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EBRD and EU launch new initiative for micro and small enterprises
€10 million loan for ISTROBANKA to support Slovak small businesses
The EBRD and the European Union are launching a new initiative to support
micro and small enterprises (MSEs) gaining better access to finance with a
first €10 million loan to ISTROBANKA, a mid-sized bank operating in the Slovak
Republic. The credit line, which will enable ISTROBANKA to increase its focus
on micro and small enterprises, will be complemented by €750,000 from the
European Commission for products development, staff training and to improve
quality of services to MSEs.
Financial intermediation in the new EU member states is still low with an
average ratio of domestic credit to GDP of 50 per cent in 2004 compared to an
average of 127 per cent in the EU-15. Micro and small enterprises in
particular are still facing significant credit constraints which limit their
ability to invest and grow.
Under the EU/EBRD Preparatory Action Programme the EBRD will provide loans to
banks and their leasing subsidiaries for on-lending to MSEs and offer
risk-sharing arrangements to partner banks in the new EU countries. The EBRD
will make funding of up to €40 million available and the European Commission
will contribute €4 million in grants for technical assistance. Under the new
initiative, micro and small enterprises with less than 50 employees and a
maximal annual turnover of €10 million will qualify for loans, the average
size of which is expected to be around €25,000.
At the signing with ISTROBANKA, Alexander Auboeck, EBRD Director for the
Slovak Republic, said the new programme will be an important instrument for
promoting financing for micro and small enterprises in the new financial
environment following EU accession. By building confidence and enhancing
capacities it will strengthen and deepen the MSE credit market.
Mag. Volker Pichler, Chairman of the Board and General Manager of ISTROBANKA,
said “I am pleased to announce that ISTROBANKA is the first Slovak bank to
offer local entrepreneurs fast and simple access to funds from this credit
line. The new facility gives us a new opportunity to enhance and improve the
financing of micro and small businesses and thus ensure our further growth in
this market segment.”
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