EBRD: supporting SMEs
Although the SME sector is frequently cited as a potential growth driver by bankers in emerging Europe, providing funding to smaller firms can be problematic for traditional lenders, particularly in the aftermath of recession and at a time when western European parent banks are under pressure to repair balance sheets.
Jean-Marc Peterschmitt, managing director for central and southeastern Europe at the European Bank for Reconstruction and Development, says: “Banks are still in deleveraging mode, and when they look at their portfolios, unfortunately it is often the SME segment that has seen the worst asset-quality deterioration.”
That, he adds, is where the EBRD comes in. Supporting SMEs has always been a key part of its remit, but since the financial crisis the bank has both increased the proportion of financing dedicated to the sector – 18% of the EBRD’s total financing commitment of €8 billion went to smaller firms in 2012 – and expanded its range of funding channels. While the EBRD still provides cash to CEE banks for on-lending to SMEs – the preferred method in the early years of transition when building local banking sector expertise was a priority – the bank now also undertakes risk-sharing with banks and even provides funding direct to small businesses.
“At times when SMEs feel that access to financing is more challenging, such direct financings are very important, because they act as a demonstration,” says Peterschmitt. “It shows that funding such small businesses is possible and that this can create success stories.”