Plzeň will take out a loan of CZK 325 million from Komerční banka (KB) for selected investments for 20 years. It offered more favorable conditions than the European Investment Bank (EIB), with which the fourth largest city in the Czech Republic had a pre-negotiated loan. This is the first time in recent history that a commercial bank has offered Pilsen lower interest on long-term fixation than the EIB, which has been cooperating with the city for almost 30 years. The deputies approved that the city would have the money paid out by KB in June. They will be used to co-finance the construction of the DRONET Technology Park, sewerage and water supply in Koterov, apartments for people with disabilities and young families in Zátiší, a children’s pool and a sports hall in Krašovská, according to David Šlouf (ODS), councilor for economics.
“The city has a pre-negotiated loan framework with the EIB of 650 million crowns, which was intended for co-financing projects with an expected cost, including VAT of 1.7 billion crowns. Half of the loan framework, ie CZk 325 million, was drawn by the city in January last year, “said Šlouf. According to him, the loan of the second part of the money, which Pilsen expects in the budget, was asked by other banks with the intention of obtaining the most advantageous conditions.
In addition to KB and the EIB, Plzeň also addressed Česká spořitelna, ČSOB, Raiffeisenbank, UniCredit Bank, Oberbank, Sberbank and PPF banka.
“Demand results have shown that some commercial banks are able to compete successfully with the European Investment Bank. As an extension, they offer interest rate fixation for the entire duration of the loan, ie 20 years, while the EIB offers a fixed rate for only five years,” Hana Kuglerová. According to her, after five years, it is therefore necessary to either revise the interest rate and set a new one that will correspond to the new conditions, or to change the base interest rate from fixed to floating or vice versa. “Komerční banka offered the city the most advantageous conditions. This situation occurred for the first time in history,” Kuglerová added.
The EIB loan for important constructions in the amount of CZK 650 million was approved by the council two years ago. At that time, Pilsen had interest rates analyzed on the then banking market. “Once again, we found that the most effective loan was from the EIB with an interest rate of 1.72 percent, while the other largest banks operating in the Czech Republic had an interest rate of 2.5 to three percent,” Šlouf said at the time.
The EIB loan will co-finance one of the largest current investments – the DRONET technology park in Světovar, which is being created from the former barracks and brewery, and the city wants to give CZK 400 million into it this year. This year, approximately CZK 160 million will go to the new district with 18 houses with a total of 179 smaller flats, ie approximately the same as to the sewerage system in Koterov and the multi-purpose hall Krašovská. This year, the city will give another tens of millions of crowns for the reconstruction of a nursing home in Prostřední Street 48 into intergenerational social flats for seniors and young people, and millions more for the reconstruction of the children’s educational swimming pool in the Slovany pool into new changing rooms.
Source: Plzeň City and CTK
