The European Investment Bank (EIB) Group said it is providing Croatia-based Erste&Steiermärkische Bank d.d. (ESB) with €132 million in support to expand lending to a range of businesses in the country.
The backing is in the form of a €100 million guarantee from the EIB and two portfolio guarantees totalling €32 million from the European Investment Fund (EIF).
ESB expects to use the EIB guarantee to generate as much as €280 million in new financing for Croatian mid-caps. The terms will include lower interest rates for loan recipients and higher risk-taking opportunities for ESB.
“Ensuring businesses of all sizes have access to financing is fundamental to driving economic growth and stability,” said EIB Vice-President Teresa Czerwińska. “With this guarantee, we are reinforcing our commitment to supporting Croatian Mid-Caps, helping them seize new opportunities for expansion and innovation.”
The EIF support totalling €32 million aims to bolster ESB lending to Croatian micro-entrepreneurs and social enterprises. It includes guarantees of €19.2 million for micro-entrepreneurs and €12.8 million for social enterprises including non-governmental organisations.
This part of the package expands EIF-ESB cooperation under the InvestEU programme to bolster financial inclusion, facilitate entrepreneurship and drive sustainable social impact across Croatia. The expanded framework is focused particularly on start-ups and first-time borrowers and allows for favourable loan terms including reduced collateral requirements.
“Access to finance remains one of the biggest challenges for start-ups and social enterprises,” said EIF Chief Executive Marjut Falkstedt.
“On the back of strong demand in the Croatian market, we are renewing our partnership with ESB, increasing financial opportunities for these organisations and ultimately enabling them to contribute to financial and social inclusion in Croatia.”
The new EIF guarantee for micro-entrepreneurs will enable total ESB lending to them of as much as €24 million. The guarantee for social enterprises will pave the way for total ESB financing to them of up to €16 million.
Hannes Frotzbacher of ESB said: “We are very pleased to continue and further deepen our long-standing successful cooperation with EIB Group.
“So far, in partnership with the EIB and EIF we have provided a total of €926 million in loans to our clients supported by the EIB funding and EIF guarantee instruments.
“Support for micro-entrepreneurs and social enterprises, as well as medium-sized enterprises, as important drivers of growth and economic development, is one of our key strategic pillars.
“With this package, we have additional financing instruments which will support client growth, contribute to job creation in our communities and result in realisation of numerous successful projects.”