Germany: SWSG concludes financing contract with the EIB
19 November 2020
The EU bank provides €200 million to SWSG
Funds to go towards sustainable social housing
Total investment volume of €500 million
The European Investment Bank (EIB) is the world’s largest provider of climate finance. As the bank of the European Union, it supports social housing and energy efficiency projects. The deal with SWSG (Stuttgarter Wohnungs- und Städtebaugesellschaft mbH), which is owned by the Stuttgart municipality, is the EIB’s first with a property company in the German federal state of Baden-Württemberg.
The EIB supports projects that enhance the sustainability of urban living. Integrated urban development, urban renewal and sustainable mobility are just some of the areas that the Bank focuses on. In its investments, it never loses sight of the overarching goal of ensuring they support projects that are to the benefit of everyone. The EIB and SWSG have signed a deal with an investment volume of €500 million to co-finance SWSG’s new-build and renovation projects in the rented accommodation segment until 2024.
EIB Vice President Ambroise Fayolle, who has the oversight on climate and environment as well as on the bank´s financing operations in Germany, said, “SWSG is making a major contribution to social housing while emphasising the importance of sustainability at the same time. It therefore meets not one but two of our criteria for lending support.” Samir M. Sidgi, CEO of SWSG, said, “We are delighted that the EIB is supporting SWSG’s work. As a result, we can forge ahead with our mission of providing, on behalf of the city, badly needed, affordable accommodation for the people of Stuttgart.”
With around 18 800 rental units, Stuttgarter Wohnungs- und Städtebaugesellschaft mbH (SWSG) is one of the major municipally-owned, economically sound property companies in Germany. On behalf of the federal state capital Stuttgart, it provides decent, affordable accommodation. Its purpose is to maintain and further enhance Stuttgart’s appeal as a place to live. It employs around 170 staff with a wealth of experience in managing housing stock and new-build projects, renovation and urban development. Neighbourhood development is another area that is taking on key importance for the company.
The EIB Group, consisting of the EIF and the EIF, has provided a guarantee for a mezzanine tranche of a synthetic securitisation transaction of around €130 million to the ´Bank für Tirol and Vorarlberg AG´ (BTV). The transaction was arranged by Erste Bank and is expected to provide capital relief under the EU Capital Requirements Regulation framework. It employs the use of a synthetic excess spread equivalent to the one-year expected loss of the reference portfolio. The capital relief provided by the transaction will enhance BTV’s risk-taking capacity and create additional lending headroom. As a result, BTV will create a new portfolio of eligible loans to SMEs and mid-caps of up to €435 million, mainly in Tirol, Vorarlberg, Vienna and southern Germany. The EIB Group operation is a direct response to the COVID-19 pandemic as the current crisis puts a particular strain on SMEs and mid-caps, which are experiencing shortages in liquidity and funding lines.
Today, the EIB and the Thuringian Development Bank, Thüringer Aufbaubank (TAB), signed a grant agreement funded by the European Investment Advisory Hub. The Advisory Hub supports the development of advisory capacities and the local delivery of advisory services through a dedicated call for proposals for national promotional banks and institutions. The agreement aims to address the needs of Thuringian municipalities for support in the preparation of sustainable and financially viable projects using various sources of funding and financing.