The new instrument is fully aimed at countering the credit crunch SMEs are still facing on a daily basis. The joint proposal envisages to pool the 10bn capital increase to the EIB - as granted by the European Council in June 2012 under the Compact for Growth and Jobs - with € 420 million of funds from the EU's COSME and Horizon 2020 programmes. Through financial intermediaries, the funds will be used for loan guarantee instruments and securitisation instruments with a maximum leverage ratio of 1:10. In its conclusions, the European Council welcomed the proposal and asked the Commission and EIB to come up with a comprehensive operational programme ahead of the October 2013 summit.
ESBA Secretary General Patrick Gibbels:
"Every day, viable businesses file for bankruptcy for the simple reason that they cannot finance their day-to-day operational costs. Banks are unwilling to provide loans, unless unrealistic amounts of collateral are provided. Although the funds are still limited when put in perspective with the EU's overall budget, the European Commission and the EIB have put viable options on the table to provide invaluable assistance to these SMEs. The options would make small businesses loans cheaper for banks, have the potential to kick-start the EU's securitisation market and could reduce the 'no risk at all attitude' currently present in the EU banking sector. Provided that sound agreements between the EIB and intermediaries are signed, each of the three options could give the much needed impetus to the European economy."
To access the proposal of the European Investment Bank and the European Commission, please click here.
To access the conclusions of the meeting of the European Council on 27 and 28 June, please click here.