- Three agreements signed by the EIB Group (EIB and EIF) and novobanco to support companies exposed to the COVID-19 pandemic.
- novobanco will unlock new financing for €1.545 billion thanks to an EIB guarantee of €100 million and two EIF guarantees for a total of €787.5 million.
- The operations are backed by the European Guarantee Fund (EGF).
The EIB Group (comprising the European Investment Bank, EIB, and European Investment Fund, EIF) and novobanco have joined forces to support Portuguese SMEs, mid-caps (up to 3,000 employees), and large corporates (more than 3,000 employees) affected by the economic crisis generated by the pandemic. The agreements signed aim to unlock financing of over €1.545 billion under three EIB Group guarantees totalling €887.5 mllion.
This financing has been supported by the contribution of the European Guarantee Fund (EGF), part of the European Union's €540 billion package of measures to address the economic difficulties and production slowdowns caused by the coronavirus pandemic.
Thanks to EGF, novobanco will provide debt financing to SMEs, mid-caps, and large corporates on more favourable terms, ensuring that companies in Portugal have sufficient financing available to mitigate the economic impacts of the COVID-19 crisis, enabling them to continue their growth and development plans in the medium to long term.
EIF Chief Executive Alain Godard said: “The agreements signed with novobanco will strengthen the Portuguese economic recovery by providing the funds needed by companies to back their medium to long terms investment strategies. The European Guarantee Fund, deployed at the beginning of the pandemic, is proving to be a key tool to provide the funds needed by companies to cope with the current economic constraints.”
“Thanks to the European Guarantee Fund, established in the wake of the pandemic, we are reaching as many European companies as possible to provide the financing they need to overcome the economic crisis caused by the pandemic. Thanks to these agreements with novobanco, Portuguese companies will benefit from an additional €1.545 billion at advantageous conditions to invest in their future,” said Birthe Bruhn-Léon, EIB Director for Financing Operations in Portugal and Spain.
“These three new risk-sharing facilities, signed with the EIB and the EIF and supported by the European Guarantee Fund, are of key importance to novobanco as it allows the Bank to grant Portuguese companies access to financing in more favorable terms, thus promoting the job creation and economic growth required to overcome the turmoil caused by the pandemic. This will add another step to the long-standing continued strategy pursued by novobanco of permanent support to the Portuguese business sector”, said Andrés Baltar, Chief Commercial Officer of novobanco.
EIB-novobanco agreement
The EIB will provide a €100 million guarantee to the Portuguese bank, which will enable novobanco to grant a total of €200 million of working capital and investment loans to facilitate financing of up to €420 million in support to eligible businesses affected by the economic consequences generated by the pandemic. The European Guarantee Fund will offer credit risk protection for up to 50% of each individual underlying corporate exposure.
EIF – novobanco agreements
Two agreements signed by the EIF and novobanco to back the economic recovery of Portuguese SMEs. The EIF will provide novobanco with two guarantees of up to €787.5 million, with the objective of channelling €1.125 billion into the real economy. By assuming up to 70% of the risk of the loans that novobanco grants to SMEs under EGF, the EIF will promote the granting of new financing.
Background information
The European Guarantee Fund (EGF) was set up by the EIB Group with contributions from Portugal and other EU Member States to shield companies suffering from the COVID-19 crisis. Using nearly €25 billion in guarantees, the EGF allows the EIB and the EIF to quickly make loans, guarantees, asset-backed securities, equity, and other financial instruments available to mostly small and medium-sized enterprises. The EGF is part of the European Union’s recovery package aiming to provide a total of €540 billion boost to those parts of the EU economy that have been hit the worst.
novobanco is a leading Bank in the Portuguese Corporate Market. The Bank has long been a strategic partner of its corporate clients, providing financial support to SMEs, mid-caps, and large corporates and giving a valuable contribution to the community by promoting innovation, job creation and economic growth. The Bank positions itself at the hedge of technological development by endorsing digitization as a core concern of the organization and providing its clients a better banking experience whilst supporting companies to digitize procedures, products, and services. Our clients are at the heart of everything we do. That is why ESG goals and the contribution of the Bank to the community are core guidelines to all novobanco´ s activities. Our strong presence in the Portuguese business market translates to market shares of 14.4% in loans to non-financial companies and into being the leading Bank in Portugal in providing trade finance support to Portuguese Companies with a 20,2% market share. novobanco has just been elected the “Best trade finance provider” in Portugal by Global Finance.