The European Investment Bank (EIB) has signed a GBP 100 million (EUR 113 million) new generation EIB loan for small and medium sized enterprises (SMEs) with the Abbey Group in the UK. Abbey will act as a financial intermediary for the EIB funds, passing them onto SMEs with eligible projects. SMEs should start to benefit from EIB finance early in the third quarter of 2009.

The EIB Loan for SMEs to Abbey is the fourth new loan of its kind in the UK since September 2008 when the EU Finance Ministers called upon the Bank to extend, modernise and diversify its support to the SME sector to help small businesses weather the financial crisis. The new generation loans ensure that the final recipients – the UK small firms – benefit from the financial advantage offered by EIB funds.

Simon Brooks, EIB Vice President responsible for lending activities in the UK, said, “At the end of 2008, I was delighted to announce that the EIB had signed new loans worth GBP 650 million to help small and medium sized enterprises to undertake key investment projects to expand their business opportunities. I was confident then that this momentum would continue, and the signature of today’s loan with the Abbey Group is a clear signal of the Bank’s commitment to playing its part in supporting SMEs in their crucial role in the development of the UK economy, especially in these difficult times. "

Small businesses are of the utmost importance to the UK economy. An estimated 4.3 million UK SMEs account for almost half of the country’s private sector employment and around 40% of private sector turnover.

Abbey will borrow GBP 100 million from the EIB to benefit smaller firms across a wide range of economic sectors. This will be the EIB’s first loan for SMEs with Abbey; however, the Bank has long-standing relationships to provide financing to SMEs with Alliance & Leicester, the Group’s subsidiary, and also with Abbey’s parent company, Santander Group in Spain.

Steve Pateman, Executive Director for Abbey Corporate and Commercial Banking, said: “We are pleased to be working with the EIB as we seek to build a business that supports the growth of SME’s within the UK; businesses that will play a key part in helping the UK economy move forward. As part of one of the strongest and best capitalised banks in the world, we are open for business and committed to supporting well run viable businesses. We are building a business that has relationship banking at its heart, with plans to open two further regional corporate banking centres and increase the number of relationship managers by 25 per cent in 2009. Our expanded regional network gives us the opportunity to develop close relationships with local businesses helping them through some of the challenges they may now face towards longer-term success” 

EIB loans to UK SMEs in 2008

The European Investment Bank (EIB) extensively revised its product offering for SMEs in 2008, developing a new lending formula called EIB loan for SMEs, which is designed to be simpler, more flexible and more transparent to benefit a greater number of small businesses. The Abbey loan signed on 19 June has been made under these conditions, as have three EIB Loans for SMEs to RBS, HBOS and Barclays Bank which were finalised in December 2008. Other loans are under discussion. The Bank has also agreed that previously signed loans for SMEs in the UK should be available under the new, more flexible conditions. In total, the EIB has now made GBP 1 billion of finance available to SMEs in the UK since the fourth quarter of 2008 through its programme of ‘EIB loans for SMEs’, significantly improving the way in which the EU’s long-term lending institution is able to support small and medium sized firms. The Bank is also supporting SMEs through the JEREMIE scheme, with a loan of GBP 75 million to Finance Wales for the benefit of Welsh SMEs, with further similar projects under consideration.

The EIB in the UK

The European Investment Bank (EIB) is the European Union’s long-term financing institution which supports projects promoting European objectives. The EIB made its first loan in the UK in 1973 and since then the EIB has lent almost EUR 70 billion to support the UK economy. In the five years from 2004 to 2008 alone, the EIB financed key investment in the UK to the tune of EUR 18.9 billion (GBP 13.3 billion).

In 2008 alone the Bank allocated EUR 3.8 billion (GBP 3 billion) for UK projects ranging from investment helping UK regional development, to protecting the environment, promoting clean and secure energy sources, improving education facilities, promoting the development of national and regional transport, and supporting the activities of small and medium sized enterprises.