SBCI SME AND CLIMATE ACTION INVESTMENT PLATFORM

Promoter – Financial Intermediary

STRATEGIC BANKING CORPORATION OF IRELAND

Location

• Ireland

Description

The project consists of a new EIB Group (EIB and EIF, the European Investment Fund) guarantee scheme targeting Irish small and medium sized enterprises (SMEs) and Midcaps, with a focus on Climate Action. The new scheme will be established in cooperation with the Irish government and the national promotional institution SBCI (the Strategic Banking Corporation of Ireland).

Additionality and Impact

The proposed operation supports new lending activities in favour of SMEs and Mid-Caps with a strong focus on Climate Action and Environmental Sustainability of 30% and specifically the greening of Agri businesses and bio-economy sector.. The targeted SME/MidCap portfolio shall consist of fixed rate term loans with tenors up to 10 years and without (real estate) security requirements. The portfolio shall amount to up to EUR 682m in total. 

The financial sector in Ireland is consolidating, since two non-Irish banks decided to withdraw from the country recently. SMEs and VSMEs are the backbone of the Irish economy plus the presence of very large multinational companies mainly in the capital region. The banks' very high security requirements and tenor restrictions limit SMEs and VSMEs access to long term investment loans.

Both deficiencies shall be mitigated by providing a guarantee to only long-term unsecured, i.e. non-mortgage loans. Banks are required to put more emphasise on green loans via the 30% Climate Action & Environmental Sustainability window. Also SMEs are incentivised to reconsider and re-evaluate the greening potential of their investments.

The Irish National Promotional Bank SBCI has recently proven its ability to promote structured guarantee products and the Financial Intermediaries have quickly allocated the previous guarantee scheme, which followed a similar model. SBIC also intends to on-board new intermediaries with the aim to broaden the financial sector in Ireland.

The scheme relies on EIB's risk bearing capacity in close collaboration with the Irish State, its National Promotional Bank SBCI and the EIF's expertise in fronting guarantee operations. Through the sophisticated risk sharing mechanism, financing from the Irish State, SBCI and commercial banks as Financial Intermediaries will be crowded in, to the benefit of the Final Beneficiaries. The advantage of combining these resources will be fully passed on to the Final Beneficiaries. Additional technical assistance will be provided for the implementation of the Climate Action window via the Advisory Hub's Green Checker tool.

Objectives

The new Investment Platform will support climate action investments and enhance access to finance for Irish SMEs and Midcaps, covering up to 80% of the related credit risks faced by commercial lenders in Ireland. The portfolio of loans will be created from 2023 to 2025 and the guaranteed loans will have a tenor of 8-10 years.

Sector(s)

• Credit lines - Credit lines

Proposed EIB finance (Approximate amount)

EUR 275 million

Total cost (Approximate amount)

EUR 955 million

Environmental aspects

Final beneficiaries will be requested to comply with applicable national and EU legislation, as appropriate.

Procurement

In accordance with the Bank's policy to ensure that sub-loans comply with the EU acquis, in particular in the fields of environment and public procurement, the Bank will require such intermediary institution to take all the requisite measures to ensure that the environment and procurement procedures carried out by the final beneficiaries for the sub-projects that the Bank finances will comply with the relevant EU legislation and the applicable national legislation provided that it is in conformity with EU rules.

Status

Signed - 29/12/2022