Portugal: EIB and Banco Montepio Group to support companies with €414 million

(Source: European Investment Bank – EIB)

  • The EIB provides a €116.35 million guarantee to Banco Montepio Group to mobilise €414 million to support companies exposed to the COVID-19 pandemic.
  • The operation is backed by the European Guarantee Fund (EGF).

The European Investment Bank (EIB) and Banco Montepio Group have signed a new guarantee agreement aimed at supporting Portuguese SMEs, mid-caps (up to 3,000 employees) and large corporates (more than 3,000 employees). To this end, the EIB will provide a €116.35 million guarantee to Banco Montepio Group, enabling the Portuguese bank to grant a total of €179 million of working capital and investment loans to facilitate financing of up to €414 million in support to Portuguese businesses affected by the economic consequences generated by the pandemic.

The agreement is supported by the European Guarantee Fund, part of the €540 billion package of EU measures deployed in response to the economic impact caused by COVID-19.

Thanks to EGF, Banco Montepio Group, through both Banco Montepio and Banco Empresas Montepio, will provide debt financing to SME, mid-caps and large corporates on more favourable terms, ensuring that companies in Portugal have sufficient financing available to mitigate the economic impacts of the COVID-19 crisis, enabling them to continue their growth and development plans in the medium to long term. The European Guarantee Fund will offer credit risk protection for up to 65% of each individual underlying corporate exposure.

The operation, a risk-sharing guarantee, aims to facilitate access to finance at favourable conditions to SMEs, mid-caps and large corporates. This is achieved by increasing Banco Montepio Group’s lending capacity to eligible businesses and by providing capital relief and loss protection on newly originated transactions.

The European Guarantee Fund was designed to support the business needs of European companies, and this operation with Banco Montepio Group is yet another proof of its added value. Thanks to this agreement, Portuguese companies will benefit from additional financing at advantageous conditions, ensuring they have the funds needed to back their liquidity requirements and medium to long-term investment needs”, said Birthe Bruhn-Léon, EIB Director for Financing Operations in Portugal and Spain.

“With the agreement now in place, Banco Montepio Group clearly improves its capabilities to meet the financing needs of Portuguese companies, allowing them to cope with Covid related difficulties and strengthen their investment capacity in order to achieve higher productivity levels” said Carlos Tavares, Chairman of Banco Montepio and Banco Empresas Montepio.

Background information

The European Guarantee Fund (EGF) was set up by the EIB Group with contributions from Portugal and other EU Member States to shield companies suffering from the COVID-19 crisis. Using nearly €25 billion in guarantees, the EGF allows the EIB and the EIF to quickly make loans, guarantees, asset-backed securities, equity, and other financial instruments available to mostly small and medium-sized enterprises. The EGF is part of the European Union’s recovery package aiming to provide a total of €540 billion boost to those parts of the EU economy that have been hit the worst.

Over its 177 years of existence, Banco Montepio has been on the side of families, small and medium-sized entrepreneurs, companies, and the community. The Bank actively supported successive generations of Portuguese in many critical moments, including wars, crises, and revolutions. Faithful to the “raison d’être” of its existence, it has always shown itself capable of innovating, growing, and expanding. With a legacy of almost two centuries of service to the community, Banco Montepio takes its place in the construction of a more just and sustainable society, committing to govern its performance by the highest standards and conducts of respect for the principles of sustainable development, as reflected in its Letter of Social Commitment.

Banco Empresas Montepio (BEM) is part of Banco Montepio Group and is the commercial brand of Montepio Investimento, SA. The brand BEM, launched in 2019 with the purpose of creating an original project in corporate banking, is a one-stop-shop concept that combines both commercial and investment banking services to respond to businesses’ growth and sophistication needs through a value proposition based on an integrated business model throughout the Banco Montepio Group and customized to each business’ profile.

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