May the 6th, 2023 - The brand new HBOR credit instrument boasts an impressive 400 million euros of potential, and large Croatian companies will now finally have a guarantee scheme offered to them by this particular body.

As Poslovni Dnevnik/Suzana Varosanec writes, after a decade and a half of questions and comments being fired back and forth on this particular issue, HBOR, supported by the operational decision of the Croatian Government, is finally going to start offering a proper guarantee scheme for large domestic companies as well.

As part of the sixth instrument implemented by the NPOO, HBOR has launched an attractive financial product on the market - "a credit guarantee as a way out" for investment projects of large companies in situations where there is a lack of own collateral, either due to the inability to access the necessary loans or owing to a lack of free assets.

For this purpose, nearly 80 million euros were allocated to HBOR from the NPOO, which, for the private sector at least, also comes as a trigger for investment projects with the aforementioned obstacles, but also for the public sector because this will greatly relieve the burden felt by local budgets. Large entities will definitely want to use the new HBOR credit instrument, as the total guarantee potential of this new financial product stands at around 400 million euros.

Beneficiaries of the new HBOR credit instrument can be commercial banks and leasing companies, and HBOR itself when acting as a creditor. With the new product, this institution will become a development bank in the full sense of the word for large domestic companies, and it will also involve taking on new risks in the name of and indeed on behalf of the Republic of Croatia as a nation.

The product became operational with the Croatian Government's decision to appoint a commission that will "nominate" consent givers for guarantees, so that their role becomes crucial in encouraging investments for the purpose of launching, modernising and digitising business as we go forward.

A maximum of 30% of such new HBOR loans can be used for working capital, and the maximum guarantee coverage is up to 80% of the loan principal for investments in special areas of the Republic of Croatia, the green and digital transition, research, development and innovation, while for other investments, coverage is up to 70% of the loan principal.

For more, make sure to check out our dedicated news section.

January 19, 2023 - The Croatian Bank for Reconstruction and Development (HBOR) is bringing more favourable investment financing conditions for everyone, but green and digital transition projects will benefit the most.

As Poslovni writes, more favourable financing conditions based on subsidized interest are available to a large number of entrepreneurs, with the condition that their projects do not produce harmful effects on the environment, which will be evaluated in HBOR. All small, medium, and large entrepreneurs, as well as the public sector, are acceptable candidates.

Up to one million euros

After the HBOR signed agreements with the 15 largest banks in the Republic of Croatia on cooperation in subsidizing interest from the National Recovery and Resilience Plan (NPOO) funds, all potential beneficiaries were invited to contact them as soon as possible. In cooperation with the Government, 80 million euros have been set aside for the program from the NPOO funds. According to the head of the Board of HBOR, Hrvoje Čuvalo, with the amount of 80 million euros, investments of 400 million euros can be encouraged.

"I invite all entrepreneurs to report to HBOR or commercial banks as soon as possible to gather all the necessary information and start implementing it as soon as possible. All projects planned for EU financing must meet the criterion of environmental acceptability, and this evaluation will be done centrally from one place, in the HBOR, which enables uniform evaluation criteria for entrepreneurs and less administrative work for commercial banks," said Čuvalo.

The most significant benefit of HBOR's program are reduced interest rates in the range of 50 to 75% compared to the initial market interest rates, depending on the type and purpose of the investment, but it is significant that all the big commercial banks are gathered because they responded to HBOR's initiative. This "proves a common willingness to contribute to the growth and development of the economy."

At the Government's instigation, HBOR designed a product that can bring entrepreneurs the creation of their investments with the most favourable interest rates. At the EC's request, the environmental acceptability of the projects was also included in the formula as a kind of ultimate goal of both the Republic of Croatia and the EU, and the Commission accepted such a program.

The subsidies can be granted through loans for investments in fixed assets - from business start-ups to modernization and capacity expansion; the amount per individual loan is limited to half a million euros for small and medium-sized entrepreneurs and one million euros for other entities.

