EIB offers $303 million

Funds target SMEs

and mid-cap companies

The European Investment Bank (EIB) has granted credit lines to four local banks with a combined value of 265 million euros ($303 million). The funds will be used to finance small and medium enterprises (SMEs) and mid-cap companies.

The beneficiaries are Byblos Bank, which was granted a credit line equivalent to $114 million, Fransabank with a credit line of $86 million, and Société Générale de Banque au Liban (SGBL) and First National Bank (FNB) with $69 million and $34 million respectively.

EIB’s credit lines have a long repayment term of seven years. This is because there is often a mismatch in the local banking system between the lending tenures and the tenures of the financial resources which are mostly short-term deposits. Long repayment terms allow the banks to extend the tenures granted to their clients. These tenures should not be less than two years.

The credit facilities will be provided to companies operating in all sectors. The aim is to fund the expansion of existing SMEs and finance newly-established companies.

Borrowers under the EIB scheme could simultaneously profit from BDL incentives and subsidies.

Dario Scannapieco,EIB Vice-President, said: “The credit lines come under the EIB Private Sector Support Facility which aims at improving the economic resilience of the Lebanese economy to face the rising economic challenges due to the refugee crisis.”

Fransabank said that under this agreement, which is its sixth transaction with EIB, at least 70 percent of the credit line should be allocated to SMEs and the remainder to midcaps.

Antoun Sehnaoui, SGBL’s Chairman, said: "Through this agreement we will provide our SME clients with credit lines at competitive rates compared to the market."

The credit line granted to SGBL will finance the capital expenditure (CAPEX) and working capital of SMEs.

Rami El Nimer, FNB’s Chairman, said they will also seek advisory and technical assistance from EIB.

EIB is currently in talks with a number of local banks for additional credit lines of the same kind and may sign the related deals in 2017.