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The European Investment Bank (EIB) has teamed up with Česká spořitelna, a.s. (CSAS) to improve innovative Czech mid-size companies’ access to finance, with the aim of catalysing EUR 100m in new investment. This is the first EIB financial guarantee to support investment by mid-sized companies, both in the Czech Republic and the whole Central and South Eastern Europe region.

A loan-by-loan guarantee extended by the EIB will provide 50% credit risk protection on a EUR 100m portfolio of new loans originated by CSAS. The transaction is supported by “InnovFin – EU Finance for Innovators”, a new generation of financial instruments backed by the European Union under Horizon 2020.

The operation will allow for a significant increase in financing to innovative companies to fund their working capital and long-term investment needs, particularly in the areas of research, development and introduction of innovation in production.

“Innovation is a driver of economic growth. Yet access to finance is scarce in this particular segment. Our latest operation with Česká spořitelna aims to at least partially remedy that,” said Vazil Hudak, the EIB Vice President responsible for operations in the Czech Republic.

“Supporting innovation is one of the strategic goals of our bank. We’ve been boosting local companies’ innovative efforts through our own programmes as well as through cooperation with European financial institutions. The latest agreement with the EIB on a loan-by-loan guarantee helped us complete our portfolio of guarantees from the EU institutions that are now available to companies from start-ups to mid-size firms,” said Ladislav Dvořák, manager of strategic projects at Česká spořitelna.

With this transaction, the EIB is continuing its successful cooperation with CSAS. Since 2002, the EU bank has provided CSAS with ten loans and guarantees amounting to EUR 1.1bn to improve the access of SMEs and midcap companies in the Czech Republic to long term-finance provided under favourable terms.

Background information

Česká spořitelna, a.s. (CSAS) is a leading commercial bank in the Czech Republic. Providing support for entrepreneurs, SMEs and start-ups is among the bank’s strategic goals. Innovation and support for innovation are an indispensable part of the bank’s portfolio. Česká spořitelna has introduced a special programme – “Top Innovations” – focusing on funding innovation in different industries. The bank has also teamed up with European financial institutions (EIB, EIF) to further help local companies finance their innovative efforts. Česká spořitelna cooperates with the EIB on InnovFin guarantees for companies with up to 3 000 employees. It also offers EaSI guarantees by the EIF for start-ups and InnovFin guarantees by the EIF for innovative companies providing jobs to up to 500 people.

InnovFin financial products

Under Horizon 2020, the new EU research programme for 2014-20, the European Commission and the European Investment Bank Group (EIB and EIF) have launched a new generation of financial instruments and advisory services to help innovative firms access finance more easily. Until 2020, “InnovFin – EU Finance for Innovators” will offer a range of tailored products, which will make available more than EUR 24bn in financing support for research and innovation (R&I) by small, medium-sized and large companies and the promoters of research infrastructure. This finance is expected to support up to EUR 48bn in final R&I investments.

InnovFin builds on the success of the Risk-Sharing Finance Facility developed under the seventh EU framework programme for research and technological development (FP7), which financed 114 R&I projects to the tune of EUR 11.3bn and in addition provided loan guarantees worth over EUR 1.4bn.

Backed by funds set aside under Horizon 2020 and by the EIB Group, InnovFin financial products support R&I activities, which by their nature are riskier and harder to assess than traditional investments, and therefore often face difficulties in accessing finance. All are demand-driven instruments, with no prior allocations between sectors, countries or regions. Firms and other entities located in EU Member States and Horizon 2020 Associated Countries will be eligible as final beneficiaries.

InnovFin MidCap Guarantee provides guarantees on debt financing of up to EUR 50m, in order to improve access to finance for innovative midcaps (up to 3000 employees) in order to improve access to finance for innovative midcaps. This facility is being rolled out through financial intermediaries, namely banks and other financial institutions, which will be guaranteed against a portion of their potential losses by the EIB.