In a situation of continuous growth of interest rates, the mentioned program presents concrete support in the realization of investment projects with credit funds, so it is expected that the planned amount of subsidies will be fully realized during 2023 and 2024. Subsidies of up to 65% can be realized for investments in particular areas of the Republic of Croatia, as well as in research, development, and innovation, and for public sector investments to mitigate the consequences of earthquakes.

For other investments in competitiveness and resilience, the subsidy is up to 50%. The advantage of the program is the environmental acceptability of the investment, so due to the new Regulation on EU taxonomy, everyone will follow suit on this plan because economic activities must significantly contribute to one of the six environmental protection goals and not considerably harm any of the others.

Risk assessment

Interest rates are becoming the most interesting issue. According to PBZ Management Board member Vedrana Jelušić Kašić, each bank will decide independently, depending on the risk rates of the projects.

"There is competition for the client to choose which bank is the most competitive, and the client receives a subsidy of up to 75% of interest or up to a maximum of 3% points. Depending on the risk rate of the project, the interest will also vary, and we believe that as many clients as possible will come forward and that everyone will be able to receive the highest level of subsidies", said Jelušić Kašić.

For more, make sure to check out our dedicated Business section.

May the 28th, 2022 - HBOR is set to facilitate favourable lending to investments through new HBOR loans from the Croatian recovery and resilience funds (Croatian: NPOO).

As Poslovni Dnevnik writes, as part of the National Recovery and Resilience Plan (NPOO), HBOR has started implementing financial instruments that enable extremely favourable lending terms for investments of both private and public sector entities - with interest rates of 0.4 percent or interest rate subsidies of up to 75 percent.

Direct loans with an interest rate of as little as 0.4 percent

Direct loans from NPOO funds will be available to start-up companies (who have been in business for up to 3 years in total), young companies (up to 40 years), companies owned and/or managed by women, enterprises investing in special areas of the Republic of Croatia (assisted areas according to the development index, mountainous areas and islands) and enterprises investing in the commercialisation of research, development and innovation-based projects (RDI projects).

The interest rate for favourable HBOR loans to projects that are mostly focused on green or digital transition and the commercialisation of RDI projects will be a mere 0.4 percent per year, while the interest rate for other investments in competitiveness and resilience will be 0.8 percent per year. Loans will be approved without a fee for processing the request and without a fee for reserving the funds, with a a repayment period of up to 15 years, which includes the possibility of using a grace period of up to 3 years.

Up to 75 percent lower interest rate on existing HBOR programmes

HBOR loans will enable a significant reduction in interest rates for businesses of all sizes in both the Croatian private and public sectors within its existing investment financing programmes: Private Sector Investments, Public Sector Investments and Youth Entrepreneurship, Women and Beginners.

For investments in green or digital transition projects, the interest rate for the borrower can be reduced by up to 75 percent; for investments in special areas of the Republic of Croatia, including public sector investments in earthquake recovery, and investments in RDI projects up to 65 percent, and for other investments that increase competitiveness and resilience - up to 50 percent.

For example, the interest rate for a user of a direct HBOR loan who invests in the green transition project of his manufacturing company under the Private Sector Investment Programme would be 0.375 percent, instead of the current 1.5 percent. This interest rate can be further reduced depending on the area of ​​investment (thanks to subsidies from individual LRUs) and if the company employs a person under 30 years of age.

When HBOR loans are approved by a commercial bank or leasing company, the interest rate it sets for each project is reduced in the same way, thus providing enterprises with a significant reduction in interest rates. Loans from commercial banks and placements of leasing companies with a subsidy from NPOO funds will be available after concluding an appropriate agreement between HBOR and commercial banks, ie leasing companies, and until then, interested parties can apply for loans directly to HBOR.

The total value of these financial instruments, the implementation of which HBOR started, amounts to a massive 1.1 billion kuna. The goal of the financial instruments that HBOR will implement is to encourage the strengthening of investment activity, but also to enable a successful transition to green and digital technologies as the basis for the future sustainability and competitiveness of the Croatian economy as a whole.

Any project that uses NPOO funds through HBOR loans must meet the principles of non-significant damage to environmental objectives (Do No Significant Harm) in terms of excluding ineligible activities, sustainability testing and comply with relevant EU legislation. More details as well as the questionnaire that must be filled out when applying for a loan can be found on HBOR's website.

