Page 42 - Annual Report 2010

ANNUAL REPORT 2010

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“It is our objective to provide sustained funding to all good busi-nesses viable on longer term. This agreement strengthens and diversifies our funding base for the benefit of Romanian SMEs”.

Dominic Bruynseels CEO, Banca Comerciala Romana

Banca Comerciala Romana and

Raiffeisen Bank Romania

“We already offer a large portfolio of bread and butter products to local SMEs. Our cooperation with EIF will provide our clients with additional tools for development”.

Steven van Groningen CEO, Raiffeisen Bank Romania

Introduction

In 2010, EIF designed and implemented new and inno-vative financial products to leverage EU structural funds, extending EIF’s geographical scope and response to spe-cific market needs. One particular product, the First Loss Portfolio Guarantee (FLPG), was developed to encourage financial institutions to extend new loans to eligible SMEs at favourable conditions. The guarantee provided cov-ers new loans, with losses being shared equally with the intermediary at a fixed guarantee rate, thus encouraging additional SME lending. Moreover, Member States are able to decide the level of guarantee charged and the groups targeted and supported.

Strongly committed to pursue its regional development strategy under the JEREMIE mandate, EIF started imple-menting FLPG in Romania where, in December 2010, two top rank banks, Banca Comerciala Romana (BCR) and Raiffeisen Bank Romania (RBRO), were chosen to deploy the product.

Both banks are key players on the SME market in Roma-nia. BCR is the largest banking institution in the country,

reaching out to close to four million customers in both the retail and corporate sectors. RBRO has a strong focus on SME lending, is the third largest bank in Romania and has a broad geographical coverage.

Added value

With FLPG, both banks are able to of fer financing to SMEs at lower margins and with substantially reduced collateral requirements, allowing the two institutions to on-lend to SMEs and provide finance at a time of tough lending conditions.

Through their partnership with EIF, BCR and RBRO are well positioned to deliver expected lending volumes of close to EUR 315m, and provide together loans to some 2 500 borrowers, therefore enhancing growth and devel-opment of small businesses in the region.

This transaction is a good example of EIF playing a key role in fostering access to finance in regions and Member States where there is a need for capacity-building initia-tives that provide local intermediaries with tailor-made financial tools for the benefit of SMEs.

Tailor-made financing in Romania