With the economic outlook in Finland uncertain and Finnish companies postponing investments, Finnvera Plc and the European Investment Bank (EIB) are mobilising projects that promote employment, growth and clean transition of medium-sized companies.
The EIB will provide a €200 million guarantee to Finnvera, the national promotional bank and official export credit agency of Finland, to facilitate the financing of Finnish mid-caps. The programme aims to tackle barriers to accessing finance by sharing risks associated with economic uncertainties like inflation, high interest rates, limited external growth opportunities and unpredictable energy supplies.
The EIB support will allow Finnvera to create a portfolio of new loans for a total amount of up to €400 million, increasing its lending capacity and offering companies access to financing on favourable terms, such as reduced interest rates and lower collateral requirements. The operation will help mobilise investments of approximately €560 million in the real economy.
This marks the first EIB agreement in Finland in the form of a direct loan-by-loan guarantee on new finance granted to mid-caps – companies with between 250 and 3 000 employees. The signed guarantee is part of Linked Risk-Sharing Programme (LRS) and will cover up to 50% of the new loan.
EIB funds will be channelled to companies through the networks and branches of Finnvera.
“Supporting the growth of mid-caps is very important for the Finnish economy,” said Finnvera Executive Vice President Jussi Haarasilta. “With the EIB sharing the risk, we have even better opportunities to promote growth. The benefits of cooperation are passed on directly to Finnish companies. The advantage of the LRS Programme is also its versatile use and the fact that, in addition to domestic projects, the guarantees can be used to finance export projects within the European Union. Boosting exports is an important strategic goal for Finnvera. We primarily work together with other financiers, but with the LRS guarantee we can complement the financing market in new ways.”
“We are pleased to work with Finnvera to support Finnish mid-caps by providing guarantees for long-term loans,” said EIB Vice-President Thomas Östros. “Together, we will support projects that are in line with the EIB’s mission – to boost jobs and growth, and to support action to mitigate climate change. Thanks to Finnvera’s countrywide presence, around half of the finance unlocked will benefit cohesion areas in Finland.”
Finnvera has extensive experience in deploying guarantee solutions from the EIB and the European Investment Fund (EIF), including the pan-European Guarantee Fund LRS. For example, in 2023, the EIF and Finnvera signed an agreement to channel €280 million to small businesses in Finland to boost green transition, innovation and digitalisation.
“The government’s goal is to get Finland back on the path to growth. The guarantee agreement concluded with the EIB is one part of this extensive set of measures. Finnvera cooperates with European operators in order to improve the financial position and operating conditions of Finnish businesses. It is in the interest of companies and all Finns,” said Wille Rydman, Minister of Economic Affairs in Finland.
Background information
The European Investment Bank (ElB) is the long-term lending institution of the European Union, owned by its Member States. It finances sound investments that contribute to EU policy objectives. EIB projects bolster competitiveness, drive innovation, promote sustainable development, enhance social and territorial cohesion, and support a just and swift transition to climate neutrality.
The EIB Group, which also includes the EIF, signed a total of €88 billion in new financing for over 900 projects in 2023. These commitments are expected to mobilise around €320 billion in investment, supporting 400 000 companies and 5.4 million jobs.
All projects financed by the EIB Group are in line with the Paris Climate Accord. The EIB Group does not fund investments in fossil fuels. We are on track to deliver on our commitment to support €1 trillion in climate and environmental sustainability investment in the decade to 2030, as pledged in our Climate Bank Roadmap. Over half of the EIB Group’s annual financing supports projects directly contributing to climate change mitigation and adaptation, and a healthier environment.
Approximately half of EIB financing within the European Union is directed towards cohesion regions, where per capita income is lower. This underscores the Bank’s commitment to fostering inclusive growth and the convergence of living standards.
In 2023, the EIB Group pledged almost €1 billion in financing for new projects in Finland. The funding was targeted at R&D expenditures of large companies, industrial investments, energy-efficient buildings and education infrastructure, and supporting small companies. The financing accounts for 0.35% of the country’s gross domestic product, supporting investment worth nearly €4.4 billion. This is part of the nearly €8 billion of EIB Group financing provided in Finland over the past five years.
Finnvera is the national promotional institution of Finland and its official export credit agency. It is wholly owned by the Finnish government, and is rated Aa1 and AA+ by Moody’s and Fitch, respectively. Finnvera was established in 1999 by the Finnish government with a mission to support SME financing by issuing guarantees and loans, as well as to guarantee Finnish exports. It currently has 368 employees and around 23 100 clients, and serves the whole of Finland via a regional network of 15 offices. By law, the Finnish government compensates part of the credit losses incurred by Finnvera, normally at a rate of 50% of the final losses incurred by Finnvera in SME financing. As of 31 March 2024, Finnvera’s balance sheet totalled €14.3 billion. In 2023, domestic loans and guarantees granted by Finnvera totalled €1.8 billion.