Following the launch of the APS Green Finance lending product last year, the European Investment Fund (EIF) have recently revised the product benefits package that is available to the Maltese market. Zoltan Horvath, Head of Propositions at the Bank will tell us more about these changes.
What is APS Green Finance and who is this facility designed for?
APS Green Finance is a lending product that enables our customers, both personal and commercial, to finance their transition towards a more energy efficient and sustainable future. Our product was designed under the terms of a wider European Guarantee instrument, in partnership with the European Investment Fund, or EIF for short, and it leverages EU funding that has been made available to allow Malta based families and businesses to ‘go green’. The benefits are significant, and we recently managed to reduce the effective interest rate charged to our customers, all the way down to zero (0), thanks to the funding that we unlocked through our partnership with EIF. This loan is available to private individuals and businesses that are based in Malta, and it follows the standard credit eligibility criteria that you would generally expect from a Bank loan.
What new environmentally friendly items/solutions are now covered with the APS Green Finance?
Eligible solutions that can be financed under this loan mostly relate to property improvements and apertures that are energy efficient, from heat pumps, insulation, lighting, double glazing, to solutions that generate renewable energy for both businesses and private households, such as photovoltaic (solar) panels and wind turbines. Our commercial and corporate customers are also eligible to finance the purchase of electric or hybrid vehicles, enabling them to future-proof their fleet in line with their ESG objectives and values. All of these solutions offer direct value to consumers, as better energy efficiency leads to lower running costs being paid out over time for your home or business premises, while renewable energy solutions can allow you to go carbon-neutral, while potentially also generating an additional minor income stream.
Moreover, as of March 2022, we are also able to offer our customers the possibility of using APS Green Finance loans to finance the purchase of fully electric cars for personal use, too. Prior to this date, APS Green Finance loans were reserved for business fleets.
Why is the partnership with EIF important for these loans?
The main benefits offered through this product are available to us through the EU funding, APS customers will benefit from favourable and reduced collateral requirements due to the presence of an EIF guarantee tied to each facility, as well as an interest rate subsidy, paid directly by EIF. This subsidy is of 2.50% for up to the first ten (10) years for each Green Finance loan facility. This subsidy covers the full interest rate that is applied to the loan, rendering it essentially interest free for up to 10 years. Another benefit is that EIF, and the wider European Investment Banking group, are offering direct advisory support to participating banks focused around helping them to understand and meet the more complex needs of some of their larger corporate customers.
It is only through our direct partnership with EIF that we have been able to design a loan product with this many benefits for our customers to enjoy.
Can you tell us more about the improvement in the interest rate subsidy?
This is probably the highlight of the whole package for most of our customers, as it is a benefit that will directly reduce the burden on their monthly loan repayments. In simple terms, through the subsidy mechanism, EIF are able to directly pay off the interest on each loan that otherwise would have been charged to our customers. In the past, this subsidy only partially covered the interest rate that banks were charging under this scheme, and even then, only for the first three (3) years. As of March 2022, both the level of the subsidy and the length of the subsidized period were significantly improved. This brought us to the subsidy rate of 2.50% p.a. for 10 years, that is available to our customers today, which renders every loan essentially interest free during this period, as interest payments are being covered by EIF.
What is the difference between the APS Eco Loan and APS Green Finance?
These two loan products are very similar at first glance, as they both seek to enable our customers to access the financial support they need on their journeys towards greener ways of living and working. The APS Eco Loan is our standard ‘green’ entry in our personal lending product suite. Through it, we are able to offer very competitive rates for a wide variety of green solutions, from white goods and home installations to electric and hybrid vehicles and e-bikes. It has been around for a number of years now and was also improved earlier this year by increasing the maximum duration that loans can carry, while reducing the applicable interest rate, the combination of which will lower our customers’ monthly repayments.
The APS Green Finance product, on the other hand, was designed in collaboration with EIF and is only available for a limited amount of time, mainly thanks to the benefits package made available through the EU funding, we have unlocked for our customers. The list of eligible solutions is similar to the standard Eco Loan, however itis a bit more restricted due to the presence of an EU-wide eligibility framework.
In any case, both of these personal loans are ideal when combined with our APS Green Home Loan, as they enable our customers to upgrade their home’s energy efficiency ratings to such a degree that would then make them eligible for the green rate on our home loans – a real layering of benefits!
What should customers do if they want to learn more about this product or book an appointment?
Information on all our products is available here, where you will find more insight into the benefits and differences between each product. If you are still unsure about which one might be best for your needs, or if you need any more specific information or advice, then I would encourage you to visit any of our branches and book an appointment with our experienced specialists. You can even book through our Contact Centre, or by sending your details through our website here so that we can contact you ourselves.
The APS Green Finance is financially supported by the Energy Efficiency and Renewable Energy Malta Fund (EERE) which is co-financed by the Republic of Malta and the European Union under the European Regional Development Fund (ERDF). The objective of this fund of funds and its first loss guarantee combined with an interest rate subsidy scheme is to support the access of the final recipients for their investments in energy efficiency and renewable energy measures.
Approved and issued by APS Bank plc, APS Centre, Tower Street, B’Kara BKR 4012. APS Bank plc is regulated by the Malta Financial Services Authority as a Credit Institution under the Banking Act 1994 and to carry out Investment Services activities under the Investment Services Act 1994. Applications are subject to the Bank’s lending criteria. Terms and conditions apply and are available on request.