7 banks benefit so far, Hellenic Bank total reaches
The European Investment Bank (EIB) signed two finance agreements on Monday worth EUR 115 mln that aim to fund public infrastructure and to boost SMEs in order to achieve economic recovery and the creation of new jobs.
The pair of agreements were signed in Nicosia by Finance Minister Harris Georgiades, EIB Vice President Jonathan Taylor and Hellenic Bank Chairwoman Irena Georgiadou.
The first agreement is for a EUR 100 mln framework loan supporting EU Co-Financing Funds for strategic infrastructure projects to be implemented during the 2014-2020 period, while the second loan was with Hellenic Bank for EUR 15 mln, with the commercial lender matching the amount from own funds for a total distribution to SMEs of EUR 30 mln
Present at the signing ceremony was EIB President Werner Hoyer who expressed his optimism that “definitely the worst is behind.”
“Since my last visit, Cyprus has made serious progress and fiscal developments continue to exceed expectations, the financial situation of the banks is showing signs of improvement and we have seen important growth enhancing reforms,” he said.
“Here in Cyprus we currently cooperate with seven banks and I am confident that we will be able to announce additional cooperations before the end of this year”, he noted. This approach, he added, “is performing well and is delivering real benefits to the Cypriot economy.”
He added that “we will continue the financing of large scale investment projects.”
“We are supporting several investments in the transport sector, including the road link between the Limassol port and the LimassolPaphos highway; in the energy sector we are financing several large investments including the Vassilikos powerplant”, he added. The EU bank is “very keen to support the country’s switch from (crude) oil fuel to a more environmental friendly natural gas or to renewable sources of energy.”
Together with fiscal consolidation and putting public finances in order, this agreement allows for a timely implementation of all those which have been planned for the next three years, said Finance Minister Harris Georgiades.
There is no excuse, no fiscal limitation and it is up to the authorities in charge, the government departments, the local administrations and all the other actors to implement what has been planned, he added.
Referring to the second agreement for a EUR 15 mln loan by Hellenic Bank with the government guarantees for funding small and medium size companies, Georgiades said that the agreement extends a funding programme for SMEs, which he called of “strategic importance.”
On his part Jonathan Taylor recalled that in 2014 the EIB together with the Ministry of Finance and several local banks implemented a new scheme for financing smaller companies and projects.
Less than 12 months after the start of the scheme almost half of the EUR 185 mln agreed with the seven participating banks has already been allocated to viable and eligible financial beneficiaries, he said.
“The first agreement with the Hellenic Bank for EUR 35 mln was signed in late 2014 and has been fully allocated,” he added, raising the bank’s funding total to EUR 50 mln.
Such partnerships, Taylor noted, are necessary for the EIB to continue supporting SMEs which are the backbone of the Cypriot and the European economy.
Before the end of this year we have to be in a position to make new announcements extending the scheme both in terms of partner banks and additional investments, he said.
Hellenic bank Chairwoman Irena Georgiadou said that under the agreement, which is guaranteed by the government, EUR 30 mln will be made available in low interest loans to SMEs and mid-cap organisations, of which the bank is putting up EUR 15 mln from own funds.
Irena Georgiadou said that the agreement constitutes another step forward towards the recovery of the Cyprus economy and the achievement of viable growth rates, adding that within the next 15 months, the cooperation with the EIB will have resulted in EUR 100 mln in low interest loans to businesses; EUR 50 mln from the EIB and EUR 50 mln matched by Hellenic.
The majority of loans from the first phase were absorbed by businesses and organisations in the education, tourism and trade sectors.
Georgiadou said that the aim of the cooperation between Hellenic and the EIB is to add real value to the economy, which has been suffering over the past two years from a liquidity crunch and sluggish business growth.
She emphasised that he bank continues to support the Cypriot economy and is confident that a potential exists, as proven by the doubling of loans granted to households and businesses compared to last year, while at the same time the Group has proceeded to create 200 new jobs.