The European Investment Fund (EIF, part of the EIB Group) and Bank of Valletta have signed an agreement to provide €28 million worth of new loans over the next two years to SMEs in Malta.
Bank of Valletta will provide the new loans with long maturities and on favourable terms thanks to a new increase of the guarantee agreement between the EIF and Bank of Valletta.

Bank of Valletta and the EIB Group (EIB and EIF) have renewed their partnership to support the business needs of small and medium-sized companies (SMEs) in Malta. Thanks to this new agreement, the Bank will provide an additional €28 million to Maltese SMEs on favourable terms and with long tenors over the next two years. The agreement is supported by the “SME Initiative” of the European Union, which is based on EU Structural and Investment Funds (ESIF) made available by the Government of Malta, and implemented in combination with funds from the H2020 programme as well as EIF own resources.

The favourable conditions on the loans are achieved thanks to a structured finance project defined as “risk transfer”, implemented by combining funds managed at the national level with resources from the EU programme and EIB Group resources. The “SME Initiative” agreement is created in the form of an uncapped guarantee operation on a portfolio of new loans to be originated by the Bank of Valletta, using these funds to cover the first losses of the portfolio.

The transaction confirms the long relationship and cooperation between the EIB Group and Bank of Valletta and will help the Bank support Maltese SMEs with a product that will provide funding on advantageous terms, aiming to help entrepreneurs overcome the economic crisis caused by the COVID-19 pandemic.

Commenting on the increase of the transaction with Bank of Valletta, EIF Chief Executive Alain Godard said: “I am delighted with the very positive results of the SME Initiative in Malta. Bank of Valletta has already managed more than €70 million of SME financing to help companies over the last six years. I am convinced that the additional finance will be instrumental in supporting more jobs and growth, mitigating the effect of the COVID-19 pandemic by combining European Structural and Investment Funds, EU Horizon 2020 and EIB Group resources.”

EIB Vice-President Gelsomina Vigliotti said: “The EIB Group is fully committed to supporting the rollout of the SME Initiative in Malta, a key programme in the context of the current COVID-19 pandemic. With today’s signature, additional long-term financing at attractive conditions will be made available to Maltese SMEs, contributing to promoting the country’s economic recovery.”

Parliamentary Secretary for European Funds within the office of the Prime Minister Dr Stefan Zrinzo Azzopardi stated: “the decision to allocate additional funds towards the SME Initiative financial instrument further confirms the Government’s commitment towards supporting our businesses. Especially in the current circumstances, the effort being made to ensure a continuous stream of support to businesses is imperative to help them mitigate the ongoing impact of the pandemic on Maltese SMEs. Our belief is that these additional funds will serve as an opportunity for our businesses to not only recover but also to invest and grow, even during these challenging times.”

The Chief Business Banking Officer of Bank of Valletta Albert Frendo said: “This is yet another step in our journey with the EIF in positioning Bank of Valletta as the Maltese SME bank. Conscious of the challenges being faced by the SME community, this top-up in funding has allowed Bank of Valletta to present a more competitive offering with the objective of helping Maltese SMEs to invest as a means of enhancing their competitiveness in a post-COVID economy.”

Background information:

The European Investment Bank (EIB) is the long-term lending institution of the European Union owned by its Member States. It provides long-term financing for sound investments that contribute to EU policy. The Bank finances projects in four priority areas: infrastructure, innovation, climate and environment, and small and medium-sized enterprises (SMEs).

The European Investment Fund is part of the European Investment Bank Group. The EIF designs and develops both venture and growth capital, guarantees and microfinance instruments, which specifically target this market segment. The EIF is also active in supporting climate and infrastructure fund investments with a strong focus on climate action and environmental sustainability. Through its activities, the EIF fosters EU objectives in support of countering climate change as well as promoting innovation, research and development, entrepreneurship, growth and employment.

Press contacts:

EIF:

Lorenzo Squintani, tel.: +352 691 285 772, l.squintani@eib.org

Website: www.eif.org — Press office: +352 4379 21000 — press@eib.org
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