Scope estimates the EBRD’s total capital, comprising its equity, reserves and the highly-rated portion of its callable capital, at around EUR 26.9bn as of end-2024, up from EUR 23.9bn in 2023. The bank’s statutory leverage at YE 2024 implied a 1-to-1 ratio to its unimpaired subscribed capital, accumulated reserves and surpluses, i.e. approximately EUR 47.2bn¹. Based on Scope’s methodology, if the EBRD were to use its remaining headroom under this limit, its capitalisation ratio would be around 57%, well above its peers. However, as end of June 2025, the bank removed the statutory limit in favour of a more flexible nominal capital ratio, which would limit net operating assets to four times that of members ‘equity net of the paid-in capital, subscribed but not yet received². According to the bank, this would increase the EBRD’s maximum capacity by EUR 2.7bn annually by 2030. Although this, would weigh on the Scope implied leverage ratio, this new ratio will be used as a secondary capital control. The bank will continue to remain constrained by its risk adjusted capital metrics, as the required capital to available capital. This requirement ratio stood at 63%, down from 80% in 2015 and comfortably below its policy threshold of 90%.

The ongoing EUR 4bn paid-in capital increase will further support EBRD’s capital base. Effective since 31 December 2024, the increase will be disbursed in five annual instalments from April 2025. These additional financial resources will allow the bank to pursue its increased level of operation in Ukraine both during wartime and reconstruction. As a result, the bank’s subscribed capital should rise to around EUR 34bn, with total paid-in capital at around EUR 10bn. As of July, around 70% of eligible shareholders have participated into the capital increase. Nevertheless, some eligible shareholders, including larger ones, may not subscribe to the paid-in capital increase before the end-2025 deadline, which could be extended and/or could pave the way for other shareholders to step in.

Moreover, the EBRD’s capitalisation profile benefits from the bank’s track record to generate and retain earnings. The bank has been profitable every year since 2010, except for 2014 and 2022. The war in Ukraine led to a revaluation of equity investments in Russia, Ukraine and Belarus, and a material increase in stage 1 and 2 expected credit losses, resulting in a net loss of EUR 1.1bn in 2022. While this was the largest loss in the bank’s history, it was more than offset by even higher net profits of EUR 2.1bn and EUR 1.7bn in 2023 and in 2024, respectively, mainly due to a sound performance in net interest income. The EBRD’s returns tend to be volatile, primarily driven by mark-to-market valuation changes in its equity portfolio, but cumulative realised gains stood at EUR 2.4bn³ over the last ten years.

Conservative liquidity management, excellent funding profile

The EBRD’s excellent liquidity coverage and capital market access further support its financial profile. Medium-term liquidity requirements highlight conservative liquidity management: i) net treasury liquid assets to cover at least 75% of the next two years’ projected net cash requirements; and ii) the bank to meet its obligations for at least 12 months under extreme stress conditions. This prudent liquidity management results in a stable level of liquid assets, which Scope estimates at around EUR 34.5bn for YE 2024, up from EUR 27.2bn in 2023, driven mainly by an increase in deposits. The estimate comprises cash and cash equivalents (EUR 6.0bn), deposits (EUR 18.8bn) and highly rated debt securities (EUR 9.7bn). In comparison, debt that was either due to contractually mature or was callable within the next 12 months amounted to EUR 18.8bn (2032: EUR 14.5bn), while gross disbursements to customers are estimated at around EUR 9.5bn for 2025⁴. (EUR 10.6bn in 2024).

The resulting Scope liquidity coverage ratio of 121.7% for 2024 indicates that the EBRD can finance with available liquid assets for around 12 months without capital markets access. This ratio is exceptionally strong, both relative to peers and over time.

The EBRD’s AAA rating is further underpinned by its status as a global benchmark issuer, reflecting frequent issuances and its highly diversified funding strategy in terms of currencies and instruments, including green and social bonds. These provide the bank with a stable source of funding for its operations. Highlighted by its appeal to global investors, the EBRD benefits from a broad and very diversified investor base led by bondholders in the EMEA region, followed by Asia and the Americas. The EBRD’s investor base comprises mainly buy and hold investors including fund managers, pension and insurance funds, bank treasuries and central banks. In addition, the EBRD is a leading supranational green and social bond issuer that has raised around EUR 12.8bn in green and social bonds since 2010, tapping into a growing ESG investor base. The bank also issues in emerging market (EMs) currencies. More than 20% of its outstanding debt before swaps, under the EBRD borrowing programme, is in EMs currency, primarily in Turkish lira (4.8% of total) and Indian Rupee (4.4%) as of H1 2025.

