The European Investment Bank (EIB) is considering providing the Bank of Ireland with additional funds to bolster SME lending. Image courtesy of: sxc.hu
Bank of Ireland may soon receive a €150m fund from the
European Investment Bank (EIB) to be used to extend credit to small and medium-sized enterprises.
The fund is similar to the one handed to
Allied Irish Bank (AIB) from the EIB in December of last year, and will ease the tough lending conditions currently being experienced by SMEs.
Under the terms of the deal, banks are obliged to provide preferential interest rates to SME clients, and must also match the amount provided by the EIB for all loan.
According to an EIB source, a decision on whether the Bank of Ireland will benefit from the EIB fund will soon be made.
With the potential for up to €600m to become available to SMEs should the new scheme go ahead, the news is a positive development for SMEs who have been struggling with reduced access to bank credit since economic downturn took hold.
The European Investment Bank provides long-term financing to EU member states, with the majority of funding going towards public-sector projects. It is currently led by former German foreign minister
Werner Hoyer.
As an institution it is firming up its commitment to helping Ireland gain economic pace; figures released last month by the EIB reveal that in 2011 it signed contracts to lend a total of €475 million to projects in Ireland.
“We should have a somewhat closer look at Ireland in these times,” said Hoyer.
One of the biggest EIB investments in Ireland was the €235 million given to upgrade the country’s infrastructure, in particular the distribution and electricity networks.