The European Investment Bank (EIB) provides two global loans amounting to EUR 30 million to Citigroup Hungary to finance investment projects of small and medium-scale enterprises: EUR 15 million to Citibank Rt and EUR 15 million to Citibusiness-Leasing Rt.

The loans will make EIB funding available to SME investors and municipalities to finance their long-term small and medium size investments. The lending will be focused on productive facilities in the corporate industrial and service sectors and for municipal activities. It will co-finance projects in the areas of environmental protection, energy and energy savings, infrastructure - including health and education as well as urban renewal and social housing, services and tourism. EIB can provide up to 50% of the total project costs, and the Bank's funds can be combined with EU grants under the Cohesion and Structural Funds Schemes.

These global loans represent the first operations signed with the Citigroup in Hungary. They extend to ten the number of banks providing this lending product of EIB in Hungary. This will have positive impacts on final beneficiaries to obtain loans under favourable terms.

Citigroup Hungary will benefit under the signed global loans from the SME Finance Facility, a special scheme promoted by the European Commission under the Phare Programme. The objective of this facility is to increase financing for the smaller segment of the SME market at supporting terms. It provides the partner banks with incentives to further develop a strong and competitive SME sector in the new Member States.

The Global Loans represent special credit lines to selected partner banks operating in the individual countries. This financial scheme is used by the EIB to finance small and medium-size projects with a total investment higher than EUR 40 000 and less than EUR 25 million. EIB partner banks assess each project, assume the credit risk and set the loan conditions for the final beneficiary.

EIB cumulative lending in Hungary amounts to over EUR 4 billion since 1990, of which over EUR 2.5 billion in the last five years. Loans provided by the EIB in the country have expanded in recent years. For example in 2000 the annual lending was EUR 240 million and it had increased in 2003 to EUR 741 million. This year alone the signed loan contracts exceed EUR 700 million up to now.

Loans signed in 2004 in Hungary cover - apart from global loans - the co-financing of projects supported by the EU Structural Funds (EUR 445 million), upgrading of Budapest's education infrastructure and services (EUR 35 million) and the financing of the modernisation of electricity networks operated by E.ON Hungary (EUR 125 million).

Since 1990, the EIB has lent a total of EUR 26 billion in Central and Eastern Europe to finance projects fostering European integration, approx. EUR 3.6 billion of this figure being provided through Global Loans.