There are 20 million SMEs in Europe which provide for 85% of job positions;

Only one out of nine companies has more than 10 employees and these SMEs cannot receive funding from capital markets

Banks are the most preferred source of funding with which SMEs in CEE countries can start and develop their business. The reason for this is that a large number of SMEs need not only capital but also professional consultation to manage their funds, an activity which can be performed by the banks too. Capital markets which are an alternative to bank loans are not accessible to most SMEs because of their size and small number of employees.

That was the opinion of the participants in one of the recent working panel discussions at Euromomey conference held in Vienna on January 14th and 15th.

The data presented at the beginning of the panel discussion showed that there are 20 million SMEs in Europe which provide for 85% of the job positions. “25 years after the fall of the Berlin wall we can no longer talk about transition. The problems SMEs in CEE countries face are the same as the ones faced by the companies based in Italy, Spain and the UK”, said Mark Johnson, Euromoney’s editor.

“The most economically advantageous and accessible resources for SMEs to start and develop their business is provided by the banks. This is how we started”, said Marian Rašík, Chief Financial Officer of PEGAS NONWOVENS. At the moment the company is listed on the stock exchange but according to Rašík bank loans are stilled the preferred option. He also pointed out that one of the possible reasons for this is the large number of banks in the Czech Republic which ensure good market liquidity. Just like the situation in Bulgaria Rašík emphasized that crisis makes people save more, and the companies to make fewer investments.

“While it is true that not all countries are experiencing one and the same situation especially as long as liquidity is concerned, big international players such as UniCredit can support the good projects of its clients”, said Gianfranco Vissani, Head of Corporate and Investment Banking of UniCredit Bulbank. He also emphasized that only 1 out of 9 SMEs had more than 10 employees. “The owners and managers of these SMEs are not used to complex funding methods. Working with the banks is considered as Solution No 1, which is the most preferred, the easiest, most reliable and accessible solution”, said Visanni.

Áron Lenner of the Hungarian Ministry of Economics also supported the opinion that it was very difficult for SMEs to look for capital market funding. He also said that governments should support banks so that they could agree more easily to grant loans to SMEs. According to Lenner governments can provide support through interest guarantee and subsidy schemes. “In this way SMEs reached a 10% funding rate in Hungary the last year”, said Lenner.

According to Lenner such programmes will not cause market distortion if implemented for a limited period of time and if used as a tool for getting the market back to normal in times of crisis.

More information for clients:

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Phone: 0700 1 84 84

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Magdalena Ivanova, Phone: + 359 2 9232 528, nbhebmfob/jwbopwbAvojdsfejuhspvq/ch