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Estonia's small and medium-sized enterprises receive EBRD financing
A €10 million credit line from the European Bank for Reconstruction and Development (EBRD) to Optiva Pank should boost Estonia’s small and medium-sized enterprises (SMEs). Provided under the SME Finance Facility signed by the EBRD and the European Commission in April 1999, this is the first such credit line for an Estonian bank.
Optiva Pank should also benefit from substantial technical cooperation funding aimed at developing a sustainable SME lending programme and a grant to help cover the costs of developing this programme. Both are being funded by the European Commission.
"In line with its mandate to foster the transition to market economies in central and eastern Europe, the EBRD remains fully committed to encouraging banks to increase lending to smaller businesses," said Kurt Geiger, the EBRD’s Business Group Director, Financial Institutions. "Under this facility with the EU, the EBRD is providing financing to banks in Bulgaria, Czech Republic, Latvia, Lithuania, Poland, Romania, Slovenia and – now – Estonia for on-lending to SMEs."
The six-year revolving credit line will support the growth of the bank and enable it to build a portfolio of good-quality medium-term loans. The proceeds of the loan will be used by the bank to provide micro loans (up to €30,000) and small loans (up to €150,000) to qualifying entrepreneurs and SMEs. EU Phare will finance a technical assistance programme for 12 months that will ensure effective implementation of the credit line, including training and technical support to Optiva Pank as it builds its SME lending business.
Optiva Pank was formed through a merger of Eesti Forekspank and Estonian Investment Bank in 1998. It is a universal bank, focusing on SMEs and private individuals. With around 7 per cent market share, the bank is the third-largest in Estonia. It has branch offices in Estonia’s four largest cities (Tallinn, Tartu, Narva, Parnu) and serves 30,000 clients. The leading Finnish financial services group, Sampo-Leonia, now owns 93 per cent of the bank following its purchase of a 58 per cent stake in June 2000 and a tender to minority shareholders. Next month, the bank will be renamed Sampo Pank.
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