• European Investment Fund (EIF) – BDB was the first financial intermediary chosen by the European Commission and the EIF from all applicant member states. In 2003, it obtained a guarantee line in the amount of EUR 7 million. Under the agreement, the EIF provides a direct guarantee which covers part of the newly formed loan portfolio of BDB during the term of withdrawal. Later on, the guarantee line was increased three-fold (to EUR 21 million) and was successfully used within the agreed terms. The loans guaranteed under the line amount to a total of EUR 42 million approved, and all loans are for SME’s with up to 100 employees and a minimum term of 36 months. The partial coverage of the risk allowed a decrease of the requirements of BDB for collateral on the loans extended by the bank to small and medium-sized enterprises, which facilitated their access to debt financing substantially. Currently, the institution is in a process of negotiation for inclusion in the EC 2007-2013 Competitiveness and Innovation Programme (CIP) for obtaining a new guarantee line managed by the EIF. The guarantee is direct and covers 50% of the portfolio risk under the newly extended loans by BDB to small and medium sized enterprises complying with certain eligibility criteria. The guarantee is provided by the EIF on a mandate of the European Commission. - www.eif.org
• European Investment Bank (EIB) – Pursuant to a financial agreement of October 2000, BDB uses a credit line in the amount of EUR 10 million for investment projects of small and medium-sized enterprises. In January 2003 Encouragement Bank AD was approved by the European Commission as an agent for the EC Financial Facilitation for SME’s under the Multi-year Program for Enterprises and Entrepreneurship under which BDB provides (with the loan from the EIB) corporate loans for a term of four to ten years and up to EUR 250 000. The total amount of the investment financed by the loan is close to EUR 21 million (VAT exclusive). - www.eib.org
• The Development Bank under the Council of Europe extended a line to BDB in the amount of EUR 15 million under the programme Creation and Maintenance of Jobs for SME’s in Bulgaria. The loan is the first loan extended to a Bulgarian bank and is divided in two parts - EUR 5 million, covering loans for one to four years, and EUR 10 million, covering loans for four to ten years. Currently, the loans are used entirely for projects of Bulgarian SME’s for over EUR 30 million. On the 18th of November 2009 in Paris a loan agreement between Bulgarian Development Bank and Council of Europe Development Bank has been signed in the amount of 15 million euro. The funds will be used for the financing of investment projects of micro, small and medium-sized enterprises from the real sector with the purpose of creating new and preserving the existing jobs. The financial resource can be used for the financing of craftsmen and family entrepreneurs.
This is the second credit line granted to Bulgarian Development Bank. The previous credit line, also in the amount of 15 million euro, was granted to Bulgarian Development Bank in 2003. The 2003 credit line has been used for the financing of investment projects of Bulgarian SMEs and 2545 new jobs were created. – www.coebank.org
• Kreditanstalt für Wiederaufbau – BDB, in its position of a trustee of the Ministry of Finance, manages EUR 3 272 268, extended to Bulgaria for a period of 40 years. The funds are provided by BDB to selected commercial banks (counterpart banks) for short-term and medium-term financing of the small and medium-sized business. In addition, the bank is a direct recipient of funds under an Agreement between the Government of the Federal Republic of Germany of 2001. In 2007, Encouragement Bank entered into a contract for a credit line in the form of a direct loan from the Ministry of Finance financed with resources provided by the Federal Republic of Germany to the Republic of Bulgaria through KfW in 2001. Under that credit line, the Bulgarian Development Bank extends credit lines to counterpart banks for financing of small and medium-sized enterprises. On 27 July 2010 BDB signed a second credit line for 25 million EURO with KfW. The loan is provided without state guarantee. The financial resources will be used for direct lending to SMEs and for provision of credit lines to the commercial banks for business financing. The funds shall be used mainly for financing of long-term investment projects of companies – www.kfw.org
• Nordic Investment Bank (NIB) - On 16 November 2004, BDB and Nordic Investment Bank signed a loan contract for the amount of EUR 10 million, under which funds provided by the NIB will be used for financing of investment projects of mutual interest for the Republic of Bulgaria and the member states of the NIB (Kingdom of Denmark, Republic of Finland, Republic of Iceland, Kingdom of Norway and Kingdom of Sweden, as well as Lithuania, Latvia, and Estonia). The purpose of the credit line is to finance investment projects of Bulgarian SME’s (including those whose capital is partially or entirely owned by a member state of the NIB) for projects envisioning delivery of goods, services and infrastructure of the NIB member states. Loans under the programme are extended for a period of three to ten years with a grace period of up to three years - www.nib.int .
