The European Investment Bank and Nord/LB Latvija signed an agreement on May 15 whereby EIB will extend a 10 million euro credit facility to Nord/LB Latvija for long-term lending to small and medium-sized businesses.
Nord/LB Latvija Board Chairman Jurgen Machaletti told reporters that Nord/LB, previously known as Pirma Banka, would use the credit to finance projects in production, services and tourism industries, nature protection, energy saving and infrastructure improvement, including health care and education.
Machaletti praised previous cooperation with EIB, which last year too made a 10 million euros credit facility to Nord/LB Latvija.
"Raising the credit facility to a total of 20 million euros is not just an affirmation to good cooperation but also evaluation of the lending quality and Latvia's businesses," he said.
He said one drawback of Latvia's banking system is that it does not have long-term credit resources available.
Machaletti said the first credit facility extended by EIB last spring was exhausted in one year. He said 10 projects in the food, wood, furniture and auto-sale industries were finances.
The biggest amount issued to one company was 2.6 million euros.
He said the previous credit facility did not provide financing to any state or municipal companies, but he added that state and municipal projects were eligible as long as they qualified for selection criteria.
Machaletti reckoned the bank could exhaust this credit facility too in one year and it could be distributed to some 10-15 companies.
The EIB Baltic states and Poland credit operations head told reporters EIB was satisfied with cooperating with Nord/LB Latvija and did not rule out the credit facility could be exhausted sooner than many believed.
In accordance to the contract between EIB and Nord/LB Latvija, a credit can be made to a company with fixed assets up to 75 million euros and less than 500 employs and with more than one-third of that company's capital owned by another company.
Nord/LB Latvija ranked 11th among Latvia's banks by assets in March.