The European Investment Fund (EIF) and Arion Bank have signed the first InnovFin SME Guarantee agreement for innovative Icelandic SMEs and small mid-caps.

The InnovFin agreement will enable Arion Bank to provide loans to innovative companies in Iceland over the next two years with the support of a guarantee provided by EIF and backed under Horizon 2020, the EU Framework Programme for Research and Innovation. The EU support for innovative Icelandic companies is expected to generate a portfolio of EUR 107 million of bank loans. The guarantee provided by EIF under the agreement covers 50% of the loan amount provided by Arion Bank.

Commenting on the signature, EIF’s Chief Executive, Pier Luigi Gilibert, said: “We are pleased to be signing our first InnovFin SME Guarantee transaction in Iceland for the benefit of innovative SMEs and small mid-caps. This is EIF’s first InnovFin transaction in an EFTA country. EUR 107 million is a significant amount for businesses and we are confident that the loan portfolio to be created by Arion Bank and backed by the InnovFin guarantee will help to strengthen the innovation agenda in Iceland.”

Carlos Moedas, European Commissioner for Research, Science and Innovation, said: “Innovative Icelandic companies can now benefit from EU-guaranteed loans up to EUR 107 million under Horizon 2020, the EU's research and innovation funding programme. The deal signed today will help these companies to reach their full potential and continue to contribute to economic growth and job creation in Iceland.”

Speaking at the signature event in Reykjavik, CEO of Arion Bank, Höskuldur H. Ólafsson, said: “Supporting all kind of innovation is a vital part of what we do. The agreement with the European Investment Fund is integral to this strategy and it enables us to lend money to small and medium-sized enterprises to facilitate their investment in innovation – in the broadest sense of the word. It means we can lend money on even better terms since the fund assumes part of the risk associated with the loans. We are excited to be able to present this new opportunity to Icelandic companies which are investing in innovation, product development, new methods of manufacturing or expansion on to new markets.”

The aim of the InnovFin SME Guarantee is to encourage banks or other financial institutions to lend to SMEs and small mid-caps (up to 499 employees) in need of investment and/or operating capital to finance research, development and innovation activities, with EU financial support. Financial institutions are being selected by EIF following a call for expression of interest for financial intermediaries across Europe.

About EIF

The European Investment Fund (EIF) is part of the European Investment Bank group. Its central mission is to support Europe's micro, small and medium-sized businesses (SMEs) by helping them to access finance. EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment.

About Arion Bank

Arion Bank is a universal relationship bank with operations in Iceland. Arion Bank’s main business sectors are retail banking, corporate banking, asset management and investment banking, and the Bank has a strong market position in all areas. In addition, Arion Bank has key strategic subsidiaries in the fields of payment solutions, fund management and insurance. Arion Bank has a nationwide branch network – 25 branches – of which 7 are in the Greater Reykjavik area and the loan book is 94% domestic. In recent years, Arion Bank has played an active role in developing the innovation environment in Iceland by investing in one of Iceland’s largest VC funds and its start-up accelerators Startup Reykjavik and Startup Energy Reykjavik, which is co-owned with some of Iceland’s main energy companies.

About InnovFin

The InnovFin SME Guarantee Facility provides guarantees and counter-guarantees on debt financing of between EUR 25,000 and EUR 7.5 million in order to improve access to loan finance for innovative SMEs and small mid-caps (up to 499 employees). The facility is managed by EIF, and is rolled out through financial intermediaries – banks and other financial institutions – in EU Member States and Associated Countries. Under this facility, financial intermediaries are guaranteed by EIF against a proportion of their losses incurred on the debt financing covered under the facility.

Press contacts:

EIF: David Yormesor
Tel.: + 352 24 85 81 346, e-mail: d.yormesor@eif.org

Arion Bank: Haraldur Guðni Eiðsson
Tel.:+ 354 444 7108, e-mail: haraldur.eidsson@arionbanki.is

European Commission: Joseph Waldstein
Tel.: + 32 (0)2 29 56 184, e-mail: joseph.waldstein@ec.europa.eu