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EU, EBRD and Latvijas Unibanka develop small businesses
€10 million credit line to continue to strengthen economy in Latvia
A €10 million credit line from the European Bank for Reconstruction and Development to Latvijas Unibanka (LUB), the second-largest bank in Latvia, will help it to strengthen the country's small business sector and promote regional development across the country. The credit line is part of the EU/EBRD SME Finance Facility, a programme of the European Commission in co-operation with the EBRD aimed at financing small and medium-sized enterprises (SMEs).
The EBRD is providing the credit line, which is complemented by a substantial package of technical assistance and performance incentives for up to €1.8 million made available by the European Commission. The new credit builds on a similar loan signed in 2000, which has helped LUB to disburse more than 725 loans to small businesses throughout Latvia, of which 80 per cent were outside Riga, and nearly 20 per cent went directly to farmers.
Kurt Geiger, Business Group Director for Financial Institutions at the EBRD, said SMEs are an important part of Latvia's economy. In a country where 97 per cent of businesses are SMEs, the loan will help to strengthen the country's economy, promote regional development and give local entrepreneurs greater access to medium-term financing.
The SME Facility was launched on April 1999 under the EC's Phare Programme with the EBRD to encourage the growth and development of SMEs by facilitating access to loans, leasing and equity finance from local financial intermediaries in the EU candidate countries.
LUB is a universal bank with 29 branches and 37 sub-branches throughout Latvia and employs over 1,370 people. The loan reinforces the bank's commitment to provide small-business loans as an integral part of its ongoing business development. The EBRD and LUB have worked together successfully for six years. In 1996, the EBRD took part in the privatisation of LUB, and in 1995 financed a $20 million credit line to fund SME development. In 1999, the EBRD provided LUB with a $30 million syndicated medium-term loan to support its activities following the Russian crisis.
"It has been truly rewarding for our bank for several years to have been chosen by the EBRD as partners in Latvia," said Andris Berzins, President of Unibanka. "Unibanka's cooperation with the EBRD in Latvia could serve as a platform for international projects implemented jointly by the EBRD and the SEB Group."
Phare is currently the main channel for the EU's financial and technical cooperation with the candidate countries of central and eastern Europe. The budget earmarked for the programme as a whole is about €1.5 billion per year.
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