Working with the EU: EUEBRD SME Finance Facility

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Working with the EUEU/EBRD SME Finance Facility

• Charlotte Ruhe, Senior Banker
• Munich - 28 June 2004

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Opportunities under-banked economies
Accession to EU coming

• Low intermediation with domestic credit to
  private sector well below EU average
• SMEs potentially attractive client base but
  perceived as high risk, high cost
• Need to improve lending and sales skills,
  streamline loan processing
• SME Facility created to combine finance with
  institution building

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SME Finance Facility in CEE

• Launched in 10 Accession countries in 1999
• 27 banks and 20 leasing companies
• 666 million EBRD loans with 104 million EU
  funding
• 825 million disbursed to SMEs
• Average loan size less than 25,000

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Three key elements

• EBRD Loans to banks and leasing companies with
  strategic commitment to finance SMEs
• Technical cooperation funded by EU
• Training of loan and credit officers
• Streamlining credit process and documentation
• Better terms, conditions and response time for
  SMEs
• Performance fee funded by EU contributes to
  start-up costs of developing their SME business

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Sustainability and Future

• Intermediaries continue to develop their SME
  finance business
• More efficient, lower-cost lending procedures
• Sound lending practices focused on cash-flows
• High quality portfolio
• Better customer service skills to be competitive
• Rural Finance Facility to focus on farmers and
  rural enterprises

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Model of cooperation

• EU with other IFIs
• Other products Municipal Finance
• EBRD with other EU institutions
• Commercial banks with EU funding at national
  level

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Contact

• Charlotte Ruhe
• Senior Banker, Financial Institutions
• EBRD
• One Exchange Square
• London
• EC2A 2EH
• Tel [phone]
• Fax [phone]
• Email ruhec_at_ebrd.com