Workshop on applications under new debt programmes. EU Access to Finance Day Brussels, 23 September 2014

Transcription

1 Workshop on applications under new debt programmes EU Access to Finance Day Brussels, 23 September 2014

2 EIF at a Glance EU specialised institution for SMEs risk financing Debt - Structuring and Guaranteeing portfolios of SME loans/leases and microcredit Equity - Venture Capital and Mezzanine (fund of funds) Geographic Focus: EU 28, EFTA, Candidate Countries Distribution through Banks and Funds (Full delegation) Founded in 1994 & started providing VC to businesses in 1997 Multilateral Development Bank (MDB) status Basel II 0% risk weighting Aaa/AAA/AAA ratings (Moody s/s&p/fitch) Shareholding Structure: EIB: 62.2%, EIB shareholders: 28 EU Member States EC: 30% European Financial Institutions: 7.8 % 1

3 How to become a partner? Applications under Call for Expression of Interest: InnovFin COSME Erasmus Plus EaSi Guarantees (expected early 2015) And similar mandates, such as: Western Balkans GF (if more budget becomes available), Cultural and Creative Sectors (CCS), JEREMIE II 3

4 1. How to apply under a Call for Expression of Interest? 4

5 Call for Expression of Interest Application & selection process Same process for existing and new FIs: Please provide all information requested in the Call even if you did before under previous mandates (c + p.) Formal assessment; overall quality of content Criteria to assess counterparty / credit risk (level of risk EIF will be taking?): Origination and credit risk management Characteristics of expected portfolio Track record in lending to a similar target group: Frequent challenge: Bank's data not in line with SME definition; mergers, restructurings 5

6 Pre-selection, due diligence, approval process Complete proposal; clarify questions with us Due Diligence (DD): for new FI: Complete DD, on-site meeting, please be prepared and send slides before the meeting For known FIs: Focus on the specifics of the application: track record, added value, absorption level, implementation plan DDs at HQ level to be updated on origination, credit servicing procedures Approval process: Board approval (which drives the timeline), contractual negotiations in parallel Third party s approval: for EC mandates not requested any more (veto right based on summary) 6

7 Application process continued Evaluation criteria: Special focus related to each Call (see next slide) Enhanced access to finance: what benefits do you offer to SMEs thanks to the EU programme Be specific in how much you reduce pricing (including fees), By how much volumes can be increased, At which level collateral will be reduced, Will you offer a new product or adjust an existing one? Implementation: How will you inform the branch network/internally? How will you make final beneficiaries aware? How much time is needed to launch the product? Absorption capacity: New lending during a given period on which basis did you estimate such volume, is it reasonable, achievable? 7

8 Application process continued special focus InnovFin Experience in financing innovative / R&D companies Implementation plan for deploying the Facility Overall impact on the global InnovFin SME guarantee portfolio (risk/diversification/transaction size) Transfer of financial benefit to the final borrower (see specific slide) COSME Increased risk taken (additionality requirements): (see specific slide) launch of a new more risky product (e.g. no collateral, start-ups) substantial increase of volumes to high risk SMEs with reference volume ERASMUS+ Implementation: experience of FI in lending to students, ability to deliver 8

9 Financial benefit principle Before InnovFin 50% of the loans 50% of the loans Typical components of the loan margin Credit Spread Others / Profit Admin cost Credit Spread Others/Profit Admin cost Credit spread reduction thanks to InnovFin [0,50% -0,80%] Others/Profit Admin cost Cost of the InnovFin guarantee from 50 bps to 80 bps on the guaranteed portion, i.e. 25 bps 40bps on the underlying Funding Cost Funding Cost Funding Cost 14

10 COSME : What are Higher Credit Risk Transactions under COSME LGF? COSME LGF covers Higher Credit Risk Transactions to SMEs, which may be defined through two options, as follows: Option 1 Target Higher Risk Profile clients/products through: - New product set up for Start-ups; OR - Extension in maturities and/or reduction in collateral; OR - New products or existing products offered to previously excluded client sectors Unconditional guarantee Option 2 Increase in volumes of (guarantees of) loans to SMEs related to - most risky 25% of current portfolio by internal rating; OR - full portfolio in case of guarantee institutions and promotional banks Conditional guarantee 10

11 Example: InnovFin Selection of FIs through a Call for Expression of Interest was published on 4 August 2014 on EIF website ( Application assessed on a «first come, first processed» basis Selection procedure: Pre-selection of EoI based on the pre-set evaluation criteria focused on: Implementation plan to efficiently deploy InnovFin Absorption capacity and geographical coverage Risk contribution to InnovFin overall Portfolio Due diligence with pre-selected Applicants Transaction approval and negotiation Changes from RSI to InnovFin: Additional requirement to submit declaration of honour with EoI Additional eligibility criteria for identifying innovative companies Enhanced features: extended maturities, increased volumes, revolving credit facilities 11

12 Contact details InnovFin COSME EUROPEAN INVESTMENT FUND Vincent van Steensel Head of Porfolio Guarantees Guarantees, Securitisation & Microfinance tel mob fax B, avenue J.F. Kennedy L-2968 Luxembourg web EUROPEAN INVESTMENT FUND Gunnar Mai Head of EU Guarantee Facilities Guarantees, Securitisation & Microfinance tel mob fax B, avenue J.F. Kennedy L-2968 Luxembourg web 12