EIF and Bank Pekao have signed a guarantee agreement to support lending to small and medium-sized enterprises (SMEs) under the Risk Sharing Instrument (RSI), a joint initiative of the European Investment Bank Group and the European Commission.
This agreement allows Bank Pekao to provide innovative companies in Poland with access to a total of EUR 80 million of debt finance over the next two years and with support of the 50% guarantee offered by the EIF. This will make it easier for Bank Pekao to offer innovative companies additional financing at favourable conditions. This is the first RSI agreement in Poland and eleventh in Europe, bringing the total loan finance available to innovative businesses across the EU to above EUR 1bn.
The aim of the RSI Facility is to encourage banks to lend to SMEs and small mid-caps with fewer than 500 employees in need of investment financing and/or operating capital to support research, development and innovation activities. Banks are being selected by the EIF following a call for expression of interest for financial intermediaries across Europe.
Commenting on the signature, in Warsaw, EIF Head of Guarantees, Securitisation & Microfinance Alessandro Tappi said: “I am pleased to be signing our first RSI agreement in Poland under the new Risk Sharing Instrument (RSI) in support of innovative small and medium sized enterprises. Through the provision of a 50% guarantee, EIF will be helping Bank Pekao – one of our long term partners - to quickly channel much needed finance efficiently to innovation driven businesses across the country.”
Bank Pekao Vice-president, Grzegorz Piwowar said: “Banks have not always been eager on lending to innovative business. This is because, by definition, innovative businesses involve new, unknown solutions, and these are projects of a potentially higher risk. The Bank Pekao-EIF agreement overcomes this barrier. The Bank will now be able to give investment and operating loans to companies running innovative projects, firms operating in science and technology parks, or innovation award winners, by which it will make a considerable input in the development of Polish economy.”
In 2010, the EIF and Bank Pekao signed two guarantee agreements under the Competitiveness and Innovation Framework Programme (CIP) helping to provide enhanced access to finance for businesses in Poland. The RSI agreement signed today will help the bank to target more innovative businesses across the country.
The Risk-Sharing Instrument (RSI)
The Risk-Sharing Instrument (RSI) is a pilot guarantee scheme which supports the financing of R&D and/or innovation driven SMEs and Small Mid-Caps. The RSI is a joint initiative of the EIF, the European Investment Bank (EIB) and the European Commission. It is supported by the European Union under the Seventh Framework Programme for Research and Technological Development (FP7) and uses EIF's risk-taking capacity. It is part of, and complements, the existing Risk Sharing Finance Facility (RSFF), managed by the EIB.
Under this facility, the European Investment Fund (EIF) is, in return for a fee, providing guarantees to banks and leasing companies that lend to SMEs and Small Mid-Caps. The guarantee covers, upon default, 50% of the outstanding amount of each loan. Some 25 or so banks are expected to be involved in the pilot phase, allowing the RSI to reach up to 2500 beneficiaries with a total loan volume of up to €2.5 billion.
The call is open to financial or credit institutions, established and operating in the EU and/or countries associated to FP7, including, Iceland, Liechtenstein, and Norway, Switzerland, Israel, Turkey, Croatia, the former Yugoslav Republic of Macedonia, Serbia, Albania, Montenegro, Bosnia & Herzegovina, the Faroe Islands and Moldova.
About the EIF
EIF's central mission is to support Europe's small and medium-sized businesses (SMEs) by helping them to access finance. EIF designs and develops venture capital and guarantees instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment. The EIF total net commitments to private equity funds amounted to over EUR 6.5bn at end 2012. With investments in over 400 funds, the EIF is a leading player in European venture due to the scale and the scope of its investments, especially in high-tech and early-stage segments. The EIF guarantees loan portfolio totalled over EUR 8bn in close to 250 operations at end 2012, positioning it as a major European SME guarantees actor and a leading micro-finance guarantor.
About Bank Pekao
Bank Pekao operates for more than 80 years and is one of the largest financial institutions in Central and Eastern Europe. In terms of assets it is the second largest bank in Poland, while in terms of capital strength it is a leader among large banks operating in Poland (according to stress-tests conducted by Polish Financial Supervision Authority) and one of the safest banks at the Pan-European level. Pekao Core Tier 1 ratio at the end of the first quarter of 2013 is at the level of 19,5%.
Bank Pekao operates through the second largest network of branches in Poland (1000 branches) with a wide list of free of charge ATM’s amounting to more than 4000 in Poland and nearly 20000 in 22 countries in Europe. Group of Bank Pekao consists of: the biggest investment fund in Poland, pension fund, two brokerage houses, as well as leasing and factoring subsidiaries, all of them leading in their respective market fields.
Bank Pekao has been frequently awarded with the most prestigious and popular prizes and titles, both in the national, as well as Pan-European level. In 2012 Pekao mobile banking won Mobile Trends Award for the best application platform, and the Bank was rewarded as Top Employers Europe 2012 for the third consecutive time. In the corporate field Pekao has been named as Best Foreign Exchange Provider 2012 and Best Trade Finance Bank 2012 by “Global Finance” magazine. Pekao has been chosen the Best Polish Bank by “Euromoney Magazine” four times, while three times gaining prestigious awards for the Best Bank in Poland by “Global Finance” and “The Banker” magazines. Corporate division was awarded also “The Golden Banker Award” for the first implementation of biometric identification of clients, in retail banking.
Bank Pekao belongs to one of the biggest Pan-European financial groups, UniCredit, which operates in 22 European countries with a network of 9600 branches and around 160,000 employees.