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The operation consists of a lending line to ICO to support Spanish small and medium sized enterprises (SMEs) and mid-caps.
The aim is to finance investments and working capital needs of the final beneficiaries. At least 10% of total financing will be dedicated to Climate Action.
The proposed operation addresses the failure in financial markets for SMEs and Mid-Caps arising from limited access and/or high cost of financing charged by creditors as a result of information asymmetries, lack of collateral and imperfect screening and monitoring. As such, it aligns with EU objectives by contributing to job creation and enhancing the competitiveness and productivity of SMEs and Midcaps.
The operation contains a minimum 10% Climate Action window, with a particular focus on transport investments to reduce carbon emissions and possibly to be extended to other EIB eligible green investments. Instituto de Crédito Oficial (ICO) will partner with other financial intermediaries while deploying the EIB loan. The model is considered to be very efficient, as ICO -and hence EIB funds- can leverage on the capillarity of commercial banks to an extent that would be out of reach with their current setup and organisational structure.
EIB's involvement is expected to generate positive effects in terms of provision of medium and long-term financing for SMEs and Mid-Caps in Spain and their investments in green projects. EIB's contribution will help mobilise financial intermediaries by offering a longer maturity and customised terms (flexibility of disbursements, length of availability period for disbursements, length of the grace period). Furthermore, EIB's participation will enhance ICO's current services by providing additional resources under flexible terms, thereby strengthening ICO's role in promoting sustainable economic growth.
The operation falls within the scope of the EIB's Environmental and Social Standards - "Standard 11 Intermediated Finance". The Borrower / Financial Intermediary has adequate capacity, systems and processes in place for identifying, assessing, managing and monitoring environmental, climate and social (ECS) risks related to the potential sub-projects benefitting from EIB support. The Final beneficiaries will be required to comply with applicable national and EU legislation in respect of environmental and social matters, as appropriate.
Final beneficiaries will be requested to comply with applicable national and EU legislation, as appropriate.