Excellent shareholder support, key mandate for a growing shareholder base

The EBRD benefits from a highly rated key shareholder base, including the United States (AA/Negative), Japan (A/Stable), the UK (AA/Stable) and all EU-27 member states, resulting in a weighted average rating of AA-. This is one of the highest key shareholder ratings among supranationals, which supports Scope’s assessment of EBRD shareholders’ ability to provide support if necessary.

Moreover, Scope assesses shareholders' willingness to provide support as ‘high’. This is underpinned by its track record of capital increases, including the latest decision to increase the paid-in capital to support continued operational growth. Moreover, the bank’s capital call mechanism is underpinned by a strong legal basis. According to Article 17 of its Basic Documents and Section 8 of its By-Laws, the bank’s board of directors could call up to EUR 23.6bn in callable capital. Under Article 6.4 of the Articles Establishing the Bank, callable capital is available to meet liabilities to creditors, where in accordance with Articles 17.2 and 42.2, any call would be reserved for an extreme scenario and after other loss bearing instruments are exhausted. No call has occurred to date.

The shareholder base continues to rise, strengthening its institutional importance. After Benin, Iraq, Cote d’Ivoire and Nigeria, more recently, Senegal and Kenya became the 78th and 79th shareholder respectively, which further supports the bank’s gradual expansion in Sub-Saharan Africa and Iraq. Further, the bank’s expanded role in Ukraine, in combination with elevated disbursements in the bank’s other core countries of operation, underpins the bank’s role. In 2024, the EBRD’s annual investments in 38 countries reached a record level of EUR 16.1bn, almost EUR 3bn higher than 2023. Looking ahead, Scope expects the EBRD to play a critical role in the transition of its countries of operation to a carbon-neutral, climate-resilient economy. Specifically, the bank has aligned all its processes and activities with the Paris Agreement and committed to increase the share of its annual investments classified as contributing to the Green Economy Transition (GET) initiative to at least 50% by 2025. The bank has already met its 50% target ahead of schedule for 2021-24.

Finally, since the invasion of Crimea in 2014, the bank has suspended all new lending to Russia. More recently, since the outbreak of the Russia-Ukraine war, activities have also been suspended in Belarus, and the bank has significantly increased its operations in Ukraine, with new investments of just over EUR 3bn in 2022/23, which benefit from guarantees from shareholder donor funds at an average 50% of total investment. The bank committed EUR 1.9bn in Ukraine in 2024 and aims to invest around EUR 1.5-2bn annually in the country during wartime, an amount that Scope expects could increase once the reconstruction begins. The bank’s expertise in the region is likely to underpin its critical role to support the international reconstruction effort of Ukraine over coming years.

Credit challenge: Weaker asset quality and higher NPLs compared to its peers, reflecting its mandate and operating environment

The EBRD’s ‘adequate’ asset quality and comparatively higher NPLs reflect its relatively risky business profile, driven by its focus on private sector lending and equity investments in transition economies that are usually rated non-investment grade.

As of end-2024, the bank’s total signed loan portfolio and guarantees increased to about EUR 55.5 from EUR 49.7bn in 2023, markedly above the EUR 25bn in 2010. Of this, about 31% relates to sovereigns directly (up from 20% in 2011), 22% relates to banks and 46% to corporates. In terms of geographical exposure, we note that the EBRD’s top-10 country exposures constitute around 70% of total, with Turkey (BB-/Stable), Ukraine (SD) and Egypt, accounting for almost one third of total exposures since 2017. For this reason, only 20% of the EBRD’s exposures are assessed as investment-grade. Scope estimates the bank’s weighted average portfolio quality at around ‘b’, lower than most of its highly rated peers.

