European Investment Fund Supports Icelandic SMEs with Up to €100 Million in New Funding via Arion Bank

(IN BRIEF) The European Investment Fund (EIF) has partnered with Arion Bank to provide up to €100 million in new lending to around 40 small and medium-sized enterprises (SMEs) and Small Mid-Caps in Iceland. Backed by the European Commission’s InvestEU initiative, the funding will support projects focused on sustainability, innovation, digitalisation, and cultural development. Arion Bank will offer more favourable lending terms to help advance Iceland’s green transition and support innovation in various sectors, including renewable energy, biotechnology, and the cultural industries.

(PRESS RELEASE) LUXEMBOURG/BRUSSELS/REYKJAVIK, 25-Sep-2024 — /EuropaWire/ — The European Investment Fund (EIF) has partnered with Arion Bank to provide up to €100 million in new lending to around 40 small and medium-sized enterprises (SMEs) and Small Mid-Caps in Iceland. This new funding is backed by the European Commission’s InvestEU programme and aims to foster sustainability, innovation, digital transformation, and cultural development across the country.

This EIF-backed guarantee enables Arion Bank to offer more favourable lending terms to businesses in key sectors, focusing on green investments, digitalisation, and the cultural and creative industries. The initiative is expected to accelerate Iceland’s economic transition towards a more sustainable and innovation-driven future.

At the signing ceremony in Reykjavík, Arion Bank CEO Benedikt Gíslason expressed enthusiasm for continuing the bank’s long-standing collaboration with the EIF, noting the wide range of projects that will benefit from this initiative. “Our partnership with the EIF will allow us to support innovative ventures across sectors such as green energy, digitalisation, and the arts. By funding projects earlier and under better terms, we will further advance Iceland’s green and creative economy,” said Gíslason.

EIF Chief Executive Marjut Falkstedt highlighted the alignment of the partnership with the EU’s focus on climate action, innovation, and cultural resilience. “This is our second major operation in Iceland, and we are eager to continue supporting SMEs that need it most, especially in the green and digital sectors,” Falkstedt added.

Arion Bank will use this funding to finance a wide range of sustainability projects, such as renewable energy, clean transportation, and pollution prevention. It will also promote innovation and digitalisation in fast-growing sectors like biotechnology and marine aquaculture. Iceland’s thriving film industry will also benefit from enhanced access to finance, supporting the resilience of its cultural ecosystem.

EU Ambassador to Iceland Clara Ganslandt praised Iceland’s ongoing collaboration with EU initiatives, stating, “Icelandic businesses and institutions have consistently excelled in EU programmes, and this guarantee agreement will help propel the country’s SMEs in the green, digital, and cultural sectors to new heights.”

This new agreement builds on the successful 2016 InnovFin SME Guarantee, which provided €107 million in loans to support Icelandic SMEs.

Background information:

The European Investment Fund (EIF) is part of the European Investment Bank Group. Its central mission is to support Europe’s micro, small and medium-sized businesses (SMEs) by helping them to access finance. EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment. Since its first project in Norway, in 1974, the EIB Group has made available over €6 billion to support projects in the EFTA region, about €5 billion through the EIB and €1,1 billion through the EIF. On the whole, in Iceland alone the EIB Group has made available nearly €1.2 billion euros throughout the years between EIB and EIF financing.

The InvestEU programme provides the European Union with crucial long-term funding by leveraging substantial private and public funds in support of a sustainable economy. It helps generate additional investments in line with EU policy priorities, such as the European Green Deal, the digital transition and support for small and medium-sized enterprises. InvestEU brings all EU financial instruments together under one roof, making funding for investment projects in Europe simpler, more efficient and more flexible. The programme consists of three components: the InvestEU Fund, the InvestEU Advisory Hub, and the InvestEU Portal. The InvestEU Fund is implemented through financial partners who invest in projects using the EU budget guarantee of €26.2 billion. This guarantee increases their risk-bearing capacity, thus mobilising at least €372 billion in additional investment.

Arion Bank is a leading Icelandic universal Bankng franchise. It operates in the Greater Reykjavík area as well as in the largest urban areas around the country. Arion provides services to households, corporates, institutions, and investors. It has three business segments: Retail Bankng, Corporate & Investment Bankng, and Markets.

Media Contacts:

EIB Group:
Tim Smit
+352 691 286 423
t.smit@eib.org

Arion Bank:
Haraldur Guðni Eiðsson
+354 856 7108
haraldur.eidsson@arionbank.is

European Commission:
Ignazio Cocchiere
+32 2 29 82261
ignazio.cocchiere@ec.europa.eu

EU Embassy to Iceland:
Viktor V. Stefánsson
+354 864 3386
Viktor.STEFANSSON@eeas.europa.eu

SOURCE: European Investment Fund