EIF sets up first operations to support microfinance in Romania under the Capacity Building Investments Window of the EU Programme for Employment and Social Innovation

• European Investment Fund to increase capacity of Romanian financial institutions Patria Credit and OMRO to support microcredits and microfinancing loans in Romania under the Capacity Building Investments Window of the EU’s Employment and Social Innovation Programme
• Capacity building for Patria Credit is supported with RON 10m to scale up its businesses and for OMRO with RON 6.5m to enhance its technology, scoring mechanisms and operational flows.

Thanks to financial support under the  EaSI Capacity Building Investments Window, which is managed by the European Investment Fund (EIF) on the European Commission’s behalf, two microfinance institutions in Romania will have more capacity to provide microloans to small businesses.

• Patria Credit will receive RON 10m to grow its portfolio targeting particularly vulnerable clients excluded from the formal financial sector;
• OMRO Romania will receive RON 6.5m to acquire and implement new IT solutions aimed at increasing efficiency and strengthening credit risk analysis.

Commenting on the EaSI capacity building investments, EIF Chief Executive Pier Luigi Gilibert, said: “We very much welcome the launch of the implementation of the Capacity Building Investments Window in Romania under the EU Programme for Employment and Social Innovation. This will increase the capacity of financial institutions to improve the access of micro-enterprises to finance as this is crucial for further development of their business activities, which generate many jobs and contribute to GDP growth in the country”.     

European Commissioner for Employment, Social Affairs, Skills and Labour Mobility, Marianne Thyssen, said: “I am delighted with the signature of the first EaSI Capacity Building agreements in Romania. The EU support will allow Patria Credit and OMRO Romania to boost their capacity to provide microfinance to micro-entrepreneurs, including vulnerable persons, who face difficulties in accessing finance. This is a sound investment in a more inclusive Europe. ”

Patria Credit IFN CEO, Raluca Andreica commented: “We are glad and grateful that our traditional partnership with European Investment Fund and European Union will continue to help rural entrepreneurs to grow through the Capacity Building Investment Window under the Employment and Social Innovation Programme. It strengthens our commitment to further developing our mission of financial inclusion in Romania and helping small rural entrepreneurs to progress and bring prosperity to their communities and families”.

OMRO IFN CEO, János Bereczki commented: “We believe that the customer experience, speed of processing, flexibility, quality of underwriting and relationships are essential to the success of micro-enterprises We  welcome the EU involvement in supporting micro-entrepreneurs, as with the help of instruments such as the Capacity Building Investments Window under the Employment and Social Innovation Programme we can now reach more clients with our offer of financial solutions.”

Patria Credit

The EaSI CBI investment of RON 10m will support the intermediary, one of the first microfinance institutions in Romania that is specialised in serving a particularly vulnerable target group in rural areas. Patria has had constant and sustainable growth throughout its 15-year presence, with the main focus on micro enterprises active in the agricultural sector (predominantly vegetables) in rural areas, which lack access to traditional bank finance due to their high risk profile and lack of formal collateral.

The capacity building investment will help Patria Credit to pursue its ambitious growth plans by, inter alia, enhancing its indebtedness capacity, allowing it to attract additional borrowings from senior lenders to finance its portfolio growth.

Patria Credit has recently embarked on a renewed growth path. Being specialised in the agro-sector and rural areas, the institution will be helped to grow its portfolio targeting particularly vulnerable clients excluded from the formal financial sector.

Omro Romania

With the support of RON 6.5m from the EaSI capacity building investment, OMRO Romania will acquire and install a stable, fast, easily customisable and modern technological solution. This will provide the basis for the re-launch of the financial intermediary’s development plans, aimed at offering quality financial services with an ethical and sustainable approach to a larger client base.

The EU-backed EIF intervention in the form of an EaSI capacity building investment is expected to enable the microfinance institution to attract new funding necessary for further growth.

The intermediary will use the EaSI capacity building investment to acquire and implement a new IT core system, to replace the old MIS, aimed at increasing efficiency and strengthening credit risk analysis. The tangible expected impact of the EaSI capacity building investment relates to the origination of higher loan volumes based on better technology, improved scoring mechanisms and efficient operational flows. Over time, these will be reflected in the lower cost of funding, which will be passed on to the final beneficiary, but also in improvements in the portfolio quality levels, given the expected improvements in the client scoring/analysis systems.

About the EU Programme for Employment and Social Innovation (EaSI)

The European Commission’s Programme for Employment and Social Innovation (EaSI) aims at supporting the EU's objective of high level employment, adequate social protection, fighting against social exclusion and poverty and improving working conditions. EaSI contributes to the implementation of the Europe 2020 strategy by supporting the EU's objective of high-level employment, guaranteeing adequate social protection, fighting against social exclusion and poverty and improving working conditions.

The EaSI guarantee scheme was launched in June 2015 and is funded by the European Commission and managed by the European Investment Fund. It provides support to financial intermediaries that offer microloans to entrepreneurs or finance to social enterprises that would not have been able to gain finance otherwise due to risk considerations. The objective is to increase access to microfinance for vulnerable groups who want to set up or develop their business and micro-enterprises, through notably loans of up to EUR 25,000. In addition, for the first time, the European Commission is helping social enterprises through investments of up to EUR 500,000.

Furthermore, the European Commission is reinforcing the social dimension of the European Fund for Strategic Investments (EFSI) for both microfinance and social entrepreneurship. Overall, the total amount of support to these areas is expected to increase (from EUR 193m under the EaSI programme) to about EUR 1bn, mobilising some EUR 3bn in additional investment.

About EaSI Capacity Building Investments Window (CBI)

The EaSI Capacity Building Investments Window is funded by the EU programme for Employment and Social Innovation (EaSI). The objective of this instrument is to build up the institutional capacity of selected financial intermediaries that have not yet reached sustainability or are in need of risk capital to sustain their growth and development. An indicative amount of EUR 26m has been earmarked within the EaSI Programme for this initiative.

About the EIF

The European Investment Fund is part of the European Investment Bank Group. Its central mission is to support Europe's micro, small and medium-sized businesses by helping them to access finance. The EIF designs and develops venture and growth capital, guarantees and microfinance instruments, which specifically target this market segment. In this role, the EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment.

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