Finnish bank first for environmental loans

Finland's state-owned Leonia Bank has been chosen by the European Union as the first bank in the country to be given European investment fund guarantees for its environmental loans to companies.

The loans are given to small and medium-sized firms to fund investments related to the environment, including investments for environmental protection or investment by companies making equipment for environmental conservation.

The environment loan guarantee scheme is an EU initiative to provide impetus for small and medium-sized companies to undertake environmentally friendly business ventures. One or two banks in each member country have been chosen to take part in the programme.

The EU guarantees can cover up to half of the loan, a statement from Leonia added. The loans, to be made over three to seven years, may not exceed one million euros and the investments must be made in Finland or other EU countries.

Leonia PLC – the holding company of Leonia Bank and Leonia Corporate Bank – announced last October that it is merging with Finland’s leading insurance group, Sampo to create the country’s leading financial services provider, to be named Sampo-Leonia.

Sampo-Leonia will be 57% owned by Sampo’s shareholders and 43% owned by the Republic of Finland. The government proposes that its share of the new group will be reduced to 20% in time. The new group’s assets – judged by last year’s annual reports were E31 billion.

Ratings agency Standard & Poors placed Leonia Corporate Bank on CreditWatch based on the gradual privatization suggested in the deal, which it said was balanced by cost savings and an improved market position. However, within the last few weeks the group’s ratings have been taken off ratings watch by Fitch IBCA.

Leonia has a network of bank contacts in the Nordic countries, Russia and the Baltic States and has a reputation for good contacts within the Eastern European markets.

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