Cyprus: Investment Plan for Europe - First EFSI transaction for businesses as EIF and RCB Bank sign EUR 10 million agreement

The European Investment Fund (EIF) and RCB Bank (RCB) have signed the first EFSI agreement in Cyprus, which will provide EUR 10 million to innovative small and medium-sized enterprises (SMEs). This agreement benefits from the support of the European Fund for Strategic Investments (EFSI), the heart of the Investment Plan for Europe. Following the signature, the EFSI is now active in all EU 28 Member States.

Under the new agreement, RCB will provide attractive loans to innovative small and medium–sized enterprises (SMEs) and mid-caps over the next two years. EIF’s guarantee is provided under the “EU InnovFin Finance for Innovators” initiative, backed by Horizon 2020, the EU's research and innovation programme.

European Commission Vice-President Jyrki Katainen, responsible for Jobs, Growth, Investment and Competitiveness, said "With today's agreement, the Investment Plan for Europe has reached another significant milestone. I am delighted that every Member State is now availing of the opportunities provided by the EFSI to boost investment in SMEs in order to create jobs and growth. I hope that today's agreement is the first of many transactions under the EFSI to be completed in Cyprus."

EIF Chief Executive, Pier Luigi Gilibert, commented: “We are delighted to be signing the first EFSI agreement in Cyprus and are pleased that loans under this programme are now available for innovative Cypriot companies. Innovation remains a key sector for growth and this transaction will help to contribute to the national innovation agenda. EIF is very proud to be delivering EFSI finance to all 28 member states ahead of schedule.”

RCB Bank Chief Executive Dr. Kirill Zimarin underlined the Bank’s commitment in working closely with the EIB, the EIF and the government in providing the necessary liquidity to the market and thus fulfilling its role in enhancing the real economy and noted: “Through such agreements, we are fulfilling an important part of our role. The role of the banking system in Cyprus is to provide the much needed liquidity to the healthy businesses that want to materialize their investment and growth plans. This is how we help the efforts of the government to achieve viable growth”.

These transactions reflect the EU's commitment to rapidly launch concrete initiatives under the EFSI, accelerating lending and guaranteeing transactions capable of boosting jobs and growth in the EU.

Speaking on the occasion, European Investment Bank President Werner Hoyer stated: “It is a great pleasure to be in Cyprus again today for the signature of the first EFSI agreement or “Juncker Plan” operation. I would like to underline that the EIB’s continued engagement in Cyprus, especially during the recent challenging years, is a sign of our absolute confidence in the country’s economy and at the same time pays tribute to the excellent investment projects that are coming out of Cyprus.”

During the signature ceremony at the Finance Ministry in Nicosia, Cyprus Minister of Finance Harris Georgiades stated: “I am especially pleased because the first financing agreement in Cyprus under the framework of “InnovFin” and the European Fund for Strategic Investments will allow RCB to develop new financial products, with its main characteristic being the significantly reduced collateral requirements on behalf of SMEs, so that it can support many SMEs, which, under different circumstances, may not have been in a position to find sufficient financing. This financing agreement being signed by the European Investment Fund and RCB, with the support of the European Fund for Strategic Investments, signals new loans with favourable terms for many Cypriot small and medium sized businesses. This important agreement –the first being signed in Cyprus- became reality with the support of the Investment Plan for Europe and is further proof that the Juncker Plan is bearing fruit.”

The EIB also signed today a second financing contract for a further EUR 40 million with RCB Bank, further enhancing competition in the banking sector and benefiting local companies, along with a State Guarantee signature between the EIB and the Republic of Cyprus.

The second loan with RCB Bank to support local companies follows an initial EUR 20 million loan signed with RCB in February 2016, which has already been fully allocated supporting more than 10 new investments.

The loans include dedicated lending under the “Jobs for Youth” programme, which offers even more favourable financial terms to eligible SMEs. The Jobs for Youth lending 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.

“The EIB agreements signed today will provide continued support to private sector investments crucial for boosting economic growth and creating quality new jobs. They reaffirm the EU Bank’s strong support for Cyprus, especially in the recent challenging years for the economy of the country. Our actions confirm our commitment as only in the last 5 years we invested 1.3 billion Euros in new, priority investments,” added EIB President Hoyer.

The agreements were signed in a public ceremony today at the Finance Ministry in Nicosia attended by Cyprus Minister of Finance Harris Georgiades, EIB President Werner Hoyer and European Commission representative Georgios Markopouliotis and Dr. Kirill Zimarin of RCB Bank.