History
History of ALTUM operation
On 22 June1999, the Government accepted the concept “On development of the state joint-stock company “Mortgage and Land Bank of Latvia” in 1999-2005”, which stated that Mortgage bank remains state-owned and continues operations as entrepreneurship development bank under target programmes set by Saeima and the Cabinet Ministers.
During the concept cover period (1999- 2005), Mortgage bank implemented a range of Promotional programmes, the most significant being the SME development lending programme (more than 1.7 thsd loans for 70 mln LVL). Moreover, the bank constantly has been performing other functions characteristic to a development bank (organizing international forums, conferences on SME financing availability issues; participation in international organizations of development banks and similar specialized financing institutions, cooperation projects; support to development of Latvian savings and loan associations network etc.).
In May 2004, upon Latvia’s entry into the European Union (EU), the further operation conditions for the Mortgage bank considerably changed – EU Commission directive on financial relations transparency between member states and national enterprises (Directive No. 80/723/EEK, 2000/52/EEK) demand separation of development functions from commercial functions.
In cooperation with the Ministry of Finance, Mortgage bank conducted the necessary consultations with the EU Commission Directorate General for Competition in 2004. In the outcome, a plan for separation of the support functions from the commercial activity within the Bank was coordinated and approved.
In January 2005, a new structural unit started its operation within Mortgage bank – the Promotional programmes office. Institution of this office meets the EU requirements – separate organizational structure and accounting system separately for support functions and commercial activity. Such separation of support functions provides that the state support is not used for deriving commercial benefits.
On 15 March 2005, the Government reviewed the informative report “On performance of the concept “On State Joint-stock Company “Mortgage and Land Bank of Latvia” development in 1999-2005” and further assignments” and supported proposals for separation of state support functions within Mortgage bank.
In May 2005, the Management ofMortgage bank approved the pilot project of SME lending of the Promotional programmes office, 40 loans were granted under this project at the total amount of 3.5 million LVL. During implementation of the pilot project, the administrative structure was improved by establishment of regional offices in Jēkabpils and Valmiera, as well as hiring more lending specialists. Implementation of the SME Pilot project allowed to identify the potential problems and the required improvements in support lending process. The experience obtained was used in development further lending programmes.
On 16 December 2005, Mortgage bank, the Ministry of Economics and the Central Finance and Contracting Agency signed an agreement of granting co-financing from the European Regional Development fund (ERAF) to implementation of the Business start-ups lending programme. Agreement directs that loans to business start-ups of 20.6 mln LVL shall be issued during thee years (2006 – 2008) within Mortgage bank’s operations. Half of the programme’s funding shall be provided by Mortgage bank, the other half – by co-financing of the national budget and ERAF funds.
On 16 March 2006, Mortgage bank and the Promotional programmes office hosted a joint press conference and presented the Promotional programmes office with its new title – ALTUM, as well as presented the initiation of ERAF co-financed Business start-ups lending programme. ALTUM home page www.altum.lv is running in the test mode.
In April 2006, Mortgage bank and ALTUM initiated implementation of Housing guarantees programme. The programme was developed by the Ministry of Regional Development and Local Government (RAPLM). Under the programme, tenants of denationalized houses and families with children may receive a guarantee when requesting a loan for purchasing a dwelling or for construction. ALTUM provides guarantees to commercial banks involved in the programme. Cooperation agreements concluded with Nordea bank and DnB NORD bank.
On 8 May 2006, Mortgage bank, the Ministry of Economics and the Sate Employment Agency (NVA) signed an agreement on implementation of Business start-ups training, consulting and financial promotional programme, co-financed by the European Social fund (ESF). Under the programme, ALTUM shall select consulting companies to provide training in regions of Latvia. In the outcome of the training, the potential business start-ups shall develop a business plan, and, by a way of selection, the best of them shall have the opportunity to qualify for loans as well as grants to start business.
