The European Investment Bank (EIB), the European Union's financing institution, is advancing two loans for a total of DKK 199 million (ECU 26.7 million) (1) to FIH for underpinning capital investment by fast growing Danish SMEs. The first of these operations consists of a loan for DKK 49 million to FIH, which will onlend the proceeds to Mezzanin Kapital A/S. Its aim is to make available mezzanine capital loans for Danish industrial SMEs. The advantage of such funding is that it lies mid-way between conventional loans and equity participations, thereby serving to strengthen the capital base of SMEs in the broadest sense.

This loan forms part of the EIB's support for small-scale job-creating productive investment and development of specialised financing instruments for SMEs, one of the objectives of its Amsterdam Special Action Programme (ASAP). This is the EIB's first involvement in Denmark's emerging mezzanine finance sector.

The second operation consists of a conventional global loan for DKK 150 million, bringing aggregate global loans advanced to FIH by the EIB to over DKK 4.5 billion. To date, more than 2 200 productive ventures undertaken by Danish SMEs have been financed in this way since 1975.

On the occasion of the signature ceremony in Luxembourg, EIB Vice-President Mr P.L. Gennimatas stated: "Small and medium-sized enterprises command far greater job-creating potential than larger companies. This is why we have arranged these two operations in partnership with FIH, an established EIB intermediary in the financing of Danish SMEs. I am delighted to see these two loans deepen and broaden the EIB's fruitful cooperation with FIH through deployment of financial instruments designed to promote the growth of Danish SMEs and so foster job creation. The EIB is ready to strengthen this cooperation even further, as well as to set up venture capital operations to add to its range of instruments in favour of innovative SMEs.

The European Investment Bank, the European Union's long-term lending institution, finances capital investment furthering EU integration, particularly in the fields of: regional development; trans-European transport, telecommunications and energy networks; industrial competitiveness and integration; SMEs; environmental protection; and security of energy supplies.The EIB set up its Amsterdam Special Action Programme (ASAP) in response to the June 1997 Amsterdam European Council's Resolution on Growth and Employment, which called on the Bank to step up its lending in support of job-creating investment. ASAP encompasses a special window designed to provide venture capital for growth-oriented SMEs, as well as, for the first time, loans in the fields of health, education and urban renewal, and lastly, more substantial funding for trans-European networks and other large-scale infrastructure projects. The EIB can draw up to ECU 1 billion from its reserves over the next three years to cover the provision of venture capital under the SME window.

(1) The conversion rates used by the EIB for statistical purposes during the current quarter are those obtaining on 30.9.1998 when 1 ECU = 40.48 BEF, 6.58 FRF, 0.69 GBP, 7.46 DKK.