For more, check out our business section.

May the 17th, 2022 - The brand new Dubrovnik public lighting system is set to save Croatia's southernmost city and tourist Mecca a significant two million kuna per year.

As the Republic of Croatia turns more and more towards the European Union's wider goal of becoming more green and employing much more environmentally friendly tactics across the board, public lighting systems and converting them from energy inefficiency to energy efficiency with the use of new lamps is one of the priorities across the country.

As Morski writes, the City of Dubrovnik has initiated a public procurement procedure for the project of the reconstruction and modernisation of the Dubrovnik public lighting system. Bids are being collected until June the 10th, and 14 million kuna has already been secured for this project which is set to save the city a decent amount of money each year.

The project of the complete reconstruction and modernisation of the Dubrovnik public lighting system includes 3739 obsolete lighting fixtures in the wider city area. The existing system consists of 46 different types of energy inefficient and environmentally unacceptable lamps, which will be replaced by high-efficiency LED lamps, they stated from the Dubrovnik city administration, emphasising that this will contribute to further environmental protection and the overall energy efficiency of Croatian public lighting systems.

They also stated that the annual financial savings on electricity costs that will be achieved by this reconstruction and modernisation of the Dubrovnik public lighting system, when compared to the current situation, will be more than two million kuna, and will significantly reduce the cost of maintaining the system on top of that as well.

The money needed for this Dubrovnik-based project will be secured by a HBOR loan with a repayment period of seven years and a fixed interest rate of 0.5 percent.

For more, make sure to check out our dedicated lifestyle section.

ZAGREB, 7 May 2022 - Finance Minister Zdravko Marić on Saturday denied Brodosplit CEO Tomislav Debeljak's statement that a solution had been found for the shipyard, saying talks are under way and that the situation is very complex.

"Unfortunately... no agreement has been reached," Marić told the press.

He said the Brodosplit situation became even more complex in the past few weeks due to the opening of pre-bankruptcy proceedings. They imply an additional procedural as well as "temporal component" regarding the approval and regime of state aid, he added.

Also, he said, the Finance Ministry has been analysing the technical, legal and financial justification of a protested guarantee request.

Our talks and cooperation with the HBOR (Croatian Bank for Reconstruction and Development) are in line with that, Marić said, regretting that "such conclusions have been made" based on "certain talks, questions asked and answers given."

He would not say if the situation was closer or farther from an agreement being reached, saying it is still not clear if the business model in question is viable.

Marić said the HBOR had a very responsible approach to its job  and that he was sorry it was exposed to "such pressure" only for showing good will.

Earlier today, Debeljak told N1 television that a meeting was held at the HBOR two days ago, that a solution had been found and that Brodosplit's problem would be solved in three months.

Late in March, the shipyard said €60 million from loans given by the Russian-owned VTB Europe bank it was using to finance the building of two ships had been blocked. The bank is subject to restrictions due to Russia's invasion of Ukraine.

Brodosplit asked the government to support a proposal that the loans be rescheduled with HBOR funds. One loan would be repaid by the end of the year and the other over a longer period of time, which would allow the shipyard to operate normally.

Earlier this week, Debeljak filed a second pre-bankruptcy motion for Brodosplit after the first one was dismissed due to procedural error.

According to unofficial reports, HBOR is willing to lend the money to Brodosplit pending a government decision.

For more, check out our business section.

ZAGREB, 6 July, 2021 - Investment in private equity in Croatia stands at 0.3% of GDP, whereby it lags behind the most successful countries in that segment, the Croatian Bank for Reconstruction and Development (HBOR) CEO said on Tuesday, adding that the HBOR would participate in launching a €40 billion technology transfer fund.

Tamara Perko was speaking at the Bestinvest.hr conference organised by the Croatian Private Equity and Venture Capital Association, at which awards for the best private equity and venture capital investment were presented.

Perko said the HBOR contributed significantly to the development of private equity and venture capital in the past two years.

She said that together with the European Investment Fund (EIF) and private investors, the HBOR invested in  €46 million worth FIL Rouge Capital, the first venture capital fund investing only in Croatia.

