MICROCAPITAL BRIEF: European Investment Fund (EIF) to Guarantee $9m in Microloans Disbursed by Romania’s Libra Internet Bank Under Progress Microfinance Facility

The European Investment Fund (EIF), a provider of finance to lenders to micro-, small and medium-sized enterprises (MSMEs), and Libra Internet Bank, a Romania-based bank that conducts the majority of its business online, have signed a guarantee agreement to help Libra lend RON 30 million (USD 9.26 million) to 400 microbusinesses in Romania. Under the agreement, the European Progress Microfinance Facility, which is funded by the EU’s European Commission and managed by EIF, will pay 75 percent of the losses suffered by Libra through client default.

Cristina Dumitrescu, a microfinance investment manager at Progress Microfinance, reportedly stated, “I am convinced that this finance will help to benefit micro-enterprises, in particular young entrepreneurs willing to establish their own company and contribute to the economic growth and social inclusion in Romania” [1].

As of 2013, Libra had a network of 35 branches and reported total assets of RON 1.2 billion (USD 370 million). As of December 31, 2013, Libra reported total deposits of RON 817 million (USD 252 million) [2]. As of 2014, EIF reported total assets of EUR 1.5 billion (USD 2.0 billion) [3]. As of 2013, EIF reported return on assets of 3.2 percent and return on equity of 4.2 percent [4]. Progress Microfinance has funding of EUR 205 million (USD 278 million) as of 2014.

By Benjamin Krupp, Research Associate

About European Investment Fund

The European Investment Fund (EIF) is a provider of risk finance to organizations that lend to small and medium-sized enterprises (SME) in Europe. The fund is a public-private partnership whose shareholding structure, as of 2014, includes the European Investment Bank; the European Union (EU) as represented by the European Commission; and 25 financial institutions from EU member states plus Turkey. EIF is a member of the EIB Group, the parent organization of the European Investment Bank. As of March 2014, EIF reported EUR 1.5 billion (USD 2.0 billion) in total assets. As of 2013 fiscal year-end, EIF reported return on assets of 3.2 percent and return on equity of 4.2 percent.

About European Progress Microfinance Facility (Progress Microfinance)

The European Progress Microfinance Facility was launched in 2010 in an effort to increase the availability of microcredit for small businesses by issuing grants and providing loans to microcredit providers in the European Union. The microcredit providers may be private or public banks, non-bank microfinance institutions or NGOs. Progress Microfinance is supported by the European Commission and the European Investment Bank (EIB), and it is managed by the European Investment Fund, a member of the EIB Group. As of 2014, the European Progress Microfinance Facility supports 38 microcredit providers in 18 countries and it had committed approximately USD 98 million in loans as of 2012.

Sources and Additional Resources

[1] Information provided to MicroCapital by European Investment Fund, June 11, 2014

[2] Libra Internet Bank: Raport Anual 2013

[3] European Investment Fund: Statement of Financial Position 2014

[4] European Investment Fund: Annual Report 2013

MicroCapital, April 15, 2014: EIF, EBRD, European Commission, DEG to Allocate $19.8m for Small, Medium-Sized Enterprises (SMEs) Via Western Balkans Enterprise Expansion Fund (ENEF)

MicroCapital, June 19, 2013: European Bank for Reconstruction and Development (EBRD) Loans $106m to Banca Comerciala Romania (BCR) for Small and Medium-Sized Enterprises (SMEs)

MicroCapital, January 3, 2012: Deutsche Investitions-und Entwicklungsgesellschaft GmbH (DEG), European Fund for Southeast Europe (EFSE), European Investment Fund to Loan $38m to Alternatifbank A.S. (ABank) of Turkey

MicroCapital, July 31, 2012: European Progress Microfinance Facility Signs 20th Intermediary, Reaches $98m Committed

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