European Investment
Bank Group
“Strengthening of SMEs through Guarantee Schemes and EU COSME
Program”
EIB Group Investment & Support for SME
programmes
Andreas BeikosEuropean Investment Bank Group
Novi Sad, 20 November 2014
111/25/2014
The EIB Group
Providing finance and expertise for sound and
sustainable investment projects
European Investment
Bank Group2
Leading developer of risk financing
for innovative SMEs
11/25/2014
European Investment
Bank Group
EIB Group:
EIB : European Union’s financing institution
Created by the Treaty of Rome in 1958 as the long-term lending bankof the EU
Shareholders are the 28 Member States of the EU
Policy driven Bank: raises funds on the capital markets which it lendson favourable terms to projects furthering EU policy objectives
Operates on a non-profit maximising basis and lends at close to thecost of borrowing
AAA rating
EIF : EIB Group’s specialist vehicle for VC and SME guarantees
Established in 1994
Shareholders are the EIB, European Union and commercial banks
Acts as a “fund of funds” by acquiring holdings in venture capital funds (VCF) which take equity participations in SMEs
Extends guarantees to the banking community to foster the provision of medium and long-term loans to SMEs
AAA rating
European Investment Bank Group11/25/2014
The EIB at a glance
Largest multilateral lender and borrower in the world
Raise our funds on the international capital markets
Pass on favorable borrowing conditions to clients
Some 440 projects each year in over 160 countries
Headquartered in Luxembourg and 28 local offices
Around 2100 staff:
Not only finance professionals, but also engineers, sector
economists and socio-environmental experts
More than 50 years of experience in financing projects
European Investment
Bank Group411/25/2014
A strong response to the crisis
European Investment
Bank Group511/25/2014
Growth and jobs: four key priorities
We work to promote sustainable growth
and job creation in Europe and beyond
European Investment
Bank Group611/25/2014
Candidate and Potential Candidate Countries
EIB can lend up to EUR 9.3bn with EU guarantee
during 2014-2020
Pre-Accession Facility (Western Balkans + Turkey)
Priorities:
Projects supporting accession agreements with EU
Incorporation and implementation of acquis communautaire
Loans of EUR 3bn in 2013
Total loans of EUR 22bn 2007-2013 (excluding Croatia)
European Investment
Bank Group711/25/2014
European Investment
Bank Group
EIB Products
In the Western Balkans, the EIB operates primarily through:
- Direct loans to projects generally with a cost above EUR 25 million
- Intermediated loans channeled through intermediary banks (creditlines to banks), whereby intermediaries are obliged to transfer thefinancial benefits from EIB resources to SMEs and municipalities
- Currently, existing credit lines for SMEs and municipalities in theregion amount to EUR 2 billion
- Framework loans to central and local public authorities for projectsof up to EUR 50 million
-The EIB contributes to the European Fund for Southeast Europe(EFSE - www.efse.lu) that provides sustainable financing to microand small enterprises and to the Green for Growth Fund SouthEast Europe (for RE and EE - www.ggf.lu)
811/25/2014
European Investment
Bank Group
SME financing: A key priority for the EIB
SME financing has been reinforced as one of the
priority objectives of the EIB Group since 2005
The role of the EIB Group is to facilitate access to
finance for SMEs at better financial conditions:
• channel increased funding sources and intensifying
our partnership with the banking sector
• provide and develop a wider range of products
SMEs can find the list of EIB financial intermediaries in
Western Balkans, including contact details, on EIB
website.
