The three main banks – Bank of Cyprus, Popular and Hellenic – as well as the Cooperatives, said they have paid back in full the 159 mln euros received from the European Investment Bank in low-interest loans for SMEs.
The Association of Cyprus Banks said that the member banks even doubled the favourable loans to SMEs for a total of 318 mln euros in the market in the form of micro- and mini-loans up to 100,000 euros.
The loans were issued at an average rate of 6 month Euribor plus 2.25% with nearly 500 SMEs benefitting from the beneficial rate.
The issue was raised by President Christofias who accused the commercial banks of not utilising EIB-funded loans to SMEs.
Bank of Cyprus even added that it continues to support SMEs through the JEREMIE programme worth about 70 mln euros and the Enterprise Support fund for a further 200 mln euros.
Meanwhile, EIB Vice President Plutarchos Sakellaris said that Cyprus will set up a guarantee fund for SMEs with total funds that can reach up to 400 mln euros.
The EIB has provided Cyprus with loans worth over 1 bln in the past four years.
"We hope that the (guarantee fund will be in place) by autumn. The mechanism will have guarantee funds between 50 or 100 mln euros but with the leverage it will be able to provide much more in loans to SMEs," he said.
Sakellaris did not reveal the size of the interest rate, noting that the EIB provides member-states with loan interest rates, as it can receive funding from international capital markets with low rates due to its AAA rating.
The long-term loan will have a maturity of ten to twelve years with an estimated rate in the region of 2.5%.
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