- New financing will help strengthen resilience of the economyamid Covid-19 crisis
- The financing is part of the Team Europe Initiative
- The operation is in the context of the Economic Resilience Initiative and the European Fund for Sustainable Development, both part of the EU External Investment Plan for its partner countries.
The European Investment Bank (EIB) supports the resilience of the Palestinian private sector with a USD 50 million line of credit extended to The National Bank(TNB) to be on-lent primarily to local small and medium-sized enterprises (SMEs).
This is the EU Bank’s first operation in response to the Covid-19 related emergency in Palestine, and it is part of the Team Europe Initiative to help mitigate the economic consequences of the coronavirus pandemic. The EIB financing comes under the Economic Resilience Initiative (ERI), which is part of the European Union’s response to the challenges in the Southern Neighbourhood, such as forced displacement and migration, economic downturns and political crises.
The EIB funding is made available as part of a package, including a comprehensive technical assistance programme and a risk sharing instrument on a later stage, to be provided under the EU’s European Fund for Sustainable Development (EFSD). These instruments aim to promote access to finance for SMEs in general and financial inclusion of underserved and vulnerable groups of the economy, including SMEs impacted by Covid-19 crisis, start-ups, women- and youth-owned businesses.
Dario Scannapieco, EIB Vice-President commented on the signature of the new financing agreement, “We are proud to partner with The National Bank. A partnership through which we aim to make available vital and much-needed financing for businesses and, ultimately, sustain jobs and strengthen the resilience of the economy in the midst of the current crisis. ”
Sven Kühn von Burgsdorff, European Union Representative said: “I am pleased to present this much needed financing to help Palestinian SMEs recover from the Covid-19 crisis. The EU is a strong supporter of private sector-led economic development in Palestine. I would like to underline that this agreement represents the first financial support delivered under the EU Covid-19 economic assistance package. The agreement we signed today represents one component of a package made available in Palestine, which includes a risk sharing instrument under the EU External Investment Plan as well as a technical assistance programme.”
TNB Chairman, Talal Nasereddin, said, “We are very proud to be the first bank in Palestine to gain the trust of the EU and the EIB and sign an agreement which supports our strategy and approaches for expanding our financing to this vital sector, especially being the most affected due to the coronavirus pandemic. With this credit line, we will certainly contribute towards reinforcing the resilience of the SMEs in Palestine and the Palestinian national economy, which SMEs is considered its backbone.”
The EIB interventions are part of a comprehensive package of economic assistance that the European Union has put together to support the Palestinian economy in its recovery form the Covid-19 crisis. The overall package amounts to around EUR 85 million of European Union funds, which is expected to mobilise over EUR 400 million in soft loans and investment for the Palestinian private sector. The bulk of this assistance is to be channelled to the Palestinian economy through European Financial Institutions and reach the private sector through local banks and micro-finance institutions.
SMEs are the backbone of the Palestinian economy as they account for over 95% of local businesses, contribute more than 55% to the GDP, and employ 85% of the active working population. As a consequence of the Covid-19 outbreak, many companies have experienced a decrease in turnover and profitability, leading to payment delays and an increased demand for liquidity. It is now crucial to step up support to private sector businesses, thus helping to protect jobs and keep the economy going.
The National Bank (TNB) is the second largest Palestinian bank and the fastest growing in the country. TNB is one of the country’s most trusted providers of comprehensive financial services for the corporate, retail, investment and MSME sectors. TNB has executed the highest number of successful M&A transactions in the Palestinian banking sector. In 2015, TNB acquired Bank al Etihad’s operations in Palestine, and in 2018, TNB led a consortium acquiring a majority stake in the Palestine Islamic Bank (PIB) marking the largest transaction in the history of Palestine Stock Exchange. In 2020, TNB acquired the operations of the Jordan Commercial Bank (JCB) in Palestine. TNB’s total assets are USD 2.67 billion and its capital is USD 92 million.
The European Investment Bank (EIB) is one of the leading development finance players in the Mediterranean region. The Bank’s goal is to support economic and social development by improving people’s living conditions. EIB aims to establish a tangible presence in the partner countries, focusing on the economic and social priorities of the beneficiary countries to which it not only contributes its financing capacity but also adds value in project implementation and modernisation of public policies through its technical and financial expertise and advisory services.