aecm annual event 2015 - gunnar mai
TRANSCRIPT
COSME
SME Guarantee Facility
AECM Conference
Berlin
The material in this presentation has been prepared by EIF and is general background information about the COSME Programme, current as at the date of this
presentation. This information is given in summary form and does not purport to be complete.
COSME LGF – Loan Guarantee Facility
Successor of the CIP SME Guarantee Facility as part of the Europe 2020 strategy
EC facility enhancing access to finance for European SMEs
Call launched in August 2014 with an estimated budget of EUR 690m (2014 - 2020)
COSME LGF provides:
Free of charge capped portfolio guarantees and counter-guarantees for additional SME risk-taking
A securitisation option on mezzanine tranches of SME debt portfolios subject to additional lending
to SMEs
COSME LGF is implemented through Financial Intermediaries like guarantee schemes, banks and leasing
companies
Thanks to COSME LGF, Financial Intermediaries go beyond their current lending or guarantee practice or
increase lending volumes
2
CIP achievements
3
As of the 30 Dec 2014, CIP has achieved the following milestones, with many agreements
still open for inclusions:
73 Agreements signed
24 Countries covered
367,912 SMEs supported
EUR 595.2m of committed budget
EUR 19.3bn of mobilised lending
>30 Leverage
SMEG – Implementation chain (all windows)
in EUR m
EUR595,20
EUR8.799,80
EUR19.317,90
EUR28.287,00
EUR-
EUR5.000,00
EUR10.000,00
EUR15.000,00
EUR20.000,00
EUR25.000,00
EUR30.000,00
Used Budget Guaranteed exposure Loans supported Investment mobilised
x 15
x 32
x 47
4
Map of signed transactions
9 agreements signed for EUR 2.7bn corresponding to an aggregate
budget allocation of EUR 131.9m
7 Countries where agreements have been signed
Financial Intermediaries are:
- AWS, Austria
- EZBOB, UK
- France Active Garantie, France
- KfW, Germany
- LfA, Germany
- Libra Internet Bank, Romania
- MicroBank, Spain
- SOCAMA, France
- CKB, Montenegro
5
5 Countries where transactions have been approved
7 Countries where applications have been received
Status of received applications
Total budget approved of EUR 191.5m, and signed EUR 131.9m
6
0
1
2
3
4
5
6
7
8
9
AU BE BG HR CZ DK FR DE HU ME NL PL RO SI ESP TR EST IT UK
Signed
Approved to be Signed
Due Diligence
Potential Deal - PS
Status of received applications
Of a total signed EUR 132m, of which EUR 47m signed with
Guarantee Institutions in France and Austria
7
Total Number Of which from Guarantee
Institutions %
Applications received 38 16 42%
Applications in process 20 10 50%
Applications approved 9 3 33%
Signed Applications 9 3 33%
COSME LGF vs. CIP – what is new?
COSME counts on a single flexible window providing capped guarantees (LGF) and a securitisation
option
Capped (counter-)guarantees are provided at a guarantee rate of up to 50% and a guarantee cap rate
fixed at the level of expected losses (max 20%)
A maximum loan amount threshold of EUR 150,000 applies - larger loans can only be covered under the
COSME LGF if the Final Recipient does not meet any of the 12 InnovFin criteria
Financial Intermediaries have two options to provide additional risk taking:
Launch of a new more risky product (e.g. without collateral, start-ups) with ground up COSME
cover
OR
Substantial increase in volumes to high risk SMEs, with a Reference Volume
COSME LGF is State Aid consistent, i.e. it does not contain State Aid
COSME LGF covers investment and/or working capital financing, now including also credit lines and
bank guarantees
8
COSME LGF capped (Counter-) Guarantee
Structure
9
Guarantee Rate
on a loan by loan basis
50% maximum
Guarantee
Cap Rate
Expected
Loss
Risk retained by
the Financial
Intermediary
20% minimum*
of the original
portfolio
* The minimum 20% level is based on the consideration that financial intermediaries could combine additional credit risk protection financial instruments alongside with
the proposed COSME (counter-)guarantees
Financial Intermediary’s Portfolio of Higher Risk
Transactions to SMEs
COSME LGF’s capped (counter-) guarantee
proposed features
Structured in the form of guarantees or counter-
guarantees
(Counter-) Guarantee rate typically set at
maximum 50%
Pari-Passu ranking
(Counter-) Guarantee cap rate fixed at the level of
Expected Losses (max 20%)
COSME guarantee has 10 year maturity
Eligible loans min 12 months maturity
Retained exposure of the Financial Intermediary to
the SME transactions needs to be min 20%*
COSME LGF – Eligibility Criteria
Final Recipient Transactions:
Amount: up to a maximum of EUR 150,000 – larger transactions can be included provided that
the Final Recipient does not fulfil any of the 12 InnovFin Innovation Eligibility Criteria
Maturity: minimum 12 months
Purpose:
- Working capital (including revolving credit lines – maximum maturity of 5 years – and
overdrafts; excluding factoring and credits or loans resulting from utilisation of credit card
limits)
- Investments
Final Recipients:
SMEs as defined in Commission Recommendation 2003/361/EC (OJ L124, 20.05.2003, p. 36)
Established in one of the COSME programme countries
They should not be “undertakings in difficulty“ as defined in “General block exemption regulation“
(Commission regulation (EU) No C(2014) 329/3, 21.03.2014)*
10 * Please refer to slide 18 for complete definition
What are Higher Credit Risk Transactions under
COSME LGF?
