- EIB signs guarantee with OP under European Guarantee Fund, to support companies in making new investments and recovering from the COVID-19 pandemic.
- The guarantee will make available new lending worth with €300 million to Finnish businesses going through tough times due to COVID-related restrictions.
The European Investment Bank has signed a guarantee agreement with OP Bank in Finland to allow OP to bring new financing worth 300 million euros to mid-size Finnish companies. The aim is to support companies in making new investments and recovering from the Covid-19 pandemic. Financing guaranteed by the EIB and intermediated by OP is intended to finance profitable investments and the working capital of companies. The EIB’s guarantee will cover €195 million (65%) of the 300-million-euro financing targeted at mid-size companies. The guarantee forms part of the European Guarantee Fund's (EGF) guarantee programme, and the agreement will be valid until the end of 2021.
The new financing will improve companies’ borrowing opportunities and provide them with much needed support amid the challenges they have faced due to the pandemic.
–“The economy is beginning to recover as COVID-19 vaccinations progress. We encourage companies to make profitable investments that ensure their competitiveness. Through financing targeted at Finland, we will support companies’ recovery from the pandemic and help them back onto the path of sustainable growth”, says Katja Keitaanniemi, President and CEO of OP Corporate Bank.
For companies, this means that the EIB and OP will provide additional financing on competitive terms, with pricing that enables them to close the investment gap caused by the pandemic. The EIB’s risk-sharing guarantee under the European Guarantee Fund will reduce the cost of financing and the amount of collateral required from companies to get a loan.
–“We are delighted to be joining forces with the European Investment Bank in offering competitive financing to companies. We at OP Corporate Bank have solid experience of the Finnish corporate sector and of acting as an intermediary for EIB financing in Finland”, Keitaanniemi says.
EIB Vice-President Thomas Östros stated. “The pandemic has put all sectors under severe stress, and Finnish businesses are no exception. The European Guarantee Fund works as a protection shield for companies, to help them finance their way out of the crisis under more favourable conditions. We are glad that we can build on the EIB Group’s longstanding relationship with OP to make sure that Finnish companies can benefit from this pan-European measure.”
OP also distributes financing to small companies
Financing provided by OP and the EIB is targeted at mid-size companies with 250–2,999 employees, and companies with 0–250 employees, net sales exceeding 50 million euros and a balance sheet total exceeding 43 million euros. The loan maturity cannot exceed six years.
OP also provides various financing options for small businesses. –“We cooperate with Finnvera and the European Investment Fund (EIF) to enable financing for small enterprises, too. OP is an intermediary for InnovFin, Initiative and other funding that SMEs can apply for through their local OP cooperative banks. We encourage SMEs to take full advantage of the various forms of support and financing available”, adds Katja Keitaanniemi.
Background information:
In 2020, the Bank made available in excess of €644 million in loans for Finnish projects. The EIB borrows money on capital markets and lends it to projects that support EU objectives, with about 90% of all loans being accorded within the EU.
The European Guarantee Fund (EGF) was set up by the EIB Group with contributions from Finland and other EU Member States to shield companies suffering from the COVID-19 crisis. Using nearly EUR 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 EUR 540 billion boost those parts of the EU economy that have been hit the worst.
OP Corporate Bank plc is part of OP Financial Group. OP Corporate Bank and OP Mortgage Bank are responsible for OP's funding in money and capital markets. As laid down in the applicable law, OP Corporate Bank, OP Mortgage Bank and their parent company OP Cooperative and other OP Financial Group member credit institutions are ultimately jointly and severally liable for each other's debts and commitments. OP Corporate Bank acts as OP Financial Group's central bank.