The European Bank of Reconstruction and Development said it had agreed to provide Alpha Bank Cyprus, a subsidiary of Greece’s Alpha Bank, a €10m trade finance facility as part of its trade facilitation programme (TFP).
The funds will serve to provide guarantees against political and commercial risks of “trade finance instruments issued by Alpha to facilitate foreign trade fiancé activities,” the EBRD said in an emailed statement on Tuesday. “The small scale of the domestic market makes trade and export competitiveness a major task for Cypriot business. The support of the financial sector with products tailored to market demand is key, especially for small and medium-sized enterprises”.
Suma Chakrabarti, chairman of the London-based lender who is currently in Nicosia where the EBRD is holding its annual general meeting, said he expects the facility will strengthen Alpha Bank’s position on the Cypriot market “especially by supporting green trade finance and facilitating access to finance for SMEs.”
As part of the TFP, launched in 1999, the EBRD signed similar agreements with Hellenic Bank, Bank of Cyprus, the Cypriot unit of Greece’s Eurobank and less than two weeks ago with the Turkish Cypriot TurkishBank.
The TFP “aims to promote foreign trade to, from and among the countries in which the EBRD invests,” the bank said. “Through the programme, the EBRD provides guarantees to international confirming banks and short-term loans to selected banks and factoring companies for on-lending to local exporters, importers and distributors”.
The lender was established after the end of the Cold War to help economies in transition. In 2014, it agreed to provide €700m in financing for projects in Cyprus and currently owns a 5 per cent stake in Bank of Cyprus and 5.4 per cent stake in Hellenic.
“Alpha Bank Cyprus joins the TFP with a view to expand its business, supporting its customers in their international trade finance transactions through cost efficient alternatives and innovative solutions,” Konstantinos Koutentakis, Alpha Bank’s managing director, was quoted as saying.