Bulgarian Development Bank (BDB) negotiated credit lines totalling BGN 230 million with 12 commercial banks. The funds will be used for medium-term and long-term investment loans, pre-export financing and financing of EU Structural Funds projects of Bulgarian small and medium-sized enterprises.
Refinancing of commercial banks is part of the Market Flexibility set of measures adopted by the government to reduce the adverse effects of the world financial crisis on the Bulgarian economy. Gradual capitalisation of BDB by the total of BGN 500 million started already in December 2008 under one of the measures. The last instalment of the capital increase is planned to be received by the end of March this year.
Owing to the credit lines provided by BDB, for less than a month, the domestic commercial banks have already given loans to SME totalling BGN 43 million. The established mechanism of interaction with commercial banks and the terms and conditions of provision of the credit lines guarantee that all target funds amounting to BGN 500 million will reach the end-customers by the end of March.
Loans to businesses will be provided in accordance with the general terms and conditions of the partner banks. The terms and conditions of provision of the credit lines stipulate that SME financing shall be for a maximum of BGN 2 million, at an interest rate of up to 8% and that the amount of fees and commissions shall not exceed 0.7% on annual basis. Loan terms shall be up to 10 years with a 3-year grace period.
BDB develops an additional measure to support agricultural producers, which is similar in terms and conditions to the credit lines agreed so far. The measure envisages providing target funds to commercial banks to extend loans to the agricultural sector for working capital and investment purposes.
At the initiative of BDB, a set of measures have started being discussed and developed to increase local pension funds’ investment opportunities. One of the alternatives is to launch bond issues to finance infrastructural projects in the country and for targeted refinancing of commercial banks. The initiative is supported by the Bulgarian pension funds.
The negotiations on structuring in Bulgaria of the European Commission’s and the European Investment Fund’s (EIF) initiative JEREMIE to support the SME sector are also in their closing stage. It is planned for BDB and EIF to establish a joint special-purpose company with a capital of EUR 200 million. The company will develop financial products for the local commercial banks.
The JEREMIE programme will allow for the SME funds utilisation term under the EU structural funds to be extended from 2 to 7 years.
Commercial banks that have concluded contracts to obtain credit lines from BDB:
Bank
1. ALLIANZ BANK BULGARIA AD
2. INVESTBANK AD
3. DSK BANK
4. COMMERCIAL BANK D AD
5. INTERNATIONAL ASSET BANK AD
6. UNICREDIT BULBANK AD
7. UBB
8. EUROBANK EGF AD
9. CORPORATE COMMERCIAL BANK AD
10. MKB UNIONBANK AD
11. FIRST INVESTMENT BANK AD
12. CENTRAL COOPERATIVE BANK AD