www.eib.org/about/news/the-intermediary-banks-and-financing-institutions-for-
credit-lines.htm
911/25/2014
European Investment
Bank Group
EIB Loan for SMEs
SME SME SME SME SME SME
EIB Loan For
SMEs
Favorable interest rate loans
Financial Intermediary
(lending to SMEs)
1011/25/2014
Serbia: the main beneficiary of EIB loans
in the Western Balkan Region
circa EUR 4.3 bn
0
200
400
600
800
1000
1200
1400
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
EU
R M
Approvals
Signatures
Disbursements
EUR M 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Total
Approvals 66 267 198 215 239 290 220 150 1359 835 335 135 665 215 5094
Signatures 66 267 162 190 149 250 134 170 893 690 711 275 315 80 4352
Disbursements 0 57 66 65 85 136 148 98 169 317 576 539 422 164 2891
11 European Investment Bank Group
11/25/2014
12
European Investment Fund
•We’re the leading developer of
risk financing for entrepreneurship
and innovation across the EU•“
•”•Fulfillingour dual goal and
pursue EU
policy objectives
as well as financial
sustainability
•Addressingmarket needs by
acting as a
countercyclical
investor in tough
economic times
•Workingwith financial
intermediaries
across the 28 EU
countries, EFTA
and all Accession
countries
•HelpingSMEs, micro-
enterprises and
European regions
innovate and grow
by making finance
more accessible
European Investment
Bank Group 12
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13
EIF at a glance
European Investment
Bank Group 13
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•
•
•
•
•
•
•
•
•
•
14
InnovFin SME Guarantee (1)
European Investment
Bank Group 14
11/25/2014
■ Successor of RSI. Will boost by almost 4 times the RSI initiative and allowthe provision of EUR 9bn–10bn of financing to benefit innovative SMEs
and Small Mid-Caps over the next 9 years
■ Purpose: improve access to debt finance for innovative SMEs and SmallMid-Caps (Beneficiaries)
■ EIF provides direct (and indirect) financial uncapped guarantees toselected Financial Intermediaries (FIs)
■ Guarantee Rate: up to 50% of losses incurred in each loan
■ Thanks to EIF Multilateral Development Bank status (MDB) and pursuant toBasel II, no capital charge expected on the covered part of the Portfolio
■ Transfer of benefit
■ Acceptable portfolio risk profile
15
Direct Guarantee structure
European Investment
Bank Group 15
11/25/2014
•Fin
an
cia
l In
term
ed
iary
•Guarante
e from EIF
•Guarantee coverage
provided by EIF
•Gg
ua
ran
tee
fro
m E
IF
•Portfolio of Final
Recipient
Transactions
•EIF
•as
•Guarantor
•Uncapped
Guarantee
•Guarantee Fee
•EIF
•Portfolio of
Guarantees
•Credit risk
retained by
the Financial
Intermediary*
•Up to 50% guarantee rate on a
loan by loan basis
• Additional external credit protection may be obtained by the Financial Intermediary. At any time the economic
exposure retained by the Financial Intermediary towards any Final Recipient Transaction must not be lower than
20% of the principal amount outstanding.
16
Counter - Guarantee structure
European Investment
Bank Group 16
11/25/2014
Guarantee Rate as per
the Financial
Intermediary standard
policy, but not higher
than 80%
Fin
an
cia
l
Su
b-I
nte
rmed
iary
Guarantee
coverage
provided by the
Financial
Intermediary
Credit risk
retained by
the Sub-
Intermediar
y
Guarantee
from the
FI
•Counter-guarantee
coverage provided by
EIF
•Co
un
ter-
gu
ara
nte
e f
rom
EIF
•Portfolio of Sub-
Operations
•EIF
•as
•Counter-
•guarantor
Guarantee
Guarantee Fee
Uncapped
Counter-
guarantee
Counter-
Guarantee Fee
•Portfolio of Final
Recipient Transactions
•Fin
an
cia
l In
term
ed
iary
•Portfolio of counter-
guarantees
•Credit risk
retained by
the Financial
Intermediary
•50% Counter-Guarantee Rate
on a guarantee by guarantee
basis
• Additional external credit protection may be obtained by the Financial Intermediary. At any time the economic
exposure retained by the Financial Intermediary towards any Sub-Operations must not be lower than 20% of
the outstanding guaranteed principal amount.
