The European Investment Bank (EIB), the European Union's long-term financing institution, is providing a global loan (credit line) of ECU 30 million (1) to Kereskedelmi és Hitelbank Rt. (K&H), Budapest, for financing smaller environmental protection, energy saving, infrastructure, industrial and tourism projects in Hungary. K&H has been a successful global loan intermediary of the EIB since 1992 and is today one of EIB's key partners in the country. Since 1997, Kredietbank of Belgium and Irish Life are important shareholders of K&H.
Hungary's Accession Partnership with the EU specifically foresees increased investment support for the development of small and medium-size enterprises (SMEs) and for schemes helping to meet the environmental standards of the EU. In line with the EIB's specific role to help prepare for EU membership, its global loan to K&H Bank offers suitable financing terms for SME and environmental projects. By making funds available to a small number of solid financial intermediaries in the candidate countries, the EIB also seeks to further growth and employment in the future EU members.
The global loan to K&H Bank, together with the ECU 110 million facility in favour of the Municipality of Budapest also signed today, brings total EIB financing in Hungary to ECU 1.3 billion. Previous loans were for the upgrading of the rail, road and telephone networks as well as the Budapest Metro, and for Hungary's air traffic control system. In the energy sector, the EIB helped modernise electricity generation and distribution as well as oil refining and distribution. As in the EU, global loans channelled through selected Hungarian banks have become a well-established and successful delivery system of EIB funds to small and medium-scale ventures. They represent a third of EIB's lending in the country.
The EIB was set up in 1958 under the Treaty of Rome to lend to projects furthering European Union policies. While strengthening weaker EU regions has always been its main goal, the Bank also lends to projects outside the European Union under the EU co-operation policy toward third countries. Since 1990 some ECU 8 billion were lent to projects in the ten Central European countries which have applied for EU membership. Owned by the Member States, the EIB raises the bulk of its funds on the capital market where its bond issues are consistently graded `AAA', the best credit rating.
(1) Conversion rates used by the EIB for statistical purposes during the current quarter are those obtaining on 31/09/1998, when 1 ECU = 1.96 DEM, 0.69 GBP,1.17159 USD, 256.4237 HUF.