OREANDA-NEWS. March 26, 2010. European Investment Fund (EIF) today signed agreements with SEB banka and Swedbank under which SEB banka will provide loans worth EUR 60 million and Swedbank EUR 44 million respectively to small and medium sized enterprises (SMEs) in Latvia.

Banks will manage the newly created Funded Risk Sharing product under the JEREMIE Holding Fund (JHF) initiative, designed to stimulate lending from banks to SMEs over the next two year period. The EIF, from Structural Fund and state budget co-financed JHF resources, will provide EUR 30 million to SEB banka and EUR 22 million to Swedbank, which will be matched by an equal amount from the banks, therefore totalling EUR 104 million. These transactions enable both banks to accelerate lending to Latvian SMEs during the current economic recession.

Hubert Cottogni, Head of Regional Business Development, European Investment Fund stated: “This Funded Risk Sharing instrument has been newly designed and developed by the EIF, providing funding and sharing credit risk with banks, thus improving SME access to financing. The EIF is managing this product in several Member States for the benefit of local SMEs and Latvia is one of the first to benefit from it.”

„Signature of agreements means that Latvian SMEs will have access to EUR 104m of loans over next few years. Financing is primarily targeted at manufacturing industry, which is one of the most export oriented sectors and its growth provides utmost effective increase to the development of the economy” says Artis Kampars, Minister of Economics.

Kaspars Delinsh, Member of the Board, SEB banka: "SEB Latvia highly values possibility to support well considered and sustainable projects. Proportion of SMEs in common business environment in Latvia draws up about 98% of overall companies, thus allocation of funding to this group of enterprises ensures functioning of overall national business environment. More and more of these companies, despite the challenging business environment, have been able not only to adapt to current market situation, but even to develop their operation attracting also bank funding. Agreement with the European Investment Fund for financing Latvian SMEs is a confirmation of purpose of SEB Latvia to promote recovery of business environment in Latvia, funding different business ideas."

Daniils Rulovs, Member of the Board, Swedbank: “Swedbank signed up to be a part of this program based on the conviction that one should always look one step ahead. The terms of the program are in line with Swedbank’s general principles of lending. The terms are designed for companies with a solid financial standing – the bank’s customers, small and medium sized enterprises mainly working in manufacturing industry and being export-oriented. We aim to provide finance for profitable corporate clients with long-term viability that form the basis for recovery of the Latvian economy.”

The Funded Risk Sharing instrument is structured to combine capital from the Holding Fund with capital provided from the bank on an equal basis as well as to share the risk proportionally. Lending to SMEs will be managed by the banks under normal market terms and conditions.

The EIF is also implementing a number of other financial engineering instruments using the Holding Fund structure in Latvia, with venture capital fund managed by BaltCap Management Latvia already operational and accessible to SMEs looking for investments, and seed/start-up fund managed by Imprimatur Capital Baltics expected operational in May.