17
Financial benefit – principle
European Investment
Bank Group 17
11/25/2014
•Credit spread
reduction
thanks to
InnovFin
[0,50% -0,80%]
18
InnovFin Selection Process
European Investment
Bank Group 18
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http://www.eif.org
http://www.eif.org/
19
Western Balkan
Enterprise Development
and Innovation Facility (2)
European Investment
Bank Group 19
11/25/2014
ENIFEnterprise
Innovation
Fund
WB EDIF Platform is managed by the EIF and
is comprised of four different and scalable
pillars
ENEFEnterprise
Expansion
Fund
Guarantee
Facility
Technical
Assistance
-EIB-
A VC fund
focusing on
innovative SMEs
-EIF-
Equity fund
supporting
established SMEs
with high growth
potential
-EBRD-
Guarantees to
banks to support
build up of new
SME loan
portfolios
-EIF-
20
WB EDIF Guarantee Facility
European Investment
Bank Group 20
11/25/2014
• Support of new lending to SMEs by banks active in target region
• Guarantee of up to 70% of each loan (capped at portfolio level at max. 25%); resulting leverage of min. 5
• Budget of EUR 20m; min. loan portfolio of EUR 100m
• Investment & working capital term loans
•Guarantee up to 70% on a loan
by loan basis
•Cap rate of
Guarantee of
up to 25%
21
Microfinance (3)
European Investment
Bank Group 21
11/25/2014
Programme for Employment and Social Innovation (EaSI
Microfinance as EPMF successor) – sponsored by the European
Commission through the DG Employment
Up to EUR 80m - 150m split between funded instruments and
guarantees, targeting micro-enterprises and entrepreneurs, but
also social enterprises
EREM – under exploration
within the EIB Group we are considering offering funding for
inclusive finance to cooperative banks and small financial
institutions
EPMF investment period continues until April 2016
•*Amounts to be confirmed
22
Microfinance guarantee
European Investment
Bank Group 22
11/25/2014
Intermediary funds 100%
of the programme
“…EaSI’s
guarantees
hedge up to 80%
of each
microloan,
subject to a
portfolio cap of
up to 30%...”
EaSI Guarantee
Covers defaults occurred within 6 years from signature of the guaranteed loan agreement
Guarantee rate up to 80% of the microloan – Cap rate up to 30% based on E(Losses) of the portfolio
Guarantee premium does not apply
Main advantages of the Guarantee
Self-
Employed
Profession
al
Trader
Sole
Proprietor
€ Microloan
€ Microloan
€ Microloan
€ MicroloanGuarantee Rate
(up to 80% loan by loan)
Cap Rate
(up to 30% of the portfolio)
23
Microfinance senior loan
European Investment
Bank Group 23
11/25/2014
•“…the Senior
Loan has the
advantage that it
can provide
100% of the
funding of a
Microfinance
programme...”
100% of the programme financed by the instrument
Standard product what speeds up the process
Flexible terms (i.e. maturities, amortisation profile, etc.)
Lower spreads required than other instruments
Risk taken by EIF → counterparty risk
•Main advantages of Senior Debt
•Self-
employed
•Professional
•Trader
•Sole-
Proprietor•Up to €9.0m
•€ Microloan
•€ Microloan
•€ Microloan
•€ Microloan
•EIF funds 100% of the
programme - with
these proceeds the
intermediary originates
a microloan portfolio
24
COSME Loan Guarantee Facility
(LGF) (4)
European Investment
Bank Group 24
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■ Successor of the CIP SME Guarantee Facility as part of the Europe 2020 strategy
■ Call launched on 4th August 2014
■ Estimated budget: EUR690m (2014-2020)
■ COSME LGF provides:
Free of charge capped portfolio guarantees and counter-guarantees for
additional SME risk-taking
A securitisation option on mezzanine tranches of SME debt portfolios
subject to additional lending to SMEs
■ COSME LGF is implemented through Financial Intermediaries like guarantee schemes, banks and leasing companies
■ COSME LGF targets Higher Credit Risk Transactions with SMEs resulting in Enhanced Access to Finance for them
■ Through COSME LGF, Financial Intermediaries provide further support SMEs by going beyond their current lending/guarantee practice or increase
lending volumes
25
COSME Loan Guarantee Facility
What’s new?
European Investment
Bank Group 25
11/25/2014
COSME LGF counts on a single flexible window providing capped guarantees and
a securitisation option
Capped (counter-)guarantees would be provided at a guarantee rate of up to 50%
and a guarantee cap rate fixed at the level of Expected Losses (Max 20%)
A maximum loan amount threshold of EUR 150,000 applies - Larger loans can only
be covered under the COSME LGF if the SME borrower does not meet any of the
12 InnovFin criteria*
Financial Intermediaries have two options to provide additional risk taking:
Launch of a new more risky product (e.g. without collateral, start-ups) with
ground up for COSME cover, OR
Substantial increase in volumes to high risk SMEs, with a Reference Volume
COSME LGF is State Aid consistent, i.e. it does not contain State Aid
COSME LGF covers investment and/or working capital financing, now including
also credit lines and bank guarantees
European Investment
Bank Group
THANK YOU
Andréas Beikos
Head of Representative Office for the Western Balkans
European Investment Bank
E-mail: [email protected]
Tel: +381 11 312 1756
George Giakoumakis
European Investment Fund
E-mail: [email protected]
Tel: +352 4379 81485
2611/25/2014
mailto:[email protected]:[email protected]
