EIB, EIF and Crédit Agricole Group to support the development of French SMEs and midcaps
The EIB Group, comprising the European Investment Bank and its subsidiary the European Investment Fund and the Crédit Agricole Group are joining forces to provide French SMEs and midcaps with over EUR 1.1bn in new financing injected into the economy via two operations.
The EIB, the EIF and Crédit Agricole have concluded their first large-scale operation under the Investment Plan for Europe (Juncker Plan). Thanks to a synthetic securitisation operation performed by Crédit Agricole CIB, the EIB Group is making available to French SMEs and midcaps a EUR 830m package of subsidised loans, which will be distributed over a three-year period by Crédit Agricole's Caisses Régionales (regional banks). An additional financing package of EUR 100m will consolidate this facility.
The second operation comes under the EIF’s “InnovFin SME Guarantee Facility”. This agreement between Crédit Agricole Leasing & Factoring (CAL&F) and the EIF concerns equipment lease financing and provides for a EUR 200m guarantee facility over two years for innovative SMEs and midcaps.
Dominique Lefebvre, Chairman of the Fédération Nationale du Crédit Agricole and Crédit Agricole S.A. stated: “These major innovative operations in support of French businesses strengthen ties between the Crédit Agricole Group and the EIB Group. Thanks to this joint action involving a number of the Group's entities, more than EUR 1.1bn of financing will bolster Crédit Agricole's activity in support of SMEs and midcaps.”
EIB Vice-President Ambroise Fayolle said: “This major partnership with Crédit Agricole reflects our strong commitment to businesses. Thanks to the EU guarantee under the Juncker Plan and innovative, attractive financing facilities, we are able to step up our support for French businesses and assist them with their development projects. Support for SMEs and midcaps is a top priority for the EIB Group as they are a key sector of the EU's economy, with 23 million companies employing some 75 million people. SMEs and midcaps are responsible for creating nearly one in every two jobs.”
EIF Chief Executive Pier Luigi Gilibert said: “These operations represent a major milestone in the development of the EIB Group, resulting in the first synthetic securitisation operation and first InnovFin agreement with Crédit Agricole CIB and Crédit Agricole Leasing & Factoring respectively. The EIF welcomes this partnership with the EIB and the Crédit Agricole Group as the regulatory capital freed up will in part be redeployed to issue new loans to SMEs and midcaps and in part allocated to innovative SMEs and midcaps. The EIF's investment and structuring expertise combined with the effective allocation of EFSI funds by the EIB provides the Crédit Agricole Group with an optimal solution that will serve to strengthen the supply of funding to the real economy. The signature of these operations between the EIF and the Crédit Agricole Group illustrates how EFSI and InnovFin complement each other and are mutually supportive in helping SMEs and midcaps to grow and create jobs.”
A detailed look at the operations
An unprecedented EUR 930m subsidised loan facility
Under the Juncker Plan, which is intended in particular to stimulate investment and facilitate access to financing for SMEs and midcaps, the EIB Group has established a financing programme using new methods, including subsidised interest rates, to enhance the leverage provided by the funding itself.
The facility, which combines these two approaches, covers loans for tangible and intangible investments by SMEs and midcaps meeting eligibility criteria defined by the EIB in line with European Union policy targets. This facility comprises two packages:
- A EUR 830m subsidised loan package made available by the EIB for 2 to 5-year fixed-rate loans. This innovative transaction relies primarily on an EIB Group financial guarantee of EUR 138m granted by the EIF on a mezzanine tranche of a Crédit Agricole CIB loan book with a notional amount of EUR 3bn reserved for large European corporates. In exchange for this EUR 138m guarantee, Crédit Agricole undertakes to provide EUR 830m of new subsidised loans (i.e. benefiting from a reduction of 0.25%) over three years to SME and midcap customers of its Caisses Régionales – generating leverage of 6x between the amount of the risk guarantee and the amount of new loans granted by the Crédit Agricole Group to SMEs and midcaps, which are drivers of jobs and growth in France. This synthetic securitisation operation also enables Crédit Agricole CIB to optimise its own capital and anticipate regulatory requirements with respect to its loan book.
- A conventional EIB financing package of EUR 100m.
An additional agreement for a EUR 200m guarantee facility covering equipment lease financing for innovative SMEs and midcaps over two years
CAL&F recently signed a guarantee agreement with the EIF to support the development of innovative SMEs and midcaps. Under the Juncker Plan, the EIF’s “InnovFin SME Guarantee Facility” programme provides support for equipment lease financing to innovative SMEs and midcaps. This two-year EUR 200m guarantee facility will stimulate business in this innovative enterprise segment. It will be available to customers of the Crédit Agricole Group (Crédit Agricole and LCL Caisses Régionales networks) benefiting from a research tax credit (CIR) or partner loans targeting innovative assets. Innovative SMEs and midcaps will thus be able to benefit from favourable financing terms thanks to the 50% risk guarantee provided by the EIF.
Both transactions come just weeks after another huge operation carried out by Crédit Agricole Leasing & Factoring in conjunction with the EIB and the EIF. On 25 October 2017, a securitisation operation for EFL, a Polish subsidiary of Crédit Agricole Leasing & Factoring, was concluded for a total of PLN 1.8bn (around EUR 415m). The operation will serve to further EFL's commercial development plan by securing funds at a competitive rate for the next four years.