The European Investment Bank (EIB), the long-term lending arm of the European Union, signed a new EUR 100 mln loan with the Bank of Cyprus to support investments by small and medium-sized enterprises (SMEs) and MidCaps, aimed at bolstering growth and creating new jobs for young people.
A state guarantee agreement between the EIB and the Republic of Cyprus was also signed.
“SMEs and Midcaps are a vital pillar of the Cypriot economy,” said Jonathan Taylor, EIB Vice President responsible for lending in Cyprus.
The loan with the Bank of Cyprus is the fourth one and builds on a scheme which the EIB and the Ministry of Finance started implementing in Cyprus with local banks two years ago. The EIB has already signed EUR 185 mln of loans with the Bank of Cyprus, bringing the total of loans approved to EUR 285 mln.
In order to support smaller size enterprises with investment needs of up to EUR 25 mln, EIB has partnered with ten local banks and has so far signed a total of EUR 475 mln with about half of that money already benefiting some 230 new investments.
In 2016, the EIB Group maintained its high level of activity in Cyprus, providing a total of EUR 240 mln to the local economy: EUR 175 mln to support private sector investments implemented by SMEs; EUR 40 mln for a pipeline to pump drinking water from the Vasilikos desalination plant to the Greater Western Nicosia Region; EUR 15 mln for the construction of two anti-flooding rain water stations in Larnaca; and EUR 10 mln by the European Investment Fund, which is part of the EIB Group, for the guarantee of new investments born by innovative companies. This was the first operation in Cyprus backed by the European Fund for Strategic Investments.
“The EIB has been a key and reliable partner for Cyprus over recent years, providing long-term financial support for crucial infrastructure, as well as backing investment in the knowledge economy, innovation and small businesses. The EIB will remain active and is committed to supporting economic growth and helping local firms invest and create new jobs. Across Europe, including here in Cyprus, small businesses are the backbone of the economy,” added EIB Vice President Taylor.
“The total amount that will be extended to Cypriot SMEs will be EUR 134 mln, since BoC will contribute from its own funds an additional EUR 34 mln,” explained Charis Pouangare, Bank of Cyprus, Director of Consumer Banking & SMEs.
The Bank of Cyprus loan includes dedicated lending under the “Jobs for Youth” programme, which offers favourable financial terms to eligible SMEs. The initiative, launched by the EIB in July 2013, is part of a wider European commitment to tackle youth unemployment requested by the European Council in June 2013. The scheme targets countries with high unemployment amongst young people. In order to benefit from financing under the “Jobs for Youth” window, SMEs in the fields of industry, commercial services and tourism need to fulfil a limited number of conditions, including the employment or training of young people.
“These loans will be offered with particularly favourable terms to local SMEs and midcaps. The amount of funding will vary between EUR 1.5 mln and EUR 12.5 mln with very competitive pricing and repayment periods of 2-12 years. Companies that meet the ‘Jobs for Youth' initiative criteria will be offered additional financing advantages”, Pouangare added.
The finance agreement and state guarantee were signed in Nicosia today in a public ceremony attended by EIB Vice President Jonathan Taylor, Ministry of Finance Permanent Secretary, Christos Patsalides and Bank of Cyprus, Director of Consumer Banking & SME, Charis Pouangare.
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