Evaluation of the EIF’s SME Securitisation Activities, 2004-2015
Since late 1990s, the European Investment Fund (EIF) has provided credit enhancement to securitisation transactions of portfolios of loans to small and medium enterprises (SMESec). The key rationale behind EIF’s support to SMESec is that originators will carry out new SME lending as a result of the released capital resources and additional funding following the SMESec transactions.
This evaluation assessed EIF’s contribution to two key objectives: increase SMEs’ access to finance through SMESec and stimulate SMESec’s market development. The period analyzed was 2004-2015.
This evaluation could not ascertain the causality link between EIF’s SMESec support and additional SME lending. For most of the period under evaluation there was no methodological tool to verify the casual link between activities and results. Such gap was filled by the development of EIF’s Value Added Methodology (2010) and its ex-post impact assessment (2013). According to this methodology, for the period 2013-2015, the SMESec cumulative leverage exceeded the initial target. However, the tool relies exclusively on originators’ reporting.
On the other hand, the evaluation found clear evidence that the EIF has contributed to SMESec’s market development not only through its transactional activities but also spreading know-how and best market practices. In 2009, the SMESec market came to a halt due to the economic and financial crisis and there was no EIF supported transaction. In subsequent years, the EIF has had an important role in supporting the reopening of some SMESec national markets, by facilitating deal execution in a difficult post-crisis environment.
Areas for improvement
In relation to SMESec, the evaluation recommends clarifying EIF’s policy objectives; adjusting the instrument to enhance its impact; introduction of additional mechanisms to ensure causality link with increased SME lending; expanding advisory and technical assistance; performing regular costs and profitability analysis; and reviewing the Value Added Methodology.