Banks for the economy receive 40 million euros

COVID LOAN AID ARRIVES AT THE BEGINN OF NEXT WEEK FROM THE COUNCIL OF EUROPE DEVELOPMENT BANK

The government has provided credit lines for micro, small and medium enterprises for new investments and preservation of liquidity. The money will be placed by commercial banks at an effective interest rate of 1.5 to 5.5 percent, with the obligation to provide support for up to 50 percent of the allocated amount.

The first 40m euros in aid to micro, small and medium-sized enterprises (MSMEs) provided by the government to the Council of Europe Development Bank (CEB) will be paid to commercial banks on July 5th, and the money is intended to preserve liquidity and new investments.

This was officially told to "Vijesti" in the Ministry of Finance and Social Welfare.

This EUR 40 million is the first tranche of EUR 70 million provided by this international financial institution.

The second tranche of the EUR 30 million loan can be obtained only when the first one is placed.

Banks are obliged to allocate from their sources the same amount of money that was provided from the CEB, which means that a total of 140 million euros will be available to the economy within this project.

The former government of Prime Minister Dusko Markovic, with the rebalance of the budget for last year, and within the third package of aid measures, provided 70 million euros to the CEB.

According to the initial announcements, this money should have been available by the beginning of October last year.

All 12 banks operating on the market are included in this project and will receive money without interest, but the Ministry of Finance for "Vijesti" did not specify how much each of the banks will receive from these 40 million.

"According to the submitted offers, the money will be distributed proportionally to the banks." The money will be transferred to them for a repayment period of nine years, which includes a grace period of two years ", they told the Ministry of Finance.

Each bank will have special conditions according to which it will place money to the economy, and the interest rate will finally be defined by the agreement that the Ministers of Finance and Economic Development Milojko Spajić and Jakov Milatović should sign contracts with commercial banks at the beginning of next week.

"At the moment, we can say that the effective interest rates will be in the range of about 1.5 percent to 5.5 percent, depending on whether the loan is intended for liquidity or investment, the creditworthiness of the client, as well as other parameters defined by the business policy of the bank with which the client applies for a loan ", said the Ministry of Finance.

Milatović said in the show Načisto on TV Vijesti that companies from this credit line can expect an interest rate of 2.5 to 3.5 percent.

"The Ministries of Finance and Economic Development have worked diligently to establish cooperation with commercial banks, in order to support MSMEs through more favorable credit arrangements in order to create opportunities for their recovery and new investments. This implements measures to support the economy and citizens for the second quarter (April-June) this year, "said the Ministry of Finance.

The Union of Employers (MEF) for "Vijesti" assessed as positive these credit supports within the latest package of measures to help the economy.

"We are witnesses that the corona crisis caused huge disturbances in the Montenegrin economy, with consequences that manifested themselves through a drop in income that was recorded in as many as 90 percent of companies in the third and fourth quarters of last year, according to our research." Lack of financial resources and illiquidity, as the most obvious problems faced by Montenegrin companies, have led to a larger number of loan applications intended to preserve the sustainability of operations. That is why, as part of our four proposals for measures to support the economy, which were sent to the Government last year, we have always singled out those related to financial and credit support as necessary measures, "they said in this organization.

The Union hopes that conditions for financial injection will soon be created through the guarantee fund and the model of credit-guarantee schemes for maintaining liquidity and working capital for entrepreneurs and MSMEs.

"And this type of assistance measures would help to support the economy financially, and thus facilitate its recovery and further development," they pointed out in the MEF.

Up to half a million

In Lovćen banka, they said that they would receive around seven million euros from the CEB loan and that the bank would provide as much of its own money.

For "Vijesti", they did not specify at what interest rate they will lend money to clients, but it was explained that the conditions will be more favorable than the market ones and that they will depend on the client's creditworthiness.

"Price conditions do not depend only on the sources from which they are placed, but there are other factors that determine the price (stability in the market, servicing all types of obligations - especially taxes, the amount of capital). Credit lines will be defined by a future agreement with the state and refer to working capital and investment funds. The total amount that can be placed against one legal entity for investments must not exceed EUR 500,000, and for working capital EUR 300,000 ", they said in Lovćen banka.

The economy will receive a total of 8.86 million from the Mortgage Bank from this project (half of the money from the CEB and the same amount from the bank).

The maximum loan amounts per client are the same as in Lovćen banka.

"The level of interest rates depends on the creditworthiness of the clients and they range from two to four percent annually. As micro, small and medium enterprises are key to the development of the economy, this credit line will provide them with access to funds that can help them recover as soon as possible and invest in improving business and meeting European Union standards. With the credit line, we want to enable our clients to realize investments that require longer deadlines ", they said in Hipotekarna banka.

CKB will place 26.38 million

CKB Bank will place a total of EUR 26.38 million, of which EUR 13.29 million is from the CEB.

"We will approve loans that are in line with CEB rules and our credit policy. The money from this program will be forwarded to commercial banks without the obligation to pay interest, and in that way the end users can get significantly more favorable financing conditions ", they said in this bank, without specifying at what interest rate they will give loans.

In this program, CKB sees an opportunity to provide additional support to the competent institutions that are trying to accelerate the process of economic recovery.

"We offer a wide range of mechanisms to remedy the consequences caused by the crisis and we believe that this arrangement with the Government and the CEB qualitatively expands our offer for existing and new clients who need an adequate response in this challenging period for our society," said the bank. .

Erste Bank will place 13.2 million and as much from the CEB, "Vijesti" has learned. In this bank, they officially said that the bank will apply the existing policy regarding collateral, ie collateral, considering that it assumes the complete risk of loan repayment.

Milatovic: The IRF has not been forgotten

In the show Načisto on TV Vijesti, Milatović, in response to questions about why the Investment and Development Fund (IRF) was excluded from this credit line, while the state gives interest-free money to banks, said that it was included in the second package of economic support measures which includes four items and that international institutions do not allow in negotiations that each credit line goes through a state fund or a state bank.

"The first item is the direct assistance of the MSME, which will be realized by the IRF through a credit support of 20 million euros. The state is the guarantor for that. The second part is the credit line that the state has contracted with the CEB. The third item is again through the IRF, where the European Investment Bank gives 150 million euros and which 30 percent must include projects for a green transition that is favorable and goes through the IRF ", said Milatović.

He added that the fourth part of the support is the establishment of a credit-guarantee fund, which was started with the European Bank for Reconstruction and Development, which provided money for technical assistance. Milatović hopes that in the fall, that fund will be put on its feet and that the credit support to the economy will be completed.

The offer from the banks was 79 million

The Ministry of Finance explained that since 70 million will be placed from the CEB, banks were asked to submit how much money they can place from their own sources.

"Banks submitted bids in the total amount of 79 million euros, and in that sense we allocated a proportional amount to each bank in relation to the bid, ie 88.6 percent of the offered amount. So, if a bank has submitted that it can place up to five million from its own sources, it is accepted that it can place 4.43 million from its own sources and the same amount from the CEB. Since 40 million is 57.1 percent of 70 million, so the banks will be allocated money. More precisely, if a total of 4.43 million is allocated for a certain bank, it means that 2.53 million out of 40 million will be transferred to it ", they explained in the Ministry of Finance.