COSME LGF covers Higher Credit Risk Transactions to SMEs of two types:
11
Option 1
Target Higher Risk Profile clients/products through:
- New product set up for Start-ups; OR
- Extension in maturities and/or reduction in collateral; OR
- New products or existing products offered to previously excluded
client sectors
Ground up COSME cover
Increase in volumes of (guarantees of) loans to SMEs related to
- most risky 25% of current portfolio by internal rating; OR
- full portfolio in case of guarantee institutions and promotional
banks
COSME cover is conditional on the Intermediary realising certain volumes
of activities as defined within the Guarantee Agreement
Option 2
“Unconditional”
guarantee
“Conditional”
guarantee
Conditionality under COSME – Mechanics
12
Option 2 – Conditional Guarantee Option 1 – Unconditional Guarantee
Expected Loss Cap amount
Portfolio Volume
Indicator
Pre-set Value Trigger calculation
formula
Trigger Value
MPV* 200 MPV*GR*GCR 20
MinPV** 130 MinPV*GR*GCR 13
RPV*** 100 RPV*GR*GCR 10
Guarantee rate
(GR)
50% Guarantee cap rate
(GCR)
20%
* MPV (Maximum Portfolio Volume); MinPV (Minimum Portfolio
Volume); RPV (Reference Portfolio Volume)
MPV trigger
MinPV trigger
RPV trigger GUARAN
-TEE
COVER
Expected Loss Cap amount Guarantee rate
(GR)
50% Guarantee cap rate
(GCR)
20%
0
5
10
15
20
25
30
35
40
45
0
5
10
15
20
25
30
35
40
45
GUARAN
-TEE
COVER
COSME selection process and workflow
13 *COSME is open to candidate, potential candidate and neighborhood policy countries **Signed Declaration of Honour + full Application submitted
Financial Intermediaries established and operating in one of the 28 Member States +
Iceland, FYROM, Montenegro and Turkey (further countries still expected until year-end)*can
apply to the Open Call for Expression of Interest to benefit from a COSME LGF product
Open Call published and open until September 2020
http://www.eif.org/what_we_do/guarantees/single_eu_debt_instrument/cosme-loan-
facility-growth/index.htm
A1 B1 C1
A2 B2 C2
A3 B3 C3
Pre-Selected
On the Reserve List
Not Pre-Selected
QUALITY (A to C)
IMPA
CT (1
to
3
)
First-come, first-served - evaluation based on:
Compliance with formal criteria**
Quality
Impact
Due diligence meeting
Requirement of further information if necessary
Revised Quality and Impact score
Open Call for
Expression of
Interest
Application
Pre-Selection
Due Diligence
Final Selection
GUARANTEE
AGREEMENT
3 to 6
m
onths
(dependin
g o
n quality
of receiv
ed in
form
ation)
If Pre-selected
Proposal to EIF Board for approval (subject to EC veto right)
Negotiations and agreement implementation
Focus on Expression of Interest required
information
14
Open Call for
Expression of
Interest
Application
Pre-Selection
Due Diligence
Final Selection
GUARANTEE
AGREEMENT
3 to 6
m
onths
(dependin
g o
n quality
of receiv
ed in
form
ation)
If Pre-selected
Financial Intermediaries shall provide:
A signed Declaration of Honor / Cover Letter and Applicant Identification sheet
A general description of their activity including geographical coverage and
previous experience of cooperation with IFIs
Annual reports for the last available three years
A general description of their operating principles, inter alia their credit, risk
management and pricing policy
Debt financing volumes information for the past five years of activity, including
both annual production as well as end-of-year outstanding portfolio volumes
A general description of their position in the market
A general description of their IT system and related capabilities of complying with
