ZABA LRS ENHANCED SUSTAINABLE SUPPORT

Promoter – Financial Intermediary

ZAGREBACKA BANKA DD

Location

• Croatia

Description

The project consists in a Linked Risk Sharing guarantee to Zagrebacka Banka DD (ZABA) covering up to 50% of the losses of each defaulted loan of a portfolio of loans to mid-caps and public sector entities.

Additionality and Impact

This Linked risk sharing operation is designed to provide support to Mid-caps and Public Sector Entities in Croatia in order to foster their access to finance and contribute to the long-term economic growth as well as to the sustainable and green transition of the Croatian economy. The operation addresses the underlying market failure in access to finance faced by Final Beneficiaries due to information asymmetries and credit considerations on the Financial Intermediaries which are located in a Cohesion area of the EU. Given the economic uncertainty exacerbated by supply chain constraints, inflation, rising interest rates, energy security constraints, the lasting effects of the pandemic as well as the war in Ukraine, the proposed risk sharing operation may alleviate some of the pressures faced by the real economy. Specifically, the operation will support social objectives such as employment via the provision of eligible transactions such as loans for working capital and investment purposes to mid-caps.

The Financial Intermediary of the present operation is an established player in the target market and a repeat client of the EIB, having successfully implemented previous operations. The guarantee may alleviate capital and credit related concerns of the Financial Intermediary and thereby free up additional lending capacity. The EIB contribution is structured on assuming credit risks to the Final Beneficiaries and thereby allowing the Financial Intermediary to engage into transactions that it would not have engaged in without the EIB's intervention. The operation is expected to carry a signalling effect, thereby crowding in other parties.

Objectives

The unfunded risk participation scheme will enhance access to finance for the target beneficiaries supporting their investment efforts. In addition, 20% of the total project amount will be dedicated to support the transition into alternative sustainable energy sources and energy efficiency projects for existing commercial and public buildings. Both EIB and ZABA aim to further catalyse finance for mid-caps bringing a positive impact on the whole economy, especially in light of economic uncertainty exacerbated by the war in Ukraine, supply chain bottlenecks, energy security and lasting effects of the pandemic.

Sector(s)

• Services - Public administration and defence; compulsory social security
• Credit lines - Credit lines

Proposed EIB finance (Approximate amount)

EUR 150 million

Total cost (Approximate amount)

EUR 360 million

Environmental aspects

Final beneficiaries will be requested to comply with applicable national and EU legislation, as appropriate.

Procurement

Final beneficiaries will be requested to comply with applicable national and EU legislation, as appropriate.

Status

Signed - 2/08/2023