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Annual Report 2011
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made available to CIP intermediaries as a free-of-charge
guarantee covering part of the first loss (i.e. the expected
losses) of a portfolio of new SME loans. To qualify for
such cover, financial institutions commit to offer enhanced
access to finance for SMEs by taking SME risk exposure
which is additional to what they would usually accept
through for example reduced collateral requirements, in-
creased loan volumes or lending to hitherto excluded SME
segments (such as start-up enterprises). The intermediary
retains, typically, 50 % of the first loss in the guaranteed
portfolio.
Throughout 2011, EIF cont inued to deploy the pro -
gramme’s guarantee instruments with a total of more than
155 000 SMEs having already benefited from the CIP
guarantees. It is expected that a total number of approxi-
mately 300 000 SMEs will be supported over time by
the already committed budget. With many financial institu-
tions tightening their credit policies post crisis, CIP SMEG
played a crucial role in addressing the dif ficulties that
SMEs face in obtaining access to debt finance. At end
2011, EIF had signed more than 50 CIP agreements in
18 different countries, the large majority (more than 90 %)
of the supported SMEs being micro-enterprises and 60 %
of them in their start-up phase.
CIP SMEG has achieved a substantial multiplier effect
on the allocated budget of approximately 16 times the
guaranteed loan amount, i.e. EUR 1 of budget allocation
supports EUR 16 of SME loans.
Own resources/credit enhancement and securiti-
sation: driving the market
EIF credit support on tranches of SME securitisation trans-
actions enables banks to obtain liquidity on a maturity
matched basis and achieve capital relief thus allowing
them to expand their SME lending activity.
Throughout 2011, EIF continued to be an active participant
in the still evolving SME securitisation market and support-
ed transactions in a wide range of geographies, including
Bulgaria, France, Germany, Italy, the Netherlands, Portu-
gal, Sweden and the United Kingdom. The total volume
of guarantee signings in the securitisation space in 2011
amounted to EUR 932m and supported SME lending
volumes of EUR 4.8bn.
EIF expects a continuation of the activity in SME securiti-
sations in Europe. While there are some caveats given
the currently volatile credit environment, EIF foresees an
increasing number of financial institutions tapping the se-
cured funding markets, either in the form of securitisations
or potentially SME covered bonds. While securitisation
spreads have generally not tightened in 2011 and in fact
widened for some countries, the scarce availability of
unsecured funding options will make securitisation more
attractive on a relative basis. Most of the securitisations
will be focussed on generating funding, while risk transfer
transactions, i.e. whereby banks release capital for new
SME lending, might make a gradual return.
EIF will continue to support this market with new guaran-
tee signings and new product initiatives targeting both
top tier international banks and smaller, national finan-
cial institutions and leasing companies, while continuing
to promote best market practice in SME-related securiti-
sations in the public domain. With this combined effort,
EIF will target an ongoing improvement for the financing
conditions of SMEs.
Financial products under JEREMIE: sharing the risk
In 2011, EIF continued to deploy its financial products
in order to catalyse EU structural funds with a view to
enabling SME financing in countries less supported by
the traditional EIF products, namely risk-sharing loans and
portfolio guarantee instruments under JEREMIE.
Under the JEREMIE First Loss Portfolio Guarantee (FLPG),
EIF covers part of the credit risk relating to a new portfolio
of loans and/or leases granted by a financial intermediary
to SMEs. An overall EUR 139m cap amount was signed
under FLPG in Bulgaria, Cyprus, France, Lithuania, Malta
and Romania.
“Securitisation plays an important role in the long-term
funding of our SME loan portfolio. In this regard, EIF
has been both an innovative and supportive partner to
the ProCredit group for many years, and we hope to
further strengthen this partnership in the future.”
Helen Alexander, Member of theManaging Board, ProCredit Holding AG