• Japan Bank for International Cooperation (JBIC) - On 19 July 2006 BDB received a EUR 10 million credit line from the Japan Bank for International Development (JBIC) and from Mizuho Bank. The funds will be used for a period of 8.5 years for financing of projects of small and medium-sized enterprises for purchase of Japanese investment equipment for a period of 8.5 years, with a grace period of 2.5 years and relieved requirements for collateral of the investment loans whose term is longer than 3 years
On 17 December 2009 BDB signed in Sofia a second loan agreement for 20 million Euro with the Japan Bank for International Cooperation. The purpose of the agreement is to promote the economic cooperation between Japan and Bulgaria. The funds will be used for financing of projects of small and medium-sized enterprises for purchase of Japanese investment equipment. BDB will provide loans for a period of 10 years, with a grace period according to the specifics of each project.- www.jbic.go.jp
• Croatia Bank for Reconstruction and Development (CBRD) - On 11 November 2006 BDB and the Croatia Bank for Reconstruction and development entered into a loan contract for EUR 1 000 000 with a term of withdrawal of up to two years. The funds provided by the CBRD will be used for financing the import of Croatian investment goods by Bulgarian companies. The loans under the programme are long-term. The credit line’s objective is to expand the economic cooperation between Bulgaria and the Republic of Croatia. - www.hbor.hr
• Black Sea Trade And Development Bank – On the 9th of October 2009 Bulgarian Development Bank (BDB) has signed a Loan Agreement with Black Sea Trade And Development Bank in the amount of 8 million euro for financing Bulgarian small and medium-sized enterprises. The credit line is intended for the creation, modernization and expansion of the activity of the SMEs. The loans will be granted for working capital, export and pre-export financing of industrial or agricultural enterprises. Bulgarian Development Bank will provide loans for a maximum period of 5 years and a grace period of 18 months. - www.bstdb.org
• China Development Bank – Bulgarian Development Bank has negotiated two credit lines in the amount of 35 million euro with China Development Bank. The agreement for the first credit line between the financial institutions was signed on the 15th of October 2009. The total amount of the first credit line is 5 million euro and the resources will be granted without sovereign guarantee. The credit line will be used by Bulgarian Development Bank to provide direct loans to small and medium-sized enterprises. Another agreement with China Development Bank for a second credit line in the amount of 30 million euro, is expected to be signed within one month. - www.cdb.com.cn
• Macedonian bank for Development Promotion – On 26 January 2010 the Bulgarian Development Bank (BDB) signed an Agreement for Cooperation with the Macedonian bank for Development Promotion (MDB). MDB will profit the experience of BDB in the utilization of European financial tools – mainly guarantee and credit lines, which facilitate the access to finance of SMEs. MDB is also interested in the experience of BDB to attract of long-term financial resource from international specialized banks without state guarantee.
• Sumitomo Mitsui Banking Corporation Europe Limited (SMBCE) - On 13 May 2010 BDB and Sumitomo Mitsui Banking Corporation Europe signed a bi-lateral trade finance facility. Under this facility, Sumitomo Mitsui Banking Corporation Europe Limited may provide short term trade finance facilities to BDB for tenors of up to 1 year. www.smbcgroup.com
COOPERATION WITH INTERNATIONAL FINANCIAL INSTITUTIONS
• North Rhine Westphalia Development Bank (NRW.BANK) - In 2006 BDB entered into a Cooperation Agreement with the North Rhine Westphalia Development Bank , which is the first step towards development of future cooperation. The German bank is the state-owned institution for development of North Rhine Westphalia - a region in Germany with a population of 18 million people, producing 22% of GDP and 6.2% of the EU economic product. The total assets of the institution exceed EUR 110 billion, which gives the bank the first place among the German regional development banks. It has a status of a public company, holds a full banking license and an ААА long-term rating. - www.nrwbank.de
• International Bank for Economic Development (IBED) – on 12 November 2006 BDB signed a frame agreement with the International Bank for Economic Development, Moscow, (IBED). The cooperation between the two banks will be in the form of exchange of information regarding clients and markets, establishing correspondence relations, operations on the money and FX markets, and opening of accounts. The two banks will offer lower fees and commissions for commercial payments and favourable conditions for use of guarantees and counter-guarantees. The two institutions are aiming to facilitate entrepreneurship and commerce between Bulgaria and the Russian Federation, as well as with the IBED shareholder states. - www.ibec.ru
• Moscow Bank for Reconstruction and Development (MBRD) - on 3 August 2006 BDB signed a Memorandum of Cooperation with the Moscow Bank for Reconstruction and Development (MBRD). The cooperation between the two banks will guarantee financial levers and will be in the form of financial relief and instruments for financing of export transactions between the two countries (export financing and facilitated schemes of payments). The Memorandum is a step towards the activisation of the activity of Bulgarian companies in Russia. - www.mbrd.ru
EXTENDING LOANS TO COUNTERPART BANKS
The provision of financial resources to counterpart banks for supporting the small and medium-sized business in the country is a typical activity for Encouragement Bank AD which is expected to strengthen after its transformation into Bulgarian Development Bank.
