Today, the European Investment Bank (EIB) has signed a global loan of EUR 40 million to Volksbank Hungary in Budapest.
Global loans support the financial viability of the projects while contributing to the development of term finance in Hungary, an important element for the further progress of the country's financial system. The loan serves for financing small- and medium-scale projects in the field of energy and energy savings, environmental protection, infrastructure (including health, education, urban renewal and social housing), industry, services and tourism in Hungary. Final beneficiaries will typically be selected SMEs and private or public promoters. It is the first EIB loan to Volksbank Hungary Rt., Budapest, which forms part of the Österreichische Volksbanken Group, an important player in Central and Eastern Europe, with which the EIB is cooperating intensively.
Global loans are credit lines to selected partner banks of the EIB, which on-lend the funds at their own risk and terms to small and medium-scale investment projects meeting EIB's lending criteria. Long-term global loans allow the partner banks to increase and diversify their long-term funding sources and to step-up their financing. The availability of several partner banks in most future EU Members leads to a healthy competition and better service as well as lower financing costs for the SMEs and municipalities. In Hungary, EIB global loans have become a well-established and successful instrument for long-term funding of smaller projects of SME's and municipalities. The EIB's partner banks include banks with substantial interests across the region and an adequate branch network.
The European Investment Bank, the financing arm of the European Union, finances projects which help implement EU policy in the present and future EU countries as well as in a number of developing nations around the world. 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 some EUR 20 billion in Central and Eastern Europe, EUR 2740 million in Hungary so far, and has become the region's most important external source of finance. The EIB's financing in Central and Eastern Europe aims at the development of a competitive SME sector, encouraging Foreign Direct Investment, improving infrastructure and supporting investment required for complying with EU's environmental legislation. Global loans support the financial viability of such projects and, at the same time, contribute to the development of term finance, an important element for the further progress of the Accession Countrie's financial systems.