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EBRD signs €20 million credit line to Slovak bank VUB
European Commission provides additional support for SME financing
The European Bank for Reconstruction and Development is extending a €20
million credit line to Všeobecná úverová banka (VUB) to support small and
medium-sized enterprises (SMEs) in the Slovak Republic. It is the second
credit line for VUB provided under the SME Finance Facility funded jointly by
the EBRD and the European Commission. The credit line has a five-year maturity
and will allow VUB to build a portfolio of good quality loans of up to
€125,000 each.
At the same time, VUB will receive the second tranche of an EC package of
financial and technical support worth up to €1.6 million. Much of that will go
towards a training programme for SME financing in the bank aimed at speeding
up the credit-approval process. A previous credit line to VUB, also for €20
million, was signed in 2001 and is already 90 per cent utilised. Nearly 300
loans with an average size of €57,000 have been extended to enterprises
throughout the Slovak Republic and through VUB's branches in Prague and Brno,
in the Czech Republic.
The development of SMEs is a key priority for the EBRD. It was the Bank's
extensive experience with other small-business lending programmes that enabled
the original VUB credit line to be rolled out so quickly, said Rogers LeBaron,
the EBRD's Director for Bank Lending. The €20 million extension of the
facility will now help guide VUB towards smaller loans using credit scoring
and sound credit principles, as well as support the development of VUB's SME
operations in the Czech Republic.
Tomas Spurny, CEO and Chairman of the Management Board of VUB, said the
development of SME financing is a key strategic priority for VUB. This relates
namely to support local SMEs through simple and user friendly products. Mr
Spurny added that the EBRD is an important partner for VUB not only in terms
of competitive funding but also as a source of technical assistance in
improving the bank's skills in this category of lending. VUB became a member
of the Intesa banking group in 2001, and is a leading bank in the Slovak
Republic, with 14 per cent of market share of all loans distributed in the
country, and 22 per cent in deposits. The bank has also developed a strong
retail banking franchise, with 242 branches and sub-branches, and 4,450
employees, across the country.
This week VUB is hosting the annual EU/EBRD SME Finance Facility Workshop,
attended by 70 representatives of banks and leasing companies from Bulgaria,
Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovenia
and Slovakia. The workshop shares best practices in SME finance and gives
participants an opportunity to learn from each others' experience.
The facility was launched in 1999 under the EC's Phare Programme with the EBRD
to provide SMEs with access to loans, leasing and equity finance from local
financial intermediaries in the EU accession countries. It has channelled more
than €710 million (€600 million from the EBRD, €110 million from the EU) to
SMEs, including €60 million in the Slovak Republic.
The Phare Programme is one of the main channels for the EU's financial and
technical cooperation with the future member countries of the Union. It
foresees annual allocations of €1.5 billion for the eligible countries through
2006. Phare has provided assistance of more than €320 million to Slovakia so
far.
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