SMEs located in southern Italy, Sicily and Sardinia are set to receive new financing worth EUR 1.2 billion. This finance will be provided via the “Iniziativa PMI” (SME Initiative) launched today in Rome by the Ministry of Economic Development, the European Commission and the EIB Group (EIB and EIF). Italy is the first of the European Union's Member States to implement the new securitisation programme for access to finance provided during the EU's 2014-2020 programming period. 

SMEs located in southern Italy, Sicily and Sardinia are set to receive new financing worth EUR 1.2 billion. This finance will be provided via the “Iniziativa PMI” (SME Initiative) launched today in Rome by the Ministry of Economic Development, the European Commission and the EIB Group (EIB and EIF). Italy is the first of the European Union's Member States to implement the new securitisation programme for access to finance provided during the EU's 2014-2020 programming period. 

The SME Initiative was presented at the offices of the Ministry of Economic Development on via Molise by Dario Scannapieco, EIB Vice-President and Chairman of the EIF's Board of Directors, Pier Luigi Gilibert, EIF Chief Executive, Carlo Sappino, Director General of Incentives to Enterprises at the Ministry of Economic Development, Rudolf Niessler, Director, Regional Policy at the European Commission (DG REGIO), with responsibility for programmes in southern European countries, and Ciprian Cristea, Head of the DG GROW Unit with responsibility for financial instruments under the COSME programme.

The SME Initiative is an innovative financial instrument, under the new regulations governing the European Structural and Investment (ESI) Funds, which enable funds managed at national (or regional) level to be combined with resources from the EU’s COSME programme (Programme for the Competitiveness of Enterprises and Small and Medium-sized Enterprises) and EIB Group resources.

Italy has made available EUR 100 million from the European Regional Development Fund (ERDF) for this project, to which the Government has added another EUR 102.5 million, giving a total of EUR 202.5 million in State contributions. Thanks to the innovative nature of the SME Initiative financial instrument based on the securitisation of existing loans and thanks to the EIB’s and EIF’s participation, around EUR 1.2 billion of new loans at favourable rates will be disbursed to SMEs operating in Abruzzo, Basilicata, Calabria, Campania, Molise, Puglia, Sardinia and Sicily.

"In the landscape of the Italian economy small and medium enterprises are those more affected by the credit crunch: for many of them access to finance has been problematic for years, especially for those in the Mezzogiorno. With the initiative that is being announced today the government wants to remedy such difficulties: we make available EUR 200 million in order to create, thanks to the intervention of the EIB Group, an overall amount of EUR 1.2 billion of new debt finance. It is an important figure, which will have positive effects for hundreds of SMEs in the South and for their workers" declared Minister Carlo Calenda.

Corina Crețu, Commissioner for Regional Policy, said: "The SME initiative launched today will give a boost to start-ups and small businesses in the South of Italy. It will give them access to much-needed funding, and will increase the competitiveness of the regional economy. It gives me the occasion to reiterate that I wish to see more countries join this innovative initiative". 

“We are confident in the success of the SME Initiative. In accordance with the Juncker Plan, this initiative uses the leverage effect of EU Structural and Investment Funds disbursed via innovative financial instruments to unlock lending to Italian SMEs, which make up 99% of all businesses in the Italian economy”, remarked EIB Vice-President and Chairman of the EIF's Board of Directors Dario Scannapieco. “The challenge is to facilitate investment by this segment of businesses as much as possible so that they can regain competitiveness, thereby providing a strong stimulus for growth and employment.”

EIF Chief Executive Pier Luigi Gilibert said: “Italy is the first Member State implementing the securitisation instrument of the SME Initiative and we expect that both the credit sector and the enterprises will show interest for such an instrument. The goal that we have is to make available to small and medium enterprises in the Mezzogiorno more than EUR 1.2 billion  of new debt finance, thus activating an important leverage of the EU Structural Funds that is possible thanks to the innovative features of the SME Initiative”.

How the SME Initiative works in Italy

The SME Initiative adopted by Italy is based on the securitisation of existing loans to free up the resources of banks and other financial intermediaries so that new financing can be granted to SMEs. The intermediaries selected by the European Investment Fund (EIF, the SME arm of the EIB) will be able to securitise such portfolios, i.e. transfer them to a special purpose vehicle (SPV), which will fund the purchase of such existing portfolios through the issuance of asset-backed securities (ABS). These bonds will be subscribed by the EIB (senior tranche) and the EIF (mezzanine tranche). The EIB’s and the EIF's participation, using their own resources, will be possible thanks to the subsequent involvement of the EIF which, as the manager of the SME Initiative, will subscribe part of the junior (riskier) bonds using both the EUR 202.5 million made available by the Italian State and the European Commission's contribution of EUR 4 million under the COSME programme.

Rather than being intended to directly finance projects by companies for that amount (EUR 202.5 million), the domestic resources act as a catalyst for EIB and EIF funds: the State covers the first loss risk of an existing portfolio of debt finance, thereby enabling the EIB Group to contribute over EUR 1 billion. Hence, this combines a positive leverage effect for the Italian economy and an effective use of EU resources.

How will new finance actually be made available for SMEs in southern Italy? Thanks to the twin role of the financial intermediaries selected – on the one hand, the securitisation of existing loans will enable them to free up regulatory capital for new financing, whilst, on the other, thanks to the improvement of capital ratios, the financial intermediaries will have to grant new loans to SMEs (including microenterprises) in the eight regions mentioned for an amount equal to a multiple of the domestic resources deployed. In practice, the combined use of European and national funds has a final leverage effect of about one to six. Instead of just over EUR 200 million, this means that at least EUR 1.2 billion of new finance will be injected into the economy. 

In the coming days, the EIF will publish a call for expressions of interest to enable it to select eligible financial intermediaries (banks, guarantee institutions, leasing companies).