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EUR 2bn for French SMEs following EIF and BPCE guarantee agreements with EU support

    Date: 24 June 2013


French version [PDF]                            

The European Investment Fund (EIF) and Banques Populaires-Caisses d’Épargne (BPCE Group) have signed two guarantee agreements to support lending to small and medium-sized enterprises (SMEs) under initiatives funded by the European Commission.

The new agreement signed under the Risk Sharing Instrument (RSI) initiative allows the Banques Populaires to provide EUR 250 million of loans to innovative companies, with the support of a 50% EIF guarantee with EU financial support under the Seventh Framework Programme for Research and Development (FP7). The Banques Populaires have developed a specific product for innovative SMEs and Small Mid-caps in France - offering reduced interest rates and collateral requirements, which benefits from the support of the Risk Sharing Instrument.

This is the first RSI agreement in France and largest RSI deal in Europe so far, bringing the total loan finance available to innovative businesses across the EU under this initiative to well above EUR 1bn with 12 guarantees signed in 10 countries.

The second guarantee agreement signed under the Competitiveness and Innovation Programme (CIP) will help BPCE to generate a total portfolio of loans worth EUR 1.8bn, to finance around 50,000 French SMEs.  SMEs in France will now have easier access to finance while benefiting from substantially reduced collateral requirements for the next two years following this extension agreement with BCPE and the network of the mutual guarantee institutions, SOCAMA. EIF has existing guarantee transactions with BPCE in France (Languedoc-Roussillon and PACA regions), as well as a long-term relationship with the SOCAMAs. The agreements signed today will help the bank to target more innovative businesses across the country.

Commenting on the signature, in Paris, EIF Chief Executive Richard Pelly said: “I am pleased to be signing our first RSI agreement in France and largest in Europe under the new Risk Sharing Instrument (RSI) under a FP7 programme in support of innovative small and medium sized enterprises. Extending our relationship with our long-term partner BPCE under the CIP programme which through the SOCAMAs have already supported some 50 000 businesses via the CIP programme, will ensure that much needed finance will be quickly channelled to innovation driven businesses across the country.”

BPCE President, François Pérol said: “The Banques Populaires are offering a unique type of finance to businesses in France in order to help strengthen their competitiveness through innovation”.

European Commissioner for Research, Innovation and Science, Máire Geoghegan-Quinn, welcomed this largest signature under RSI "This agreement is an excellent example of how we can support innovative companies in gaining better access to risk finance. Financing research and innovation and helping those SMEs who take risks to bring ideas to the market will mean more jobs and growth in France and across Europe."

The aim of the RSI Facility is to encourage banks to lend to SMEs and small mid-caps with fewer than 500 employees in need of investment financing and/or operating capital to support research, development and innovation activities, with EU financial support. Banks are being selected by the EIF following a call for expression of interest for financial intermediaries across Europe.

The Competitiveness and Innovation Framework Programme (CIP), aims to boost European productivity, innovation capacity and sustainable growth, whilst simultaneously addressing complementary environmental concerns during the 2007-2013 programming period.

About the Risk-Sharing Instrument (RSI) under FP7

RSI is a pilot guarantee scheme which supports the financing of R&D and/or innovation driven SMEs and Small Mid-Caps. The RSI is a joint initiative of the EIF, the European Investment Bank (EIB) and the European Commission. It is supported by the European Union under the Seventh Framework Programme for Research and Technological Development (FP7) and uses EIF's risk-taking capacity. It is part of, and complements, the existing Risk Sharing Finance Facility (RSFF), managed by the EIB.

Under this facility, the European Investment Fund (EIF) is, in return for a fee, providing guarantees to banks and leasing companies that lend to SMEs and Small Mid-Caps. The guarantee covers, upon default, 50% of the outstanding amount of each loan. Some 10 or so banks are expected to be involved in the pilot phase, allowing the RSI to reach up to 1000 beneficiaries with a total loan volume of up to €1.0 billion.

The call is open to financial or credit institutions, established and operating in the EU and/or countries associated to FP7, including, Iceland, Liechtenstein, and Norway, Switzerland, Israel, Turkey, Croatia, the former Yugoslav Republic of Macedonia, Serbia, Albania, Montenegro, Bosnia & Herzegovina, the Faroe Islands and Moldova.

About CIP

The Competitiveness and Innovation Framework Programme (CIP), which spans from 2007 to 2013, has been put in place to boost European productivity, innovation capacity and sustainable growth, whilst simultaneously addressing complementary environmental concerns.

Within the framework of the CIP, the European Investment Fund (EIF) has been allocated EUR 1.1bn to be split between venture capital – with the High Growth and Innovative SME Facility (GIF) - and guarantees – with the SME Guarantee Facility (SMEG).

EIF’s investment is funded by the European Union, through the Competitiveness and Innovation Framework Programme (CIP). CIP is a EUR 1.1bn facility managed by EIF, which is be split between Venture Capital and Guarantees. It covers the period 2007- 2013. CIP’s objectives are to generate economic growth and create more jobs as well as boost productivity, competitiveness and innovation in the EU, optimising the use of European Union funds to support SME’s access to finance.

About the EIF

EIF's central mission is to support Europe's small and medium-sized businesses (SMEs) by helping them to access finance.  EIF designs and develops venture capital and guarantees instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment. The EIF total net commitments to private equity funds amounted to over EUR 6.5bn at end 2012. With investments in over 400 funds, the EIF is a leading player in European venture due to the scale and the scope of its investments, especially in high-tech and early-stage segments. The EIF guarantees loan portfolio totalled over EUR 8bn in close to 250 operations at end 2012, positioning it as a major European SME guarantees actor and a leading micro-finance guarantor.

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