First CIP guarantee in Latvia

The European Investment Fund (EIF) and Latvijas Hipoteku un zemes banka (State JSC "Mortgage and Land Bank of Latvia"), have signed a guarantee agreement under the Competitiveness and Innovation Framework Programme (CIP) providing enhanced access to finance for small and medium sized businesses in Latvia.

Start-ups and recently created businesses in Latvia could now have access to up to 30 million euros of loan financing benefiting from the CIP guarantee which will help to boost the competitiveness of the Latvian economy by creating new jobs and supporting new entrepreneurs.

Thanks to the guarantee agreement Hipoteku Banka will be able to complement its offer to medium sized enterprises, targeting smaller and recently created companies. The CIP guarantee will help providing both investment loans and working capital loans to this market segment at a critical time for Latvia's economy.

EIF Chief Executive, Mr Pelly said "We are delighted to continue our cooperation with the Mortgage and Land Bank and to provide a new guarantee for the financing of small and medium sized enterprises in Latvia. This complements our strategic role as JEREMIE Holding Fund manager in the country."

This transaction allows the EIF to renew its cooperation with Hipoteku Banka, following prior successful cooperation under the Multiannual Programme (MAP, CIP's predecessor).

Commenting on the transaction, Rolands Panko, Chief Executive of Hipoteku Banka said: "The guarantees are supposed to help provide loans to small and medium-sized businesses that are involved in knowledge-based businesses, such as IT, innovations and introduction of technology. These guarantees will allow receiving loans with smaller warranties than usual. EIF guarantees to entrepreneurs are free of charge, so they are favourable, as usually clients have to pay up to three percent of the guaranteed sum."

Background information:

The Competitiveness and Innovation Framework Programme (CIP), which spans from 2007 to 2013, has been put in place to boost European productivity, innovation capacity and sustainable growth, whilst simultaneously addressing complementary environmental concerns.

Within the framework of the CIP, the European Investment Fund (EIF) has been allocated EUR 1.1bn to be split between venture capital - with the High Growth and Innovative SME Facility (GIF) - and guarantees - with the SME Guarantee Facility (SMEG).

Under the SMEG, financial institutions are encouraged to enhance access to finance for SMEs.  The facility offers an excellent tool to allocate additional financing volumes for those SMEs that would not otherwise have access to resources and financial engineering instruments because of the increased lending risk entailed. As such, the SMEG complements and broadens EIF's own product offering.

The EU CIP SMEG Facility gives the EIF the opportunity to play an essential role in supporting sustainable job creation and entrepreneurship in European SMEs.

About Latvijas Hipoteku un zemes banka

Hipoteku Banka is state owned bank, operating from 1993. Priority of the bank is support to small and medium businesses and stimulation of economic activity in all regions of Latvia, via cooperation with private commercial banks.

About EIF

The EIF central mission is to support Europe's 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, the EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment.

For further information, please contact David Yormesor, d.yormesor@eif.org