Fighting the climate change on the financial front

Nordea and EIB Group to offer new support for green SMEs in the Nordics

Nordea has signed an agreement with the EIB Group, consisting of the European Investment Bank (EIB) and the European Investment Fund (EIF). Under the agreement, European support will guarantee a portfolio of Nordea lending up to 1.8 billion EUR, freeing up capital for new loans for sustainable initiatives of Swedish and Finnish companies. The green loans will be offered to eligible SME’s and include offering reduced margins for eligible projects.

As part of the agreement, Nordea has committed to extend funding at attractive terms to eligible green projects. This gives Nordea the opportunity to provide SME customers in Finland and Sweden lower than usual rates to fund investments that meet well-defined sustainability criteria.

EIB Vice-President Thomas Östros explains Nordic Business Report that the project is a good example of how European financing can have a real and direct effect on the economy, while also giving an incentive for green investments.

– This has been the first synthetic securitisation transaction that we signed in the Nordic region, and we are very happy with this, as it allows us to extend our support to local enterprises during a time of increased need, Östros comments.

– Despite this being the first transaction in the Nordics, we have signed several of these agreements during the last few years in a number of EU Member States, and we remain highly interested in expanding our activity in this domain.

There are already ongoing discussions with other Nordic banks for similar transactions, and EIB is eager to conclude more of them in the near future.

EIB provides support, but the banks remain in control

Östros emphasizes that the intermediated operating model in cooperation with local financial institutions works in a fully delegated model. Financial Institutions receive, as part of the agreement, the EIB’s eligibility framework which includes parameters such as company size, sectors, and types of financing that are eligible for support.

– When operating within this framework, financial institutions are ultimately fully and solely responsible to which final recipients the support will be directed, Östros continues.

– It’s worth noting that our eligibility in the SME and Mid-Caps space is rather broad and allows support for most economic activities undertaken by final beneficiaries, including financing for working capital and investments. In the case of this particular transaction with Nordea, a portion of the new lending will need to be dedicated to support green projects. This is how we – the EU Climate Bank – promote an economic recovery based on a sustainable green transformation.

EU in process of creating new ways to boost economies

The initiative is backed by the European Union’s Investment Plan for Europe, which is aimed at encouraging sustainable, long-term economic growth in Europe. As the Investment Plan for Europe is now reaching its end and has achieved the goals that had been set – encouraging sustainable, long-term economic growth in Europe – it will be replaced from the next year onwards by InvestEU, a new initiative launched in cooperation with the European Commission. The programme is uniquely suited to provide long-term funding to companies and to support European Union policies in a recovery from a deep economic and social crisis.

Thomas Östros concludes by pointing out that generally, new initiatives launched together with the European Commission allow the EIB Group to expand its risk appetite and increase its support, particularly to riskier projects – similar to the transaction signed with Nordea where EIB Group undertakes higher risk levels compared to its standard activity – and with new counterparts, as long as projects have a strong EU policy angle.

– We are looking forward to expanding our support towards more financial institutions in the future, by using the products that will be available through the InvestEU initiative.


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