Bigbank signs its first synthetic securitisation with the European Investment Bank Group
A synthetic securitisation deal signed between Bigbank and the European Investment Bank Group will enable Bigbank to provide additional financing of over 250 million euros to businesses in the Baltic states over the next three years. The aim of the transaction is to promote the issuance of new loans to small and medium-sized enterprises and mid-cap companies in Estonia, Latvia and Lithuania, with a particular focus on micro-enterprises, young companies and environmental sustainability.
According to Bigbank’s Chief Financial Officer, Argo Kiltsmann, the conclusion of the first synthetic securitisation transaction in the company’s history marks an important milestone for Bigbank. “By reducing Bigbank’s regulatory capital requirements, this transaction will help us finance small and medium‑sized enterprises on better terms across all Baltic States over the next three years, in a total amount of up to 254 million euros. For small and medium‑sized businesses in Estonia, Latvia and Lithuania, this is good news – together with the European Investment Bank Group, we can help them grow and realise plans that require affordable financing,” he said.
The Head of Corporate Banking at Bigbank, Ingo Põder, noted that small businesses in the Baltics – as elsewhere in Europe – remain chronically underfinanced by banks, as the loan terms offered are often not acceptable to customers. At the same time, small businesses are the engine of economic and regional development. “Supporting entrepreneurship and financing small businesses is one of Bigbank’s key strategic priorities, and this transaction will allow eligible micro‑entrepreneurs and young and early‑stage companies not only to benefit from improved access to funding but also from a financial advantage reflected in their interest rate. At least 7% of the transaction volume will be directed to projects aimed at climate change mitigation and adaptation, and at least 50% of the total volume will reach micro-SMEs,” he added.
According to European Investment Bank Vice‑President Karl Nehammer, the agreement with Bigbank once again demonstrates how innovative financial instruments can strengthen the European economy by directing more funding to the micro‑enterprises that need it most. “By helping Bigbank free up capital for new lending, we are enabling thousands of Baltic SMEs and mid‑cap companies to invest, renew and grow. In this way, we support sustainable and inclusive economic development across the region,” he said.
According to European Investment Fund Chief Executive Marjut Falkstedt, the transaction is an important step towards improving access to finance for businesses across the Baltic region. “By sharing risks with the bank, our aim is to enable new lending to companies that form the backbone of the local economy. The transaction supports entrepreneurship, strengthens the financial sector and directs capital towards creating real economic and social impact,” she said.
Under the transaction, the EIF provided Bigbank with a financial guarantee covering a reference loan portfolio of more than 210 million euros, consisting of loans, credit lines and leases originated in the Baltic States and Finland. More specifically, the guarantee provides credit‑risk protection for the senior tranche of 184 million euros and the mezzanine, or intermediate‑financing, tranche of 23 million euros. The EIF’s exposure to the mezzanine tranche, as well as part of its exposure to the senior tranche, is counter‑guaranteed by the EIB. The junior tranche of the reference portfolio, amounting to approximately 3 million euros, is fully retained by Bigbank. Bigbank was advised on the transaction by the international consulting firm A&M.