The European Investment Fund (EIF) will provide guarantees worth €140 million to Erste Group in Croatia, allowing the Croatian lender to originate a portfolio of €200 million of financing for Croatian small and medium businesses, the two financial institutions said on Wednesday. 

The EIF guarantees stem from the Pan-European Guarantee Fund (EGF), a €25 billion guarantee facility set up by the European Investment Bank (EIB) Group, of which EIF is part, in 2020 to accelerate the post-Covid-19 recovery of European economies, safeguard jobs, and provide much needed liquidity to European SMEs.

This is the first EGF operation signed in Croatia, which has contributed around €105 million to that fund, and the EGF guarantees will allow Erste to offer loans and finance leases to Croatian SMEs under more favourable terms including, among others, reduced interest rates, longer grace periods, lower collateral requirements or extended maturity, the EIF said.

EIB Vice President, Chairman of the EIF Board of Directors, and Chairman of the EGF Dario Scannapieco said that the EGF was a result of prompt reaction to the pandemic by the EIB Group.

“The Fund is just one of the support mechanisms the EIB offered to the EU member states to accelerate economic and social recovery of the EU. I would like to thank the Government of Croatia for their decision to participate in the EGF which allowed this signature today.”

The EIF also quotes in its statement Croatian Finance Minister Zdravko Maric, who expressed satisfaction with the first EGF operation signed in Croatia.

“Together with other Member States of the European Union, at the start of the unprecedented crisis last year we have approved a unique set of measures to help the European economy. The EGF established within the EIB Group is the key element in this emergency economic response. The EGF guarantees present a unique opportunity for making available additional financing for small and medium companies, mid-caps and corporates in order to help them bridge the current crisis. We look forward to further new EGF operations signed in Croatia and to their successful deployment for the benefit of businesses in Croatia,” Maric was quoted as saying.

Boris Centner, Member of the Management Board of Erste Bank, expressed satisfaction that Erste Bank was the first partner bank within the EIB Group’s Pan-European Guarantee Fund and that it was happy to continue and further deepen their long-standing successful cooperation.

“So far, in partnership with the EIB and EIF we have provided a total of €390 million in funding to our clients. Support for small and medium-sized enterprises, as important drivers of growth and economic development, is one of our key strategic pillars. With the help of this guarantee instrument, we will provide support to our clients through liquidity loans and investment loans, and – with more favourable lending terms – help them quickly and easily implement many successful projects in the future,” Centner said.