the programme’s reporting requirements
An explanation of the selected Option under COSME LGF (1 or 2) and related
business plan and additionality elements, if applicable
Detailed Vintage Tables for both Defaults and Recoveries for the past five years of
activity of comparable loan products to the ones proposed for coverage under
COSME
An explanation of the marketing and promotion tools foreseen for ensuring
compliance with the programme’s promotional requirements*
* Please refer to slide 16 for further information
Focus on Pre-Selection criteria
15
Open Call for
Expression of
Interest
Application
Pre-Selection
Due Diligence
Final Selection
GUARANTEE
AGREEMENT
3 to 6
m
onths
(dependin
g o
n quality
of receiv
ed in
form
ation)
If Pre-selected
Financial Intermediaries’ complete applications are evaluated based on both the Quality
and the expected Impact of the proposed Guarantee transaction
Quality criteria:
- Capacity of the applicant to comply with all COSME contractual
obligations
- Capacity of the applicant to manage the risk of the COSME operation
- Experience and ability of the applicant to finance SMEs
- Quality and plausibility of the applicant’s implementation proposal
Impact criteria:
- Assessment of the proposed and envisaged COSME portfolio,
specifically with regards to providing enhanced access to finance and
the expected loss and granularity of the proposed COSME portfolio
- The impact of the application on the geographical distribution of the
overall current and expected aggregate COSME portfolio
Visibility, Publication, Promotion
Financial Intermediaries shall provide:
quarterly reporting on the portfolio of supported SME transactions; and
two case studies of supported SMEs
EIF will publish on its website:
information (name, address, guarantee amount, etc.) about Financial Intermediaries and Financial
Sub-Intermediaries (in the case of counter-guarantees) unless they provide a written justification
explaining that this publication would harm their commercial interest
in the case of SME transactions above EUR 150,000 (or EUR 500,000 in securitisation),
information about the SME will also be published unless the SME provides a written justification that
such publication would harm its commercial interest
Visibility & Promotion:
SMEs need to be informed by the Financial Intermediary about the EC support through high visibility
(e.g. cover letter, or visible in the contract with the SME in both cases duly acknowledged)
promotion from the Financial Intermediary is expected (website, case studies, press release)
16
Contacts
EU Guarantee Facilities Team
17
tel +352 2485 81438
mob +352 691 286 156
fax +352 2485 51438
e-mail [email protected]
EUROPEAN INVESTMENT FUND
Luís Broegas Amaro
Transaction & Relationship Officer
Guarantees & Securitisation
37B, avenue J.F. Kennedy
L-2968 Luxembourg
web www.eif.org
tel +352 2485 81603
mob +352 691 286 649
fax +352 2485 51603
e-mail [email protected]
EUROPEAN INVESTMENT FUND
Gabriela Brtkova
Transaction & Relationship Officer
Guarantees & Securitisation
37B, avenue J.F. Kennedy
L-2968 Luxembourg
web www.eif.org
tel +352 2485 81358
fax +352 2485 51358
e-mail [email protected]
EUROPEAN INVESTMENT FUND
Gunnar Mai
Head of EU Guarantee Facilities
Guarantees & Securitisation
37B, avenue J.F. Kennedy
L-2968 Luxembourg
web www.eif.org
tel +352 2485 81629
mob +352 661 451 023
fax +352 2485 51629
e-mail [email protected]
EUROPEAN INVESTMENT FUND
M. Chiara Amadori
Transaction & Relationship Officer
Guarantees & Securitisation
37B, avenue J.F. Kennedy
L-2968 Luxembourg
web www.eif.org