EIB loans Cyprus banks 228 mln euros for SMEs

NICOSIA, July 10 (Reuters) - The European Investment Bank signed a 228 million euro loan agreement with Cypriot commercial banks on Friday, part of a broader strategy to boost liquidity to European small to medium size enterprises.

As part of the deal, 120 million euros will go to the Bank of Cyprus BOC.CY (BOCr.AT), 50 million euros to Marfin Laiki CPBC.CY (MRBr.AT) and 58 million euros to Hellenic Bank HBNK.CY. The Cypriot banks will also have to make 228 million euros of their own funds available.

The islands business community say the funds will provide additional liquidity to Cypriot SMEs at better rates than are currently available in the Cypriot lending market.

Cyprus is currently preparing a legal framework to allow commercial banks access to cheap European Central Bank funding under its covered bond programme, something that is expected to be in place by next month.

(Writing by Nassos Stylianou, editing by Ron Askew)