Last year the HBOR, together with the EIF, established three more equity funds in Croatia, the Prosperus Growth Fund, the Adriatic Structured Equity Fund, and the Croatian Mezzanine Debt Fund, investing over €80 million.

Perko said that together with the EIF and the Slovenian development bank, the HBOR planned to invest in a fifth fund, the Transfer Technology Fund. In terms of patents, Croatia is within the EU average, but is near the bottom when it comes to their applicability in the economy, she added.

The purpose of the Transfer Technology Fund is to commercialise science and finance societies that will be established in science and research institutions and work together with the economic sector by providing the necessary products, services and processes, Perko said.

She said that Estonia invested 1.3% in private equity and was among the countries investing the most in that segment, adding that Croatia, with only 0.3%, "must run four times faster to catch up with the best."

Minister underlines importance of industries based on new technologies

Economy and Sustainable Development Minister Tomislav Ćorić underlined the importance of technology transfer and new technologies for the Croatian economy whose development, he said, must be based on those industries.

He said the venture and private equity scene in Croatia developed in a good direction over the past ten, 15 years. The fact that classic financing sources often are not enough additionally underlines the importance of the fund industry, he added.

For more about politics in Croatia, follow TCN's dedicated page.

ZAGREB, 18 June 2021 - The Three Seas Initiative Investment Fund  (3SIIF) has so far raised €1 billion to be used for investing in infrastructure projects, a virtual conference organised by the Croatian Bank for Reconstruction and Development (HBOR) heard on Friday.

The aim of the conference was to illustrate the features of the 3SIIF and the opportunities it offers in terms of financing infrastructure investments.

The fund aims to raise three to five billion euro for this purpose from institutional and private investors, while the goal is to reduce disparities in infrastructure quality in relation to Western Europe as well as generate a profit for investors through investments in the fastest growing region in the EU.

"So far, the Fund has raised more than 900 million euros to be used for investing in infrastructure projects that contribute to security and diversity of energy supply, economic, traffic, social and digital connectivity of the Initiative member countries as well as stronger EU integration by reducing disparities in infrastructure quality," HBOR said in a press release.

The conference was opened by HBOR CEO and 3SSIF supervisory board member Tamara Perko, while Croatia's Foreign and European Affairs Minister Gordan Grlić Radman addressed the conference via video link.

The Three Seas Initiative is a forum of twelve states in the European Union, along a north–south axis from the Baltic Sea to the Adriatic Sea and the Black Sea in Central and Eastern Europe.

Fore more on business in Croatia, follow TCN's dedicated business section.

June 14th, 2021 - The European Investment Bank (EIB) and the Croatian Bank for Reconstruction and Development (HBOR) on Monday signed the Covid Guarantee Agreement in the amount of €50 million for loans taken by Croatian mid-caps and large corporations to help them recover from effects of the COVID-19 pandemic.

In a joint press release, EIB and HBOR said the EIB contribution valued at €25 billion stems from the European guarantee fund (EGF) set up by EIB in 2020 to accelerate post-COVID recovery, job keeping measures, and to provide much-needed liquidity for European companies.

This is the first EIB operation in Croatia stemming from the EGF, following three EGF operations implemented by the European Investment Fund (EIF). The EIF operations provided guarantees for €350 million in loans. Today’s agreement with HBOR puts the total amount of loans guaranteed by the EGF in Croatia to €513 million,  the press release notes.

Teresa Czerwinska, vice president of the EIB, who is in charge of Croatia, said that the "EIB-HBOR agreement is good news for Croatian economy and local mid-caps and large corporations. It brings further economic relief crucial for faster recovery from the COVID-19 crisis."

Tamara Perko, President of the Management Board of HBOR, said that this Guarantee Agreement "will enable HBOR to approve loans with lower collateral requirements to mid-caps and large companies."

These benefits will be available for direct working capital loans and investment loans to mid-caps under the existing HBOR’s loan programs. It is our pleasure that the EIB has recognized HBOR as its first partner for cooperating under this program in Croatia, which makes it possible for us to offer further benefits to our entrepreneurs irrespective of their size," said Perko.

