MICROCAPITAL BRIEF: European Investment Fund (EIF) to Guarantee Loans Disbursed by UniCredit Bulbank to Microenterprises in Bulgaria Under Progress Microfinance Facility

The European Investment Fund (EIF), a provider of finance to organizations that lend to micro-, small and medium-sized enterprises (MSMEs) in Europe, and UniCredit Bulbank, a Bulgarian banking unit of UniCredit Group of Italy, have announced a guarantee agreement that will enable UniCredit Bulbank to support increased financial inclusion of approximately 270 microenterprises in the country [1]. Under the guarantee, the European Progress Microfinance Facility (Progress Microfinance), which is funded by the EU’s European Commission and managed by EIF, will back 56 percent of the losses suffered by UniCredit Bulbank through client default [2].

As of year-end 2013, UniCredit Bulbank reported total assets of BGN 12.7 billion (USD 8.75 billion) and a network of approximately 230 branches in Bulgaria. UniCredit Group has 9,500 branches in 22 countries and reported total assets of EUR 876 billion (USD 1.2 trillion) as of 2013. As of 2014, EIF reported total assets of EUR 1.5 billion (USD 2.0 billion) [3]. Progress Microfinance has funding of EUR 205 million (USD 278 million) as of 2014.

By Nisha Koul, Research Associate

About UniCredit Bulbank: UniCredit Bulbank, part of European financial group UniCredit, is a bank that provides financial services to individuals, small and mid-sized businesses, local and international companies and local governments in Bulgaria. As of year-end 2013, the bank reports total assets of BGN 12.7 billion (USD 8.75 billion), a network of approximately 230 branches in the country and one million customers.

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] EIF, News, UniCredit Bulbank and EIF Sign An Agreement for Financing Micro-enterprises

[2] UniCredit Bulbank, News, UniCredit Bulbank and EIF Sign An Agreement for Financing Micro-enterprises

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

MicroCapital Story, June 18, 2014, European Investment Fund (EIF) to Guarantee $9m in Microloans Disbursed by Romania’s Libra Internet Bank Under Progress Microfinance Facility

MicroCapital Story, February 4, 2013, EIF Joint Action to Support Microfinance Institutions (JASMINE) Offers Technical Assistance to European Microcredit Providers

MicroCapital Universe Profile: European Investment Fund

MicroCapital Universe Profile: European Progress Microfinance Facility

Do you know that MicroCapital publishes the MicroCapital Monitor newspaper each month? Find out more at https://www.microcapital.org/products-page/

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