Publish Date : 01-Dec-2017
The European Investment Bank (EIB) and the European Investment Fund (EIF) jointly the EIB Group today signed guarantee agreements with TBC Bank in Georgia to support the equivalent of over EUR 90 million of loans to Georgian small and medium-sized enterprises (SMEs). The EIB also signed its first microfinance investment in the country, thanks to a USD 5 million credit line with Credo Bank to support of Georgian micro and small enterprises (MSEs business with less than ten employees) projects, particularly in rural areas.
Transaction with TBC Bank:
The European Investment Bank Group and TBC Bank signed two guarantee agreements:
an InnovFin agreement for innovative Georgian small and medium-sized enterprises (SMEs) and small mid-cap companies, and a guarantee agreement under the EU4Business initiative targeting small loans to SMEs.
The InnovFin agreement will enable TBC Bank to provide up to EUR 80m of loans to innovative companies over the next two years with the support of a guarantee provided by the EIF, backed by Horizon 2020, the EU Framework Programme for Research and Innovation. The InnovFin guarantee agreement covers 50% of each loan disbursed by TBC Bank.
The second guarantee transaction under the EU4Business initiative is expected to unlock an additional EUR 14m of financing specifically for small loans to SMEs, to sustain jobs and create new business opportunities in Georgia. This guarantee facility is funded by the European Union (EU) through the Neighbourhood Investment Facility under the EU4Business initiative. The guarantee covers 70% of each loan disbursed by TBC Bank.
Transaction with Credo Bank: The EIB also signed a USD 5m credit line with Credo Bank for projects of Georgian micro and small enterprises (MSEs business with less than ten employees), particularly in rural areas.
This is the EIBs first microfinance investment in Georgia and via Credo bank. The credit line will target micro-entrepreneurs including self-employed individuals, sole-proprietorships and micro-entrepreneur groups with a focus on providing financing to women. As part of the EU4Business initiative the operation is partially financed by the European Union's Neighbourhood Investment Facility.
With this first EIB investment supporting microfinance activities in Georgia, the EU Bank will target borrowers including self-employed individuals, sole-proprietorships and micro-entrepreneur groups with a focus on providing financing to women beneficiaries, said Vazil Hudk, EIB Vice-President responsible for operations in Georgia. Without doubt, this will improve the access to finance of SMEs in Georgia and thus contribute more to growth and job creation. At the same time, we are providing a guarantee which will help to accelerate innovative SMEs and allow them to be more competitive.
"We count 10 years of successful cooperation with EIB. Projects implemented by EIB financial support have a real impact on people's lives, in particular by investing in infrastructure and financial sector. These projects are increasing resilience, stimulates growth and jobs creation. We strongly appreciate EIBs involvement in private sector operations in Georgia. We believe that increasing Banks private sector operations is as important as the EIB sovereign lending portfolio. We welcome EIBs efforts to increase the volume of operations in the private sector and hope that the Bank will diversify its private sector activities", said Mamuka Bakhtadze, the Minister of Finance of Georgia.
Carlos Moedas, European Commissioner for Research, Science and Innovation, said: The European Union is committed to boosting innovative SMEs both in its Member States and in the Eastern Partnership countries. The fact that SMEs in Georgia will now benefit from an additional EUR 94m in EU-guaranteed loans is testament to that. Innovation and a strong SME sector, in particular, are crucial for economic growth both in Georgia and in the EU.
Commenting on the signature, EIF Chief Executive Pier Luigi Gilibert said: I welcome the signature of these two guarantee agreements in Georgia. TBC Bank is a leading Georgian bank with a strong focus on lending to SMEs and small mid-caps. Todays agreement will enable the Bank to expand its financing activities, benefitting Georgian companies.
Vakhtang Butskhrikidze, Chief Executive Officer of TBC Bank, said: The signing of the two guarantee agreements marks a significant milestone in our partnership with the European Investment Bank Group. The size and the structure of the products will allow TBC Bank to accelerate financing of Georgian MSMEs and small mid-caps by reducing credit risk. The introduction of guarantee facilities in the Georgian financial sector is an important trigger to fostering further growth of the economy and supporting MSME development. We are delighted to continue our successful partnership with the EIB and the EIF with the introduction of these innovative products and look forward to more transactions in the future.
Zaza Pirtskhelava, Credos CEO, stated: It is our honour to officially commence partnership with European Investment Bank. 2017 has been a remarkable year in Credo Banks history, with the support of our international shareholders, the microfinance organisation Credo entered the banking industry. Focusing on micro and small businesses in the agriculture sector remains one of our top priorities. Therefore, cooperation with the EIB is an important step to further support the development of those businesses and create additional employment capabilities. We look forward to contributing our efforts to make the cooperation as valuable as possible.
This year the EIB is celebrating the ten-years anniversary of its operations in Georgia, with a total amount of EUR 1.6bn signed for 21 projects. Georgia is the second most important recipient of EIB funding among the Eastern Partnership countries.
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