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introduction
5
2011 also saw intensive
act ivi t y in the planning
and development of instru-
ments for the Multiannual
Financial Framework and
Europe 2020 with the ob-
jective of maximising sup-
port for smart, sustainable
and inclusive growth.
EIF’s financial performance
reflected the economic en-
vironment. Operating profit
of EUR 53m was slightly be-
low the plan, reflecting low-
er than expected guaran-
tee fees and equity gains,
whilst costs were contained
at the plan levels.
After provisions and impairments, EIF recorded a net loss
of EUR 10.2m, which was caused, to a large extent, by its
exposure to the Danish banking sector through a securiti-
sation transaction completed in 2007. The outlook for a
number of the underlying small banks in this structure has
deteriorated and hence the Board of Directors approved
new provisions which account for a large percentage of
the total net new provisions for the year.
Standard & Poors, Fitch and Moody’s confirmed EIF’s
AAA rating and the ‘stable outlook’. This reflects the
strength of the capital base and prudent risk management.
The pipeline of demands for EIF services and support in
2012 is expected to be bigger than ever. At the same
time, EIF is committing to a tightly controlled cost base to
reflect the challenges faced by all its stakeholders. This
leads to even greater demands being made on the ex-
traordinarily talented and dedicated staff whom I would
like to thank for their remarkable achievements in 2011.
Richard Pelly
EIF’s role was critical in 2011 in view of the extraordinary
economic and political developments in Europe. EIF com-
pleted a record number of transactions, providing over
EUR 13bn in equity and loan support for micro, small and
medium-sized enterprises which continued to suffer from
a severe shortage of risk capital.
Over EUR 1.1bn of new equi t y commi tments were
made, a 20% increase compared with 2010, catalysing
EUR 6bn in new risk finance for Europe’s fastest growing
innovative companies. This represented a very significant
proportion of all risk capital raised in Europe for SMEs
and underlines the widely agreed view that EIF, backed
in particular by the Risk Capital Mandate (RCM) from the
EIB, plays a critical role in the start-up and growth phases
of companies. This was accompanied by a number of
new initiatives including structures designed to catalyse
Business Angels and corporate venture investors. Through-
out the year, EIF was active across a wide geographic
spectrum with the development of new fund structures in
Luxembourg, the Netherlands, the Nordic region, Turkey
and the Western Balkans. Additional Structural Funds un-
der the Joint European Resources for Micro to Medium
Enterprises (JEREMIE) were also committed to equity in-
vestment in Bulgaria, Greece and Romania. This partner-
ship with Member States is core to EIF’s future strategy.
EIF also had a record year in its contribution to meeting the
gap in lending capacity from Europe’s commercial banks.
Continued development and strengthening of EIF’s securiti-
sation capability has been fully justified by the value add-
ed role demonstrated in 2011. EIF initiated and played a
catalytic role as credit enhancer in all the externally placed
transactions in the year; the first risk transfer/capital support
transaction to take place since end 2008 was closed, giving
a sign of a revival for this form of support for key SME banks.
The guarantee resources under the EU Competitiveness and
Innovation Framework programme (CIP) were fully utilised
and new loan and guarantee instruments were contracted in
nine countries by the JEREMIE Holding Funds managed by
EIF. The investment of the European Progress Microfinance
funds is well underway and EIF is now widely recognised
as a key provider of equity and loan capital to the growing
number of microfinance institutions within the EU.
Foreword of the Chief Executive