Croatian companies whose loans were approved six months before the agreement between EIB and HBOR can apply for the guarantees provided the loan agreements were signed after the European Commission approved state support to introduce this financial facility for Croatia.

The EIB reported that the EGF had approved funding amounting to almost half its target for 2021. After clearance under the EU state aid notification process in December 2020, the initiative has now approved €11.7 billion in support of European businesses struggling with the economic fallout of the COVID-19 pandemic. This is almost half the fund’s target for 2021.

The fund mobilizes additional financing, and initiatives approved so far are expected to generate €93.9 billion in funding and investments for the EU economy, the press release notes.

For more, follow our business section.

ZAGREB, 11 June 2021 - The World Bank and the Croatian Bank for Reconstruction and Development (HBOR) on Friday signed a Loan Agreement for the HEAL Croatia Project (Helping Enterprises Access Liquidity) in the amount of EUR 200 million intended as support to businesses hit by the corona crisis and the 2020 quakes.

A press release issued by the WB and HBOR reads that "the COVID-19 crisis has caused a sharp decline in the economic activity of Croatian businesses and has had a profound effect on jobs and livelihoods."

"The pandemic disrupted firms’ production and reduced the demand for their goods and services, while the financial sector tightened lending to companies, due to rising credit risk. The crisis also exacerbated Croatia’s regional disparities and reduced credit access for young firms and for firms owned and managed by women."

The HEAL Croatia scheme "will provide liquidity and financial restructuring to firms that have been hit by the COVID-19 pandemic and by the two devastating earthquakes of 2020 and will support an inclusive and resilient recovery. "

The HEAL project will increase access to finance to firms focused on export, both small and medium enterprises (firms employing fewer than 250 people) and mid-caps firms (employing from 250 to 3000 people), as well as for firms from less developed regions of Croatia, and firms owned or managed by women. It will also increase access for young enterprises (operating less than five years).

HBOR management board president Tamara Perko was quoted as saying that the Croatian development bank is pleased " that the World Bank has recognized the significance of financing entrepreneur groups whose importance has also been recognized in HBOR's five-year strategy."

Elisabetta Capannelli, the World Bank Country Manager for Croatia, was quoted as saying that the World Bank looked forward "to a smooth and quick implementation of the HEAL Croatia project which will help preserve jobs and support household livelihoods through direct support to approximately 150 firms employing around 25,000 people."

Finance Minister Zdravko Marić, who signed with the World Bank a contract on loan guarantee, said that "the loan being signed today represents a continuation of the significant support provided by the World Bank to the Republic of Croatia since the beginning of the crisis in 2020, which is reflected in operations worth a total of EUR 760 million (including HEAL)."

"With this project, we are contributing to the further recovery of Croatia’s private sector, following the existing measures of the Government of the Republic of Croatia adopted in the context of the COVID-19 pandemic, post-earthquake reconstruction and creating foundations for future sustainability and resilience."

The World Bank has been a partner to Croatia for over 27 years and during that period the bank has supported more than 50 projects, worth almost US$5 billion, and provided technical assistance to help strengthen institutions and support the design of policies and strategies.

For more on politics in Croatia, follow TCN's dedicated page.

ZAGREB, 28 May 2021 - The European Investment Fund has approved a €35 million guarantee to the Croatian Bank for Reconstruction and Development (HBOR), allowing it to originate a portfolio of €50 million to mitigate the economic consequences of the COVID-19 pandemic, HBOR said on Friday.

HBOR will approve loans at interest rates reduced by 0.403 percentage points or only with bills of exchange and promissory notes as collateral.

The EIF guarantee stems from the Pan-European Guarantee Fund (EGF), a €25 billion guarantee facility set up by the European Investment Bank Group in 2020 to accelerate the post-COVID-19 recovery of the European economy.

The EGF guarantee will allow HBOR to offer loans to Croatian SMEs and small mid-caps under more favourable terms, including reduced interest rates or lower collateral requirements. The loans will available to SMEs and small mid-caps operating in some of the hardest hit sectors of the Croatian economy, including tourism and manufacturing.

For more about business in Croatia, follow TCN's dedicated business section.