• Subject of a project under an Agreement between the government of the Republic of Bulgaria and the government of the Federal Republic of Germany for financial cooperation of 2001.
BDB is a subject of a project under an Agreement between the government of the Republic of Bulgaria and the government of the Federal Republic of Germany for financial cooperation of 2001. The Bank received a credit line in the form a direct loan from the Ministry of Finance financed with funds provided by the Federal Republic of Germany to the Republic of Bulgaria in 2001. Under that credit line, the Bulgarian Development Bank extends credit lines to counterpart banks for financing of small and medium-sized enterprises. The total amount of the credit line is EUR 4 928 704 and will be used on a revolving principle for a period of ten years. It will be used for funding investment projects of micro, small and medium-sized enterprises with more than 50% private participation, as well as for working capital loans. The loans to counterpart banks will be extended for a period of up to three years.
In 2007 BDB extended the following credit lines:
- to Targovska Banka D AD in the amount of EUR 1.1 million (October 2007).
In 2008 BDB extended a credit line to Tokuda Bank AD in the amount of EUR 1.298 million for financing of SME’s (July 2008).
• Trustee of the Ministry of Finance under a New agreement for management of funds for small and medium-sized enterprises under an Agreement between the government of the Federal Republic of Germany and the government of the Republic of Bulgaria for financial cooperation of 19.10.1998, entered into between the Republic of Bulgaria represented by the Minister of Finance and Encouragement Bank AD on 11.05.2001.
In 2007 BDB provided funds for financing of SME’s to:
- TB Tokudabank AD (July 2007) in the amount of EUR 0.4 million
The total capitalized volume of the programme is EUR 3,962,516.75 and will be used on a revolving principle for a period of 40 years following its signing, i.e. until 2038.
The conditions under which the counterpart banks may finance SME’s include:
- investment loans and working capital loans to SME’s with more than 50% private participation in the capital;
- amount of the loan – up to the equivalent in EUR of BGN 100 000;
- the borrower is not in a sector which is forbidden for financing (gambling, trade in arms, and sectors polluting the environment).
MEMBERSHIP IN INTERNATIONAL ORGANIZATIONS
• Network of European Financial Institutions (NEFI)
In 2007 BDB was accepted as a full member of the Network of European Financial Institutions (NEFI) after it was an observer at the organization since 2004.
NEFI was established in 1999 and currently unifies 13 financial institutions from 13 EU member states: ALMI (Sweden), AWS (Austria), OSEO/BDPME (France), Finnvera (Finland), Hipoteku Banka (Latvia), ICO (Spain), KfW Bankengruppe (Germany), MCC (Italy), MFB (Hungary), SNCI (Luxemburg), SZRB (Slovakia), SID ( Slovenia) and Bulgarian Development Bank (Bulgaria).
All members share a common mission set by the government of their respective country – to facilitate the access to financing for small and medium-sized enterprises (SME’s). The partnering institutions operate on the principle of being complementary to one another and cooperation with the respective national banking systems through provision of co-financing, risk sharing, expert opinions regarding issues with SME financing on the territory of the European Union.
In 2007 the NEFI partnering institutions financed a total of more than 313 000 SME’s on the territory of the EU through over EUR 20 billion in the form of loans and guarantees. - www.nefi.be
• European Association of Public Banks (EAPB)
Since May 2005 BDB is a member of the European Association of Public Banks, a prestigious organization with more than 100 members – financial institutions with 15% market share in Europe and assets of over EUR 3 trillion. The EAPB members are banks with state participation, development banks and other European financial institutions. Among them are eight German banks and institutions, one Danish and one Latvian bank, as well as three Austrian banks of which one is Erste Bank. The members of the organization are also the Swiss Association of Cantonal Banks, Finvera and Municipality Finance (Finland), as well as the Hungarian Development Bank which is analogous to the Encouragement Bank. Mr. Sasho Chakalski, Executive Director of the Encouragement Bank is a member of the Administrative Council of EAPB. The mission of the Association is to represent the specific interests of the state banks and the development banks at the European level.
• The Club of Institutions of the European Union Specializing in Long-Term Loans
Members of the organization are the European Commission, the European Investment Bank, the European Investment Fund, Kreditanstalt für Wiederaufbau, Nordic Investment Bank, the French Bank for Development of SME’s, as well as representatives of the new EU member states. The organization was established in June 2001 to ensure cooperation, exchange of information and know-how in the area of long-term loans.
