WRITTEN QUESTION E-3083/02

by Jonas Sjöstedt (GUE/NGL) to the Commission

(28 October 2002)

Subject: Failure in Sweden of EIB preferential loans for small businesses

There is much talk from political quarters in the European Union of protecting and promoting small and medium-sized enterprises. Preferential loans for such businesses is one method of assisting them. Because of its high standing, the EIB is able to lend money on preferential terms. The overriding objective of the EIB is to promote development in the EU and integration between the Member States.

In 2001, Föreningssparbanken became the first Swedish bank to conclude an agreement with the EIB to offer preferential loans to small and medium-sized businesses. Within the framework of a global loan, Föreningssparbanken had the facility to lend some SEK 400 million, which was primarily intended to finance small businesses' investments in infrastructure and industry.

A year later, however, in May 2002, it was noted that the EIB's partner had not lent a single krona of the amount earmarked. The bank had had numerous inquiries but the customers thought that the benefits were poor in relation to the terms. The bank in Sweden had hoped to be able to deliver something of benefit to its corporate customers. The idea was that the EIB loan would be cheaper than the commercial banks' but in May 2002 it was observed that compared with Föreningssparbanken's normal business loans, the difference in interest rates was not even half a percent but rather 10 to 20 percentage points, which was not particularly advantageous for borrowers.

Another reason for entrepreneurs' lack of interest was the additional administrative work. The involvement of the EIB means that yet another party demands scrutiny of the company, which may be reasonable but is also a source of irritation. As the EIB is a participating party, it must in some way take part in the lending process but, at the same time, the risk remains with Föreningssparbanken.

In what way will the Commission take this experience from Sweden into account when it discusses setting up preferential loans for small and medium-sized businesses and the terms and conditions for them?

Answer given by Mr Solbes Mira on behalf of the Commission

(3 December 2002)

According to the European Investiment Bank (EIB), the arrangements with FöreningsSparbanken have been in place for a relatively short time and have not yet led to full implementation. Nevertheless, progress is being made on identifying suitable final beneficiaries and full allocation of the Global Loan can be expected in due course in line with experience with Global loans programmes in other Member States.

This programme is funded from EIB's own resources and does not involve any financial support from the Community budget. The terms and conditions of the loans are exclusively determined by the EIB according to their normal practice.

The improved availability of medium and long term funding in the Swedish market should in itself be of prime value to small and medium enterprises (SMEs), independent of its pricing which, nevertheless, remains competitive with alternative products. The EIB's priority remains to promote the availability of a wider range of financial products in favour of SMEs, including new products as and when they become available.