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Annual Report 2011
20
The SMEG facility comprises of four measures or windows:
■
Loan Guarantees cover portfolios of mid- to long-term
loans and leases to SMEs;
■
Micro-Credit Guarantees cover portfolios of micro-
credits to encourage financial institutions to provide
financing to micro-enterprises, especially start-ups;
■
Equity/Quasi-Equity Guarantees cover portfolios of
investments in, and mezzanine financing of, respec-
tively, early stage SMEs;
■
Securitisation consists of guarantees to support secu-
ritisation transactions by financial institutions to mobi-
lise additional debt financing for SMEs.
The CIP mandate is an efficient tool due to the high multi-
plier effect of EIF capped guarantees.
Portfolio
Total outstanding guarantee commitments amounted to close
to EUR 4.4bn in 221 transactions at the end of 2011. Of this
total, EUR 2.9bn were dedicated to own risk and EUR 1.5bn
to mandate programmes*, mobilising more than EUR 30bn,
demonstrating EIF’s increased catalytic role in SME lending.
General overview
EIF is a prime provider of credit enhancement to catalyse
SME lending. With its guarantees and credit enhance-
ment/securitisation financing solutions, EIF protects its
financial intermediaries’ capital by sharing the risk taken,
with a view to stimulating and increasing the volume of
loans they grant to SMEs.
EIF guarantee operations can be
broadly split into ‘own risk’ and
‘mandate’ activities.
For own risk transactions, EIF em-
ploys its own capital to credit en-
hance tranches of SME loan or
lease securitisation transactions
and to provide guarantee cover
for SME loan and lease por t
folios to financial institutions on a
bilateral basis. Through its credit enhancement activity,
EIF achieves substantial added value by facilitating SME
credit risk transfer from financial institutions as well as by
facilitating access to term funding through the placement
of guaranteed asset-backed securities with capital market
investors. As a consequence, EIF facilitates capital relief
and contributes to the funding needs of financial institu-
tions, thus increasing their lending capacity to SMEs.
As par t of its mandate activity, EIF manages the SME
Guarantee Facility (SMEG) under CIP on behalf of the EC.
Under this facility, losses are covered using the EC budg-
etary resources specifically allocated to this programme.
The guarantees and counter-guarantees issued cover part
of the expected loss for portfolios of SME loans or leases
originated by financial institutions. Final losses stemming
from new SME loans granted during a predefined period
are covered on a pari passu basis with the financial inter-
mediaries up to the expected loss set at inception of the
agreement.
Guarantees and credit enhancement
MAP
G&E
GAGF
27
2 880
Total mandates
1 492
4 372
175
253
376
661
Own resources
Mandates*
Total
CIP
JEREMIE
Product breakdown at 31 Dec 2011 – in EUR m
EUR 1.4bn
catalysed
EUR 7.6bn
of lending to SMEs
in 2011
“We had an important and successful collaboration
with EIF on our second securitsation transaction. We
found in EIF a skilled and reliable partner ready to
support the financing of SMEs.”
Stefano Rossi, CFO, Alba Leasing S.p.A
* Including the two EC programmes prior to CIP – the Multiannual Programme
(MAP) and Growth & Employment (G&E) available between 1998 and 2007 –
JEREMIE and the Greater Anatolia Guarantee Facility (GAGF).