One billion and 200 million of new financial resources for SMEs located in Southern Italy and the Islands. It is the result of the “SME Initiative” launched today in Rome by MISE, the European Commission and the EIB Group (EIB and EIF subsidiary). Italy is the first among the Member States of the European Union to implement the new credit access program envisaged by the 2014-2020 programming of the European Union using the instrument of securitization.
The SME Initiative was presented at the headquarters of the Ministry of Economic Development in via Molise (MISE) by Carlo Sappino, Directorate General for Business Incentives of the MISE, Dario Scannapieco, EIB Vice-President and FEI President, Pier Luigi Gilibert, AD of the EIF, and, for the EU Commission, Rudolf Niessler, DG REGIO for the programs of the Southern European Countries and Ciprian Cristea, Head of Unit DG GROW with responsibility for the financial instruments of the COSME programme.
The SME Initiative represents an innovative financial instrument envisaged by the new regulation on European Structural and Investment Funds (ESIF) which makes it possible to combine funds managed at national (or regional) level with resources from the European COSME program (Programme for the Competitiveness of Enterprises and Small and Medium-sized Enterprises) and EIB Group resources.
Italy has made 100 million ERDF Structural Funds available for this project, to which the Government has added another 102,5 million: 202,5 million in total from the state contribution. Thanks to the innovativeness of the PMI Initiative financial instrument, based on the securitization technique of existing credits and thanks to the intervention of the EIB and EIF, approximately 1,2 billion of new loans at favorable rates will be disbursed to SMEs operating in Abruzzo, Basilicata, Calabria , Campania, Molise, Puglia, Sardinia and Sicily.
“In the panorama of the Italian economy, small and medium enterprises are the most affected by the credit crunch: for many of them, access to credit has been problematic for years, especially for those in the South. With the initiative we are announcing today, the government is taking steps to remedy these difficulties: we are making available 200 million of resources to generate, thanks to the intervention of the EIB group, a total stock of 1,2 billion euros of new credit. It is an important figure, which will have positive effects for thousands of SMEs in the South and for the people who work there”, underlines Minister Carlo Calenda.
“The SME initiative announced today will support start-ups and small and medium-sized enterprises in Southern Italy. It will allow them to access badly needed financial resources and increase the competitiveness of the regional economy. I take this opportunity to reiterate the hope that other countries will join this innovative initiative”, commented Corina Cre?u, Commissioner for Regional Policies of the Commission of the European Union.
“We believe in the success of the SME Initiative, an initiative consistent with the Juncker Plan, which uses the leverage effect of the European Structural and Investment Funds disbursed through innovative financial instruments to activate credit towards Italian SMEs, which make up 99% of enterprises in the national economic system", underlined the EIB Vice-President and FEIDario Scannapieco President, "the challenge is to facilitate investments by this segment of enterprises as much as possible, thus recovering competitiveness, and thus providing a strong stimulus to growth and to employment".
EIF Chief Executive Officer Pier Luigi Gilibert said: "Italy is the first Member State to have joined the PMI Initiative securitization tool and we expect this scheme to attract interest from the world of credit operators and businesses . The goal we set ourselves is to make more than 1 billion and 200 million euros of new finance available to small and medium-sized enterprises in the South, thus activating an important multiplier of usable structural funds, made possible by the innovative characteristics of the SME Initiative ”.
How the PMI Initiative works in Italy
In detail, the PMI Initiative (SME Initiative) adopted by Italy is based on the financial instrument of the securitization of existing credits to free up the resources of banks and other financial intermediaries for the granting of new loans to small and medium enterprises. The intermediaries selected by the European Investment Fund (EIF, controlled by the EIB) will have the possibility of securitizing these portfolios, i.e. transferring them to a vehicle company (SPV, Special purpose vehicle), which will finance itself through the issue of bonds (ABS, asset backed securities). The bonds will be subscribed by the EIB (senior tranche) and the EIF (mezzanine tranche). The participation of the EIB and EIF, with the use of their own budget, will be possible thanks to the further intervention of the EIF which, as manager of the initiative, will subscribe part of the junior bonds (riskier) using both the 202,5 million available from the Italian State and the contribution of four million made available by the European Commission with the COSME programme.
In fact, instead of being used to directly finance business projects for the same amount (202,5 million), national resources act as a catalyst for EIB and EIF funds: the State assumes the risk of the first losses of an existing portfolio, thus allowing the intervention of the EIB group for over one billion. With a positive leverage effect for the Italian economy and effective use of Community resources.
But how do you get to have new finance for SMEs in the South? Thanks to the dual role of selected financial intermediaries who, on the one hand, thanks to the securitization of existing credits, can free up regulatory capital to be reused for new loans. On the other hand, thanks to the improvement in capital ratios, they will have to grant new loans to SMEs (including micro-enterprises) in the eight regions mentioned for an amount equal to a multiple of the public resources used. In practice, the combined use of European and national resources has a final leverage effect of about one to six. Instead of just over 200 million, it will come to at least 1,2 billion in new finance for the economy.
In the coming days, the EIF will publish a call for expressions of interest aimed at selecting eligible financial intermediaries (banks, guarantee institutions, leasing companies).
