The European Investment Bank's (EIB) possibilities to extend loan financing to investments by SMEs in Finland have taken a big step forward as two new global loan agreements have been signed with OKOBANK and Finnvera for EUR 100 million and EUR 25 million (1), respectively.
EIB loan financing of small and medium-sized enterprisesis implemented through the global loans scheme where the EIB makes credit linesavailable to financial intermediaries. These intermediaries select the projectsbased on criteria laid down in liaison with the EIB and take on management ofthe loan and the associated risk.
Theglobal loans scheme combines the EIB's funding at favourable terms and thenational intermediary's close relationship to and good knowledge of the localmarket.
EIB Vice PresidentEwald Nowotny says that it is a top priority for the EIB as the EuropeanUnion's bank to support investments that will create jobs.
"As small andmedium-sized enterprises are particularly vital for economic growth and jobs, wewill continue our efforts to promote future global loan operations and venturecapital investments in the Finnish market."
The EIB has financed investments by Finnish SMEs withinthe framework of two previous global loan agreements with OKOBANK (totalling EUR35 million) and Finnvera, then KERA (EUR 16 million). Allocations from these twocredit lines have supported some 80 SMEs covering virtually all sectors frommechanical engineering to tourism investments.
TheEIB has also extended some EUR 81 million in venture capital to financeinnovative and high-growth Finnish enterprises. In addition, credit linestotalling EUR 195 million have been established with Municipality Finance tofinance small and medium-sized public sector investments.
EUR 100 million loan to Metsä-Botnia
The EIB hasalso signed a EUR 100 million loan agreement with Metsä-Botnia Oy tofinance part of the modernisation and environmental upgrading of the Joutsenopulp mill. An approx. EUR 75 million EIB loan was extended to finance thisinvestment already in 1998.
Thecapacity of the Metsä-Botnia pulp mill will be increased by some 30 per cent to420 thousand tons per year. In addition, the investment meets the EIB'sobjectives to improve energy efficiency and environment protection as it willmake the Joutseno mill self-sufficient in energy and will upgrade itsenvironmental performance in order to substantially reduce environmentalemissions.
The EIB's Finnish "pulp and paper loan portfolio" contains in addition to Metsä-Botnia, also UPM-Kymmene and Stora Enso.
During Finland's EU-membership, the EIB has extendedloans totalling some EUR 2.5 billion for infrastructure and industrialinvestments in Finland, as well as venture capital financing.
The AAA-rated EIB, the European Union's bank, extends long-term financing forinvestments both within and outside the EU.
(1) EUR 1 = 0.6003 GBP.