The European Investment Bank (EIB) and Banco BPI SA (BPI) have taken new steps to increase their collaboration in order to provide financing for innovation in Portugal. The EU bank has granted BPI a guarantee to partially cover the credit risk of a EUR 300 million portfolio of new loans for R&D projects implemented by businesses.
The agreement was signed in Lisbon today and is supported by the InnovFin MidCap Guarantee facility under Horizon 2020, the EU's research and innovation programme. The aim of this initiative is to improve access to finance for innovative SMEs and midcaps by providing a guarantee to partner financial intermediaries.
This InnovFin Guarantee will therefore help create jobs in Portugal, as SMEs and midcaps are essential vehicles for economic growth in the country. The agreement will enable BPI to develop a new portfolio of innovative small and medium-sized companies (up to 3 000 employees). The EIB estimates that around 80% of the investment projects financed will be implemented in cohesion areas of Portugal.
The EU bank's relationship with BPI was initiated in 1985 soon after BPI was founded in 1983. The institutions have signed numerous agreements to provide financial support to a wide array of sectors, including in the areas of agriculture and energy efficiency investments, the latter under an EU-backed investment initiative (PF4EE). In July, the EIB provided a EUR 100 million loan to BPI specifically dedicated to financing Portuguese SMEs and midcaps on advantageous terms.
The EIB Vice-President overseeing the Bank’s activity in Portugal, Román Escolano, stated: “The contract signed today will facilitate Portuguese companies’ investment in innovation, which is essential to increase their competitiveness and support their long-term growth. SMEs and midcaps are fundamental vehicles for job creation in Portugal and, for this reason, supporting their projects in innovation – on favourable financial terms and with longer tenors – is one of the EIB’s priorities.”
Carlos Moedas, EU Commissioner for Research, Science and Innovation, said: "This deal will enable innovative companies in Portugal to go further, faster and with higher risks, generating new jobs and growth and developing new markets. This is especially welcome as 80% of this investment should go to areas already funded under the EU’s cohesion policy."
Pablo Forero, Chief Executive Officer of Banco BPI said: “This operation marks a new milestone in the relationship between BPI and the EIB. Following a public tender launched by the EIB under the Horizon 2020 programme promoted by the European Commission, we are delighted to have been selected as the first financial intermediary in Portugal to participate in a risk-sharing operation with the EIB, on a pari passu basis. It will enable BPI to strengthen its activities in the provision of medium and long-term finance for projects carried out by leading innovative midcap companies and SMEs in Portugal, one of the shared key business priorities of both financial institutions.”
In 2016, the EIB Group provided EUR 33.6 billion for small and medium-sized businesses, reaching 300 000 companies throughout the EU. In Portugal, the EIB Group signed agreements last year totalling EUR 1 780 million, including EUR 1 196 million that helped support more than 8 200 Portuguese SMEs and midcaps.
The European Investment Bank (EIB) is the long-term lending institution of the European Union owned by its Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals. For more information about the EIB in Portugal, click here.
InnovFin MidCap Guarantee provides guarantees and counter-guarantees on debt financing of up to EUR 50m, in order to improve access to finance for innovative midcaps (up to 3000 employees) which are not eligible under the InnovFin SME Guarantee. This facility is implemented by the EIB, and will be rolled out through financial intermediaries, such as banks or other financial institutions. Under InnovFin MidCap Guarantee, financial intermediaries will be guaranteed against a portion of their potential losses by the EIB.
40 years of activity in Portugal: the EIB is a long-standing partner of Portugal. The EU Bank initiated its support to the Portuguese economy in 1976, even before the country’s accession to the then European Communities in 1986. So far, the EIB has lent over EUR 45.000 million to fund projects in Portugal. The EIB Group, which comprises the EIB and its subsidiary the European Investment Fund, has provided financing to more than 25.000 SMEs through credit lines in cooperation with the national banking system. 40 years of a strong a relationship financing major projects throughout the country that has contributed to the modernisation of Portugal.
For additional information about the Investment Plan for Europe in Portugal, please click here.