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Financial Instruments 2014-2020*. Presentation to the debate on Financial engineering in future EU programmes Thursday 26th April 2012, 9h00 – 11h00 Czech Permanent Representation to the EU. George Lemonidis European Commission DG Enterprise and Industry

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Financial instruments 2014 2020

Financial Instruments 2014-2020*

Presentation to the debate onFinancial engineering in future EU programmes

Thursday 26th April 2012, 9h00 – 11h00

Czech Permanent Representation to the EU

George Lemonidis

European Commission

DG Enterprise and Industry

Deputy Head of Unit – Financing of innovation and SMEs

* Based on a presentation by Roger Havenith, DG ECFIN

What are eu financial instruments
What are EU Financial Instruments?

Equity/risk capital: e.g. venture capital to SMEs with high growth potential or risk capital to infrastructure projects

Guarantees to financial intermediaries that provide lending to e.g. infrastructure projects, SMEs, persons at risk of social exclusion

Other risk-sharing arrangements with financial intermediaries in order to increase the leverage capacity of the EU funds

or a combination of the above with other forms of EU financial assistance



Eu financial instruments why
EU Financial Instruments: Why?

  • An appropriate tool in times of budget constrains

  • 3 types of benefits

    • Multiplier effect – multiplication of scarce budgetary resources by attracting additional finance

    • Policy impact – financial intermediaries pursue EU policies

    • Institutional know-how – EU can use the resources and expertise of financial intermediaries

  • A political priority (Europe 2020 strategy, Communication on a Budget for Europe 2020)

  • Effective and efficient way to support Europe 2020 objectives of smart, sustainable and inclusive growth

Next mff simplification and transparency
Next MFF: Simplification and Transparency

  • Fewer financial instruments (from 13 to 6)

  • Larger financial instruments ensuring critical mass

  • Minimisation of overlap between instruments

  • Standardised contractual arrangements including management structures, reporting, fees…

  • More transparent to stakeholders

  • Budget: No contingent liabilities

  • Dedicated regulatory framework (Title VIII of the Financial Regulation)

Financial instruments included in proposals for 2014 2020 mff
Financial Instruments included in proposals for 2014-2020 MFF

Centrally managed by COM

Shared Management

Research, Development Innovation

Horizon 2020

Equity and Risk Sharing Instruments

EUR 3.5bn

Instruments under Structural and Cohesion Funds

EU level

Off-the shelf instruments

Tailor made instruments

Significantly higher amounts than currently

Growth, Jobs and Social Cohesion

Creative Europe

Guarantee Facility

EUR 210m

Competitiveness & SME (COSME)

Equity & guarantees

EUR 1.4bn

Erasmus for all

Guarantee Facility

EUR 881m

Social Change

& Innovation

Micro-finance EUR 192m


Connecting Europe Facility (CEF)

Risk sharing (e.g. project bonds) and equity instruments

Budget not yet decided

EU financial instruments MFF

current and new

Equity instrument for SMEs’ growth and R&I MFF

  • Equity Facility for R&I (H2020)

    • focus: early stage

    • final beneficiaries: innovative SMEs and small midcaps

    • also covering growth-stage investments

  • Equity Facility for Growth for SMEs (COSME)

    • focus: growth stage

    • final beneficiaries: growth-oriented SMEs

    • also covering early-stage investments

  • Multi-stage funds: contributions from COSME and H2020 on a pro-rata basis (based on a fund’s investment policy)


EU financial instruments MFF

current and new

Debt instrument for SMEs’ growth and R&I MFF

  • Loan Guarantee Facility(COSME)

    • guarantees for loans to SMEs up to € 150 000

    • securitisation of SME debt finance portfolios

  • SMEs & Small Midcaps Guarantee Facility(H2020)

    • guarantees for loans over € 150 000 for R&I activities


EU financial instruments MFF

current and new

EU financial instruments MFF

current and new

COSME & Horizon 2020 - Budget proposed MFF

  • COSME – “Actions to improve SME access to finance”

    • € 1 436 million in current prices

      • Equity Facility for Growth: € 690 million

      • Loan Guarantee Facility: € 746 million

  • H2020 (Industrial Leadership) – “Access to risk finance”

    • € 3 768 million in current prices for financial facilities supporting all sizes of companies and types of entity

    • At least 1/3 (ca. € 1.25 bn) likely to be absorbed by SMEs and small midcaps (no breakdown between equity and debt)



Implementation MFF

Under discussion

  • Commission delegates implementation to the EIB/EIF and/or other financial institutions (partnership, delegation, …)

  • Implementation in line with a common set of rules that will be incorporated in a regulatory framework (Financial Regulation – new Title VIII; its Delegated Act (implementing rules); Debt and Equity Platforms (operational requirements))

  • Debt and equity funding can be combined; also with grants in H2020

  • Demand-driven approach and Flexibility

  • Equity and debt facilities can pool resources with Member States willing to contribute part of their Structural Funds

  • Budget for H2020 “Access to Risk Finance” can be topped-up by ring-fenced contributions from other parts of H2020, otherprogrammes in the EU budget, third parties (inc. EUREKA), etc.