The EBRD is providing a loan of up to €20 million to Raiffeisen FACTORING d.o.o. to provide financing in the form of factoring to small and medium-sized enterprises (SMEs) and corporate clients in Croatia, including in the less-developed regions of the country. Increasing the availability of finance to the real economy is crucial for Croatia to return to growth.
The agreement follows a previous €10 million EBRD loan to Raiffeisen FACTORING in November 2013. It is a fully-owned subsidiary of Raiffeisenbank Austria d.d. Zagreb and began operations in January 2008. The company is expanding rapidly in order to meet growing demand. A new factoring law extending the scope of available services is about to be introduced.
While many local corporates have recognised factoring as a suitable financial product to address their needs for working capital, others are not yet convinced. As part of its market outreach, Raiffeisen FACTORING will place special emphasis on informing potential clients about the benefits of the product.
With this loan the EBRD is specifically targeting local SMEs, whose development remains limited by funding constraints. SMEs in Croatia employ almost 64 per cent of the total workforce and account for roughly 50 per cent of the country’s GDP.
Vedrana Jelušić Kašić, EBRD Director for Croatia, said: “We are pleased to sign this loan extension to Raiffeisen FACTORING. The fact that we are doing this soon after the first loan agreement demonstrates the successful introduction of factoring as a new product on the Croatian market. This complements the Bank’s efforts and the support it has provided for the development of the new factoring law.”
Igor Fišer, President of the Board of Raiffeisen FACTORING, added: “We are pleased to continue our cooperation with the EBRD, especially in view of the successful implementation of a first credit line last November which also was the first EBRD financing provided to a factoring company in Croatia. The new loan illustrates the significance and benefits of cooperation between development banks and commercial banks in support of SMEs in Croatia.”
The EBRD has been active in Croatia as an investor since the country’s independence and has invested some €2.9 billion in almost 160 projects to date. The Bank’s activities include all sectors of the economy and are especially strong in infrastructure, corporate, financial institutions and energy.