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JEREMIE, by George Kolivas REGIO-B.4 – Financial Engineering

JEREMIE, by George Kolivas REGIO-B.4 – Financial Engineering. JEREMIE stands for : ‘Joint European REsources for MIcro to medium Enterprises’ ‘ Joint resources’: JEREMIE combines resources from OPs( ERDF or SF) + EIB+ other IFIs, banks & financial intermediaries, investors

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JEREMIE, by George Kolivas REGIO-B.4 – Financial Engineering

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  1. JEREMIE, by George KolivasREGIO-B.4 – Financial Engineering • JEREMIE stands for : ‘Joint European REsources for MIcro to medium Enterprises’ • ‘ Joint resources’: JEREMIE combines resources from OPs( ERDF or SF) + EIB+ other IFIs, banks & financial intermediaries, investors • Not an organisation but a series of coherent actions

  2. Why JEREMIE? • Enhanced Access to finance for SMEs in the regions is needed • Renewed Lisbon Strategy and CSG stress the need to enhance: -market driven - sustainable - financial products and instruments for SMEs

  3. Main Actors of JEREMIE -1 • Commission: DG REGIO • EIF + EIB (EIB as loan capital provider) • Other IFIs, like the EBRD for 8 new MS, the Council of Europe Dev. Bank (CEB) • Other specialized financial intermediaries, I.E. KfW (DE), Caisse des dépots (FR),etc • Banks, investors

  4. Main Actors of JEREMIE -2 • MS, Regions and managing authorities • National and regional banks and financial intermediaries, investors • SMEs, including - Micro credit (up to 25.000 EUR) beneficiaries

  5. JEREMIE PHASES -1 Phase 1 : Preparation • Evaluations (2006-2007) • Programming Phase 2: Systems • MA selects Holding Fund • MA contributes to Holding Fund • HF selects Financial Intermediaries • HF contributes to fin. intermediaries

  6. JEREMIE PHASES Phase 3: Implementation • Financing: - SMEs - micro-credit beneficiaries • Closing OPs • Recycling OP resources

  7. Phase 1: Evaluation Evaluation consists in: • gap analysis of potential supply and demand for financial products for SMEs in the regions • identifying and recommending appropriate market driven instruments to fill the gap -proposed action plan

  8. Evaluation - 1 • Is carried out by the EIF in close cooperation with the regions, in 2006 and 2007 • EIF is assisted by Commission -DG REGIO services: • DG REGIO: B1+ Operational Desks + Evaluation Unit

  9. Evaluation - 2 Evaluations, including Interim reports produced in 2006, will be freely available to: • MS, Regions-managing authorities –Interested holding funds and financial intermediaries • Associations of SMEs, Chambers of commerce, etc

  10. Who Finances the Evaluation? • ERDF- Commission technical assistance credits will cover 75% of the cost • EIF will cover 25% of the cost • Total Budget for 2006: 3.5 million €

  11. Phase 1: Programming • interim evaluations reports available in 2006 • Competent national authorities use conclusions and proposed action plan of evaluations ( interim reports) when they elaborate programmes • DG REGIO negotiates programmes based on evaluations – interim reports

  12. SYSTEMS: Selecting Holding Fund-option 1 • Member States or managing authorities wishing so, can award directly the holding fund tasks to the EIF • A funding agreement must be negotiated and signed in this respect between MA and EIF

  13. SYSTEMS: Selecting Holding Fund-option 2 • Tendering by MS or MA for the selection of holding fund • MS or MA sign a funding agreement with holding fund • EIF willing to respond to tenders, alone or with IFIs/local financial institutions

  14. SYSTEMS: OP contributes to Holding Fund • OP contributes to the H F for ALL types of financial products • Such contributions are eligible for interim ERDF payments ( art 78 - new gen. reg) • Such contributions, when reimbursed by the ERDF, are IRREVERSIBLE for the period 2007-2015 • Supplementary contributions from the OP to the HF recommended for the whole period 2007-2015

  15. SYSTEMS: JEREMIE policy mix The MS or MA with the Holding Fund: • define and review the JEREMIE strategy and policy mix : • financial products offerred, • targeted SME etc • monitor implementation ofJEREMIE

  16. SYSTEMS: Selecting Financial Intermediaries • Holding Fund proceeds to Call for expression of interest addressed to financial intermediaries. • Holding Fund evaluates, selects and accredits financial interm. • Accreditation subject to periodic review • Holding Fund provides equity, loans or guarantees to selected fin. intermediaries

  17. SYSTEMS: Types of Finan. Intermediaries -1 • Venture capital funds, including: -Start ups and Seed capital funds -Business angels -Technology and innovation funds

  18. Types of Financial Intermediaries - 2 • Guarantee funds • Loan and mezzanine funds • Micro credit providers • Fin. intermediaries offering any combination of the above financial products and services

  19. Phase 3: What kind of support for SMEs? • Maximum publicity for JEREMIE products for SMEs to be ensured by: • OP, • Holding Fund • Financial Intermediaries) • Financial interm. evaluate proposals by SMEs and support them with: • Equity and Venture capital • Mezzanine financing • Guarantees • Loans • Advice and assistance

  20. Phase 3: Supporting Micro Credit Operations • Banks reluctant to consider such "social economy" operations • Specialized Micro Credit Providers fill the gap • Credit up to 25.000 EUR to: –micro enterprises – First time entrepreneurs –Young or old entrepreneurs – Women –Minorities, unemployed, etc

  21. Phase 3: Monitoring implementation of JEREMIE • Holding Fund , in close cooperation with OP, monitors JEREMIE implementation by Financial intermediaries and reports to the MA • Following effective demand for each type of financial product, MA channels funds from the OP to the HF • HF following demand and efficient management, supports FI during the whole period 2007-2015

  22. Phase 3:Closure of OPs end 2015 At the closure of OPs at the end of 2015, ERDF grants transferred to Holding Funds must have been used at least once, paid out of FinancialIntermediaries, to: • finance SMEs( equity,VC, loans, guarantees) • finance micro credit beneficiaries, • cover guarantees offered by Guarantee Funds • finance eligible management costs

  23. Recycling JEREMIE resources • Contributions from OPs invested in SMEs under JEREMIE, • when repaid to funds or holding funds, belong to the MS or MA • Such Repaid resