The European Bank for Reconstruction and Development is extending a €20mn credit line to Komerční­ banka (KB) to support small and medium-sized enterprises (SMEs) in the Czech Republic. The line, with a seven-year maturity, is provided under the SME Finance Facility funded jointly by the EBRD and the European Commission (EC). It will help KB build a portfolio of good quality loans of up to €125,000 each.

At the same time, KB will receive up to €1mn of financial and technical support from the EC. Much of that will go towards a training programme for SME financing in the bank aimed at speeding up the credit approval process.

The development of SMEs is a key priority for the EBRD, and KB, with 334 branches, plays a leading role financing them in the Czech Republic. Using the long-standing experience of its parent company, Société Générale, KB helps small and medium-sized Czech enterprises cope with the competitive environment in the EU. The €20mn facility will now help KB further improve the accessibility of financing for entrepreneurs in the Czech Republic, as well as focus more on smaller loans using credit scoring and sound credit principles.

Petr Slabý, deputy head of marketing of Komerční­ banka, says the credit line is an important boost for the bank’s SME lending, and says Komerční­ banka is preparing a new credit product for SMEs, rising from EBRD  credit line, which should be launched at the beginning of next year.

SMEs represent one of the key drivers of the economy and this facility with KB will contribute to the development and funding of this sector, said Alexander Auboeck, EBRD director for the Czech Republic.

The facility was launched in 1999 under the EC’s Phare Programme with the EBRD to provide SMEs with access to loans, leasing and equity finance from local financial intermediaries in the EU accession countries. It has channelled more than €796mn ( €690mn from the EBRD, €106mn from the EU) to SMEs, including €74mn in the Czech Republic.

The Phare Programme is one of the main channels for the EU’s financial and technical cooperation with the future member countries of the Union. It foresees annual allocations of €1.5bn for the eligible countries through 2006.