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To support Poland’s small and medium-sized enterprises (SMEs), the European Bank for Reconstruction and Development (EBRD) is lending €20mn to PKO Bank Polski SA, Poland’s largest retail bank. The loan is complemented by financial support of up to €3.8mn from the European Commission for financial incentives, staff training and institution-building initiatives via the Phare Programme.

The loan is being provided through the EU/EBRD SME Finance Facility, a programme of the European Commission in co-operation with the EBRD to facilitate access to finance for smaller businesses and to promote their growth and development. SMEs are of critical importance for economic growth, accounting for more than 50% of employment and GDP in many countries of central and eastern Europe.

Hanna Gronkiewicz-Waltz, vice-president of the EBRD, says that the loan will help SMEs in Poland successfully compete in an increasingly open and challenging market. She says projects like this will help small businesses in Poland obtain the reliable and medium-term funding they need. Gronkiewicz-Waltz underlines that this is the EBRD’s first joint project with PKO Bank Polski and adds that the bank is pleased to be working with its new Polish partner.

Andrzej Podsiadlo, president of PKO Bank Polski, says that the bank will put funds to good use. “We are a leading institution servicing small and medium companies,” he stresses, with a market share of about 25% in this segment. “Our experience and the largest branch network shall ensure that we have attractive and widely available offerings for the SME clients.”

The EU/EBRD SME Facility was launched in April 1999 under the Phare Programme of the European Commission with the EBRD, to encourage the growth and development of SMEs by providing access to loans, leasing and equity finance from local financial intermediaries in the EU accession countries of central and eastern Europe. It has so far channelled more than €710mn (€600mn from the EBRD and €110mn from the EU) to SMEs in the respective countries.

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 €1.5 billion for the eligible countries through 2006. Phare has provided assistance of €3.5bn to Poland so far.

Through the SME Facility, the EBRD has provided around €160mn to banks and leasing companies for the financing of SMEs in Poland. More than 5,000 loans totalling €139mn have been extended.