PBZ LRS ENHANCED SUPPORT FOR MIDCAPS

Promoter – Financial Intermediary

PRIVREDNA BANKA ZAGREB DD

Location

• Croatia

Description

The project consists of an unfunded risk participation scheme under a full delegation approach by which the EIB will cover up to 50% of the losses with respect to each defaulted loan of a portfolio of loans or other debt instruments to mid-caps in Croatia.

Additionality and Impact

This Linked risk sharing operation is designed to provide support to Mid-caps in Croatia in order to foster their access to finance and contribute to the long-term economic growth. 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 geopolitical tensions in some of the European neighbouring countries, the proposed risk sharing operation may help to alleviate some of the pressures faced by the real economy.

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

Through the intermediation of PRIVREDNA BANKA ZAGREB DD (PBZ), the new loan portfolio will support the final beneficiaries in their investment efforts as well as in funding their working capital needs. EIB and PBZ are aiming to further catalyse access to finance for mid-caps and diversify the lending products to Croatian corporates through the experimental issuance of mini-bonds for mid-caps. The EIB guarantee will enhance lending capacity and risk appetite of the financial intermediary on a semi granular portfolio of mid-cap loans which would benefit from a financial advantage in their risk pricing and cost of lending.

Sector(s)

• Credit lines - Credit lines

Proposed EIB finance (Approximate amount)

EUR 100 million

Total cost (Approximate amount)

EUR 280 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 - 20/11/2024