Non-performing loans declined to 5.5% in Q1 2025, after peaking around 7.9% of total loans at YE 2023 on account of the war in Ukraine. The EBRD no longer has loan exposure in Russia as of H1 2024 and its exposure to Belarus declined to EUR 194m as of Q1 2025, most of its classified as non-performing. Geographically, NPLs were concentrated in Ukraine (around half of total NPLs as of Q1 2025), Turkey (8%), Belarus (8%) and Poland. Around 40% of EUR 2.5bn at Q1 2025 of loans in Ukraine are non-performing, but associated risks to the bank are well-covered. Total impairment (Stage 1,2 and 3) amounted to EUR 915m for Ukrainian exposures. Further, the bank broadly maintained its level of post-model adjustments related to Ukraine at EUR 387m, from EUR 400m at YE 2024.

Rating-change drivers

The Stable Outlook represents Scope’s view that risks to the ratings over the next 12 to 18 months are balanced.

Downside scenarios for the ratings and Outlooks are (individually or collectively):

1. Asset quality deteriorated materially, resulting in sustained losses if not compensated by further capital increases.
    
2. Liquidity buffers were significantly reduced.

Factoring of environment, social and governance (ESG)

Scope considers ESG sustainability issues during the rating process as reflected in its supranational methodology. ESG factors are explicitly captured in Scope’s assessment of the institutional profile, which Scope assesses as ‘Excellent’ for the EBRD, and the assessment of potential climate risks under the portfolio quality assessment.

Supranational scorecard

Scope’s supranational scorecard, which is based on clearly defined quantitative parameters, provides an indicative ‘aaa’ rating for the EBRD. Additional considerations allow Scope to incorporate idiosyncratic characteristics that cannot be assessed in a consistent and comprehensive manner across all supranationals, but which may still affect the creditworthiness of the issuer.

No adjustment was made to the indicative rating of the EBRD.

A rating committee has discussed and confirmed these results.

For further details, please see Appendix II of the rating report.

Rating Committee
The main points discussed by the rating committee were: i) institutional profile; ii) financial profile, including capitalisation, asset quality, liquidity and funding; iii) shareholder support; iv) additional considerations; and viii) consideration of peers.

Rating driver references
1. EBRD, Financial Report 2024
2. EBRD, Capital Adequacy Policy and Procedures, July 2025
3. EBRD, Investor Presentation, July 2025
4. EBRD, Strategy Implementation Plan 2025-2027

Methodology
The methodology used for these Credit Ratings and Outlooks, (Supranational Rating Methodology, 23 May 2025), is available on scoperatings.com/governance-and-policies/rating-governance/methodologies.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions – Credit Ratings, Ancillary and Other Services’, published on scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at scoperatings.com/governance-and-policies/regulatory/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): registers.esma.europa.eu/cerep-publication. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on scoperatings.com/governance-and-policies/rating-governance/methodologies.
The Outlook indicates the most likely direction of the Credit Ratings if the Credit Ratings were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information
The Credit Ratings were not requested by the Rated Entity or its Related Third Parties. The Credit Rating process was conducted:
With Rated Entity or Related Third Party participation     YES
With access to internal documents                                   YES
With access to management                                             NO
The following substantially material sources of information were used to prepare the Credit Ratings: public domain, the Rated Entity and Scope Ratings’ internal sources.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting these Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and Outlooks and the principal grounds on which the Credit Ratings and Outlooks are based. Following that review, the Credit Ratings and Outlooks were not amended before being issued.
 
Regulatory disclosures
These Credit Ratings and Outlooks are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings and Outlooks are UK-endorsed.
Lead analyst: Carlo Capuano, Executive Director
Person responsible for approval of the Credit Ratings: Giacomo Barisone, Group Managing Director
The Credit Ratings/Outlooks were first released by Scope Ratings on 10 July 2020. The Credit Ratings/Outlooks were last updated on 13 September 2024.

Potential conflicts
See scoperatings.com under Governance & Policies/Regulatory for a list of potential conflicts of interest disclosures related to the issuance of Credit Ratings, as well as a list of Ancillary Services and certain non-Credit Rating Agency services provided to Rated Entities and/or Related Third Parties.

Conditions of use / exclusion of liability
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