The European Investment Bank has granted global loans to Central European International Bank (CIB) and Kereskedelmi és Hitelbank (K&H Bank), and - under these operations - has signed Finance Facility Agreements with Inter-Europa Bank (IEB) and K&H Bank for the special financing of Small- and Medium-sized Enterprises (SMEs).
Global loans are credit lines to financial intermediaries (partner Banks), which on-lend the proceeds under their own management, at their own risk and own conditions for small or medium-scale investment projects meeting EIB's criteria. Long-term global loans of the EIB allow the partner banks to increase and diversify their long-term funding sources and to step-up their longer-term financing of projects. The range of EIB's partner banks also means more choice and should result in better service and lower financing costs for the final beneficiaries which are typically SMEs and public or private promoters of infrastructure projects.
The EUR 50 million loan to CIB will be used for financing small- and medium-sized projects in the field of environmental protection, energy savings, infrastructure, industry, services or tourism.
Of the EUR 70 million loan to K&H Bank, EUR 50 million are earmarked for the same purpose as the loan to CIB, while an amount of EUR 20 million will be allocated to the tourism and municipal infrastructure sector and where EIB is ready to finance ( via K&H Bank) up to 75 percent of the total project cost. By financing more than the usual 50 percent of project costs, EIB is providing an incentive for fast implementation and completion of investment projects.
The loans to K&H and IEB will benefit from the SME Finance Facility, a special scheme promoted by the European Commission. It provides EIB's partner banks with an incentive in the form of a specific contribution for supporting the development of a strong and competitive SME sector in the Accession Countries. The two banks will be the first EIB partner banks benefiting from the SME FF in Hungary.
At the signing of the loans EIB Vice President, W. Roth, said: "The global loans will serve many purposes at once. They will enhance EIB's support in favour of the SME sector, and should have a catalytic effect on further foreign direct investments into Hungary, help to improve the international competitiveness and integration of the country's industry, contribute to provide environmental protection and reduction of pollution, promote the modernisation of the energy sector and improve infrastructure. At the same time, they will contribute to the development of long-term finance in Hungary which is crucial for financing of investment and catching up economically. "
The European Investment Bank, the financing arm of the European Union, has the task of supporting EU policies. In 2001, the Bank granted loans totalling EUR 36.8 billion, of which 31 billion within the EU. The EIB is re-financing its lending by issuing bonds on the international capital markets. Due to its AAA credit rating it is able to raise funds at the keenest terms. Being a non-profit institution, the Bank passes on these terms to public and private project promoters as well as partner banks. Since 1990 the EIB has lent over EUR 19 billion to the Central- Eastern European Accession countries and has become the region's most important foreign source of finance. In Hungary, the EIB has lent so far EUR 2. 3 billion, of which 785 million in global loans.