Delivering more competitive loans to SMEs using Structural Funds
Natalija Iniakina
Head of Corporate Loans
2011-10-28 | Natalija Iniakina, Head of Corporate Loans 2
New YorkShanghai
Singapore
SEB Group
Founded in 1990Member of SEB Group since 200057 branch offices in over 30 townsOver 1,800 employeesLargest bank in Lithuania with market share of 28% in corporate financing
Founded in 1856 in Sweden
Represented in 20 countries
SEB offices in the all the world’s important financial centers
Over 17,000 employees
Net profit, EUR 0.13 bn
Assets, EUR 6.7 bn
Loans and leasing, EUR 5.5 bn
Net profit, EUR 0.97 bn
Assets, EUR 259 bn
Loans and leasing, EUR 131 bn
Key facts, SEB group Key facts, SEB Lithuania
Key figures (1-3Q, 2011), SEB group Key figures (1-3Q, 2011), SEB Lithuania
2011-10-28 | Natalija Iniakina, Head of Corporate Loans 3
SEB Bank customer base in Lithuania
Large Corporate ClientsCustomer number – 2 thou
Income share – 45%
SMECustomer number – 46 thou
Income share – 35%
Private individualsCustomer number – 834 thou
Income share – 25%
2011-10-28 | Natalija Iniakina, Head of Corporate Loans 4
FRSP utilisation dynamics
0
5
10
15
20
25
Feb-Ju
n 2010
Jul-1
0Aug-10Sep
-10Oct-
10Nov-10Dec-
10Jan
-11Feb
-11M
ar-11
Apr-11
May
-11Ju
n-11Ju
l-11
Aug-11Sep
-11
MEUR
0
25
50
75
100
125unitsFRSP amount Number of FRSP agreements
Agreement signedFebruary 2010
2011-10-28 | Natalija Iniakina, Head of Corporate Loans 5
New product takes time to understand
Specific restrictions caused limited volumes:
- Most “wanted” product after the crisis – credit line for financing of WoC(not within the scope of FRSP)
- Restrictions to maximum amount of the loan
- Restrictions to risk class of SMEs (internal SEB rating of companies) set by EIF
- Lending only in EUR seeking to avoid currency risk
General economic situation:
- slow recovery of the economy after the crisis
- low lending volumes
SEB experienceSlow startSlow start due to several factors
2011-10-28 | Natalija Iniakina, Head of Corporate Loans 6
Strong SEB management focus
- Road show to all branches by Head of Retail Division- Weekly follow-up with Branch Managers- Training sessions to Client Executives- Marketing campaigns “Let your business expand” and
“More power to your business”
Reduction of restrictions
- Increased maximum amount of the loan- Reduced restrictions to risk class of SMEs- SEB decision to take currency risk and lend in LTL
Improvement of macroeconomic situation
SEB experienceImprovement of FRSP utilisationImprovements in 2011
2011-10-28 | Natalija Iniakina, Head of Corporate Loans 7
Real example of SME borrowingLITNAGLIS JCS
Established 2004Employees 98Activity Metalwork, production of
nails
Project Installation of additional production line increasing manufacturing capacity by 25%
Total Project EUR 0.778 mFRSP Loan EUR 0.350 m
12 working places created
90% of production for export to Western Europe
Business expansion in small town Plungė(~20.000 citizen)
Company & Project
Benefits of FRSP to the company and to the economy:
2011-10-28 | Natalija Iniakina, Head of Corporate Loans 8
Real example of SME borrowing Stikloporas JSC
Established 2009
Employees 1
Activity Production of foam glass
Project new production line of thermal insulation product -foam glass granulate
Total Project EUR 2.822 m
FRSP Loan EUR 0.971 m
Company & Project
22 new working places will be created
80% of production will be exported to Russia and Poland
Eco-friendly project. Recycling of glass waste – 5,000 tons per year (5% of total glass waste in Lithuania)
Benefits of FRSP to the company and to the economy:
2011-10-28 | Natalija Iniakina, Head of Corporate Loans 9
Level of efforts determines success of the product
Time is needed to understand a new product
Too many restrictions hamper use of the product
Partnership with EIF is crucial to resolve issues
Greater focus on financing of WoC would allow greater volumes
SEB would consider participation in distribution of other products of EIF
Benefits and lessons learned
Clauses in loan agreement related to EU legislation in respect to structural funds “frighten” SMEs and in some cases the choice is to receive financing without FRSP despite higher margin
Possibilities for SMEs to decrease financing costsCompetitive advantage for SEB after the crisis when competition between banks increasesAdditional experience of working with international institutions
Issues
Benefits Lessons learned
2011-10-28 | Natalija Iniakina, Head of Corporate Loans 10
Thank you!