On 27 July 2006, Mortgage bank signed a cooperation agreement with Swedbank. The agreement regulates ALTUM cooperation with Swedbank in funding SME-business start-ups; informing the business start-ups and other client groups about products offered by both banks; education of clients on issues pertaining to granting funding; carrying out researches of business environment and development of new promotional programmes.
On 7 December 2006 is the starting date of the programme "Training, consultations and financial support to business or self-employment start-ups" financed by the European Social fund. The training providers start formation of training groups in all 5 regions of Latvia.
In June 2007, at the closing conference of EU INTERREG IIIC programme project "FinNetSME" in Brussels, presenting the results and findings obtained during the project, the ESF Business start-ups training, consultation and financial support programme implemented by the Mortgage bank/ALTUM was mentioned as a sample of good practice of project partners. The said programme is a good example, how to combine financial and nonfinancial instruments (training/consultations) to stimulate SME development.
Year 2007. Implementation of programmes co-financed by EU structural funds continues. 215 loans for 20.7 mln LVL have been granted under the programme financed by the ERAF until the end of 2007, whereas the volume of the granted loans reached 14.8 mln LVL. And, the 1st stage of the ESF-financed programme was accomplished – training of the potential business start-ups, encompassing approximately 1000 programme participants in total in all 5 planning regions of Latvia. Meanwhile implementation of the Fast Growth SME lending programme continues within resources of the bank – 127 projects have been supported for 12 mln LVL, including issued loans for 9.1 mln LVL.
In July 2008, Provision of financial support- loans and grants under the ESF co-financed Business start-ups training, consulting and financial support programme has been completed. In total financial support covers 340 business start-ups.
On 31 October 2008 both of EU co-financed promotional programmes have been completed. Within Business start-ups lending programme (co-financed by ERDF) 291 loan has been granted for total amount of 22.76 mln LVL. In its turn, witihin Business start-ups training, consulting and financial promotional programme (co-financed by ESF) 998 potential business start-ups have been trained; 327 loans have been granted for total amount of 5.84 mln LVL. In addition, start-ups have received grants (business start-up grant; sustenance grant; consultancy grant) in amount of 2.2 mln LVL.
On 21 April, 2009 Hipotēku banka concluded an agreement with the Ministry of Economics on the implementation conditions for the loans for improvement of competitiveness of businesses and procedure to be followed when attracting ERDF co-financing. The agreement stipulates that in line with the EU requirements the Loan Fund be established for disbursement of the loans from ERDF resources. The total financing of the Loan Fund is LVL 58,5 mln, of which ERDF and state co-financing amounts to LVL 43,3 mln and financing of Hipotēku banka – LVL 15,2 mln. The Programme for Improvement of Competitiveness of Businesses (No X 399/2009) grants loans to the businesses registered in Latvia with economically feasible business plans which cannot access the financing of the credit institutions due to increased risks they present.
On 7 August, 2009 Hipotēku banka concluded an agreement with the Latvian Investment and Development Agency about implementation conditions and procedure regarding ESF programme „Support to Self-employment and Business Start-ups”. The agreement stipulates that the programme will be operational until June 2015 having provided consultations/training to 1200 start-ups, but loans to 600 start-ups. To implement the programme the resources of ESF, state and Hipotēku banka are attracted in the amount of LVL 23 mln (LVL 14 mln are provided by ESF and state, LVL 9 mln by Hipotēku banka). By July 2013 within the framework of the programme Hipotēku banka will have granted loans to the start-ups of economic activities from the Loan Fund established for this purpose totalling to LVL 17,5 mln. Moreover, the programme’s financing for training and consultations is LVL 4 mln, administration and management of the programme – 1,5 mln lats.
On 21 August, 2009 the experts of the bank received the first applications for the programme marking out the start of actual implementation of the ESF programme „Support to Self-employment and Business Start-ups”.
March/ April, 2010 - In the frame of the Start programme (ESF) the first million of Lats has been granted for the start-ups projects. Those potential start-ups having need for an additional training before submission of their business plans, have been acitvely involved in the training activities. More than 200 people have already finished training courses. In its turn, within the Competitiveness programme more than 35 mln. LVL have been granted.