MICROCAPITAL BRIEF: European Investment Fund to Guarantee $6m in Credit Lines Extended by Crnogorska Komercijalna Banka (CKB) to 700 Microentrepreneurs in Montenegro

The European Investment Fund (EIF), a member of the EU-backed European Investment Bank Group, and Crnogorska Komercijalna Banka AD (CKB), a member of Hungary’s OTP Group, recently partnered to provide financing to “up to 700 Montenegrin micro-borrowers.” Under the EU Programme for Employment and Social Innovation (EaSI), EIF and the EU’s European Commission will guarantee lending totaling EUR 5 million (USD 5.9 million) over five years.

CKB will make the funding available via overdraft facilities, which are a new product for the bank. CKB CEO Pal Kovacs stated: “This agreement will give these clients the opportunity to closely cooperate with the bank which will recognise their needs, advise and support them in their business life cycle. Each account will have a cap of EUR 10,000 (USD 11,800) and will be backed by personal recognizance rather than collateral. The terms also will include “a reduction of the fees and the interest margin.”

OTP Group operates in nine countries in Southeast Europe, serving 13 million clients via 1,400 branches and 4,000 automatic teller machines

The European Investment Fund (EIF) provides 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 2017, includes the European Investment Bank (59.8 percent equity); the European Union (EU) as represented by the European Commission (28.1 percent); and 24 financial institutions from EU member states plus Turkey and Croatia (12.1 percent). As of 2016, EIF had total assets of EUR 2.30 billion (USD 2.42 billion).

By Colin Mulligan and the MicroCapital team

Sources and Additional Resources

European Investment Fund press release:
http://www.eif.org/what_we_do/microfinance/news/2017/ckb_easi_agreement.htm

EU Programme for Employment and Social Innovation (EaSI)
http://ec.europa.eu/social/main.jsp?catId=1081

European Investment Fund financial statement:
http://www.eif.org/news_centre/publications/eif_annual_report_2016.pdf

European Investment Fund shareholders:
http://www.eif.europa.eu/who_we_are/shareholder/index.htm

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