The European Investment Bank (EIB) is granting two global loans of EUR 20 million each to Volksbank CZ a.s. and VB Leasing spol s.r.o., two entities of the Österreichische Volksbanken A.G (ÖVAG) group in the Czech Republic.
Global loans take the form of credit lines made available to banks or financial institutions, which onlend the proceeds under their own management, at their own risk and own conditions for small or medium-scale investment projects meeting EIB's criteria.
The global loans to ÖVAG in the Czech Republic will be used to finance small scale environmental, energy saving, industrial, infrastructure and tourism projects undertaken by private and public sector promoters (including municipalities).
These loans are the first global loans signed with ÖVAG Group. ÖVAG will also be the first EIB partner benefiting from the SME Finance Facility (SME FF), a special scheme promoted by the European Commission under the PHARE Program. The SME FF aims at supporting term financing for the smaller segment of the SME market. It provides the partner bank with an incentive in the form of a specific contribution to further develop a strong and competitive SME sector in the Accession Countries.
The EC has made available EUR 45 m for the implementation of the SME FF with the EIB. The EIB in turn will allocate a minimum of EUR 450 m of its global loan financing for the SME FF.
With these loans, total amount of Global Loans in Czech Republic is EUR 337 m, which added to larger project financing of EUR 3 008 m, brings total lending in Czech Republic up to EUR 3 345 m.
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 Union's co-operation policy toward third countries. Since 1990, nearly EUR 18 billion have been lent to projects in the ten Central European accession countries. Owned by the Member States, the EIB raises the bulk of its funds on the capital markets worldwide and, due to the Bank's 'AAA' credit rating, at the keenest terms. Being a non-profit institution, the Bank passes on these terms to public and private project promoters.