Irish SMEs benefit from EUR 350 million of EIB finance
26 March, 2009
The European Investment Bank (EIB) is finalising agreements to extend three new generation EIB loans for small and medium sized enterprises (SMEs) in Ireland for a total of EUR 300 million. The three recipient banks - Allied Irish Bank (AIB) ,Ulster Bank and Bank of Ireland - will act as financial intermediaries for the EIB funds, passing them onto SMEs with projects which further EU policy objectives. These loans complement EUR 50 million of EIB funds which were recently made available to Bank of Scotland (Ireland) to finance investment projects by small businesses. Irish enterprises should start to benefit from the EIB Loans for SMEs within the coming weeks.
The signature of the EIB Loans for SMEs was welcomed by the Irish Minister for Finance, Brian Lenihan TD:
"I very much welcome the support of the European Investment Bank in providing this significant lending facility for small and medium sized enterprises, which are of critical importance to the European economy in general and to smaller economies such as Ireland's in particular. I very much appreciate the efforts of the EIB officials and the participating Irish banks in bringing the initiative to fruition. It is a very positive signal of the joint capacity of Europe and Ireland working together to meet the credit needs of the enterprise sector.
The EIB loans for SMEs carry particular importance in the current financial and economic climate when many smaller businesses face difficulties in accessing finance. In September 2008, the EU Finance Ministers called upon the EIB to extend, modernise and diversify their loans to the SME sector. The new generation loans ensure that the final recipients - the Irish small firms - benefit from the financial advantage offered by EIB funds.
Plutarchos Sakellaris, EIB Vice President responsible for lending activities in Ireland, confirmed the Bank's commitment to supporting SMEs. "I am delighted to share the platform today with the Irish Finance Minister - a clear sign that we at the EIB are committed to working hand-in-hand with individual EU Member States to tailor the Bank's financial support to each country's needs. Ensuring access to finance for small businesses is essential for the Irish economy and it is a crucial element of the EIB's newly adopted measures to help Europe through the current financial and economic crisis. We have finalised agreements for three new loans to Allied Irish Bank, Ulster Bank and Bank of Ireland and we are hopeful that our increasingly rich relationships with Irish banks will lead to similar success in the future".
Small businesses play a key role in the Irish economy and account for more than half of the total private sector workforce. Irish SMEs will soon already begin to benefit from EIB finance via a EUR 50 million package which was dedicated to Bank of Scotland (Ireland) from a GBP 250 million loan made by the EIB to HBOS (UK) in December 2008. The EIB has enjoyed a nearly 30-year long relationship working with the Bank of Scotland to finance sound projects by Irish SMEs. The other three financial intermediaries receiving Loans for SMEs are also well know to the EIB from previous lending operations.
Allied Irish Bank (AIB) has traditionally been one of the EIB's key financial intermediaries in Ireland, having received eight EIB credit lines between 1990 and 2003 to benefit SMEs. The current EIB Loan for SMEs to AIB is worth EUR 100 million and will be allocated to sound investment projects by SMEs all around Ireland.
Ulster Bank is also securing a EUR 100 million EIB loan which will be dedicated to financing SME investments, under normal credit terms, across the island of Ireland, north and south. The projects which will be supported by the loan to Ulster Bank will cover a range of economic sectors. This is the first EIB loan which has been made to Ulster Bank to benefit SMEs since 1998.
Bank of Ireland has worked in partnership with the EIB for over 20 years to provide funding for SMEs in Ireland. The Bank is now entering into its seventh partnership, with a EUR 100 million line of credit across the island of Ireland, north and south to encourage growth in the industry. Qualifying SMEs, including from the service and agriculture sectors, will significantly benefit from this facility.
EIB loans to Irish SMEs
The European Investment Bank (EIB) extensively revised its product offering for SMEs in 2008, developing a new lending formula called EIB loan for SMEs, which is designed to be simpler, more flexible and more transparent to benefit a greater number of small businesses. The three new loans mentioned in this press release have been agreed under these new conditions which significantly improves the way in which the EU's long-term lending institution is able to support small and medium sized firms. In addition to the three loan agreements finalised on 25 March, the EIB agreed in early 2009 that EUR 50 million of a GBP 250 million loan made to HBOS (UK) in December 2008 could be dedicated to the bank's Irish subsidiary - Bank of Scotland (Ireland).
The EIB in Ireland
The European Investment Bank (EIB) made its first loan in Ireland in 1973 and since then the European house bank has lent almost EUR 10 billion to support the Irish economy. In the five years from 2004 to 2008, the EIB financed key investment in Ireland to the tune of EUR 2.2 billion.
In 2008 alone, the EIB lent EUR 450 million to support investment underpinning the Irish economy, financing projects modernising the national transport network, promoting research and development and strengthening the security of energy supplies.
Source: European Investment Bank http://www.eib.org