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EBRD, EU and CEB support Hungarian small businesses
EUR30 million joint financing to Central-European International Bank Group
Though Hungary has been a forerunner of economic reforms in central and eastern Europe, ample scope remains to develop its small and medium-sized enterprises (SMEs). To support this crucial segment of the economy, the Council of Europe Development Bank (CEB) and the European Bank for Reconstruction and Development are lending €30 million to the Central-European International Bank (CIB) Group, owned by Banca Intesa Group.
The package consists of a €20 million loan from CEB to finance investments in infrastructure and equipment undertaken by Hungarian SMEs. A first disbursement has been used to contribute to the financing of the restoration and reconstruction works of a historical building in the centre of Budapest. Taking into consideration the indirect effects on suppliers, the financing will have a major impact on the local employment market.
In addition, the EBRD is lending €10 million to CIB Leasing, a subsidiary of CIB Bank. The loan is complemented by funds from the European Commission via the Phare Programme. The EBRD sees the expansion of leasing activities as one of its priorities under its efforts to promote the development of SMEs, said the Bank’s Director for Hungary, Hubert Warsmann. We expect that the loan will help Hungarian entrepreneurs prepare for the competition within the EU, he added.
Tibor Galambos, chief officer of CIB Leasing Group, said the EBRD loan will provide support to Hungarian SMEs, a sector which has developed strongly over recent years and will also help to prepare for EU accession. CIB Leasing offers special funding arrangements to SME clients in the form of financial leasing. As market leader CIB Leasing has one of the largest networks in Hungary with highly experienced staff who are familiar with the local market.
Founded in 1979, CIB Bank is today owned by Italy’s Banca Intesa and is the fourth largest bank in Hungary. Banca Intesa, with its headquarters in Milan, is the largest Italian banking group and through its 3,800 branches provides a wide range of retail and commercial banking and other financial services to 11.5 million customers in Italy and abroad. Banca Intesa’s principal services are focused on deposit taking, lending, collection and payment services, investment banking, capital market services, securities custody and settlement, foreign currency transactions, leasing, factoring and asset management.
The EBRD’s loan comes under the EU/EBRD SME Finance Facility, a joint programme of the European Commission and the EBRD to support the development and growth of entrepreneurs by facilitating their access to finance, launched in 1999 under the Phare Programme. The Bank has committed €700 million, of which €495 million has been disbursed by local banks and leasing companies via 19,000 loans and leases. The EC has committed €130 million in grant financing and for technical assistance since the Facility’s launch in 1999.
The Phare Programme is the main channel for the EU’s financial and technical co-operation with accession countries. Phare’s overall budget is about €1.5 billion a year. For further information see: http://europa.eu.int/comm/enlargement
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