Greece’s Piraeus Bank will provide €700m (£618m) of investment loans to the country’s SMEs, backed by the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD) and the European Investment Fund (EIF).
Piraeus Bank will partly finance the loans through a new 5-year €500m bond in October, placed among the three institutions. The proceedings from the bond will then be used to extend finance to SMEs and mid-caps, or companies with capitals in the single-digit billions.
This is the first time that international financial organizations have invested in a covered bond from Greek banks since the beginning of the country’s crisis. It’s also the first time Piraeus, the largest business lender in Greece, issues such a bond. It’s the first in a wider covered bond programme worth €10bn.
Nick Tesseyman, EBRD managing director for Financial Institutions, said: “We welcome the signing today as it marks a further important step in the recovery of the Greek banking sector. The successful placement will allow Piraeus Bank to diversify its funding sources and strengthen its lending capacity. It also demonstrates the growing confidence by institutional investors like the EBRD and sends an important signal to other market participants. The rejuvenation of the covered bonds market will benefit the financial sector and the real economy in Greece.”
Mr. Christos Megalou, chief executive officer of Piraeus Bank, stressed that “The new era in EIB’s presence in Greece is connected with a new agreement with Piraeus Bank concerning the EIB Group’s largest ever support for SME investment in Greece. This agreement is a strong proof of the EIB’s commitment to support the financing of Greek SMEs and Small Businesses through Piraeus Bank, the largest bank in Greece. Piraeus has built a lasting relationship with supranational organizations as the EIB Group throughout the recent years, and is fully committed to support the financing of the Greek economy on its way back to sustainable growth.”
Last week, the EIB signed an agreement to provide €150m in funding to SMEs in Greece through another of the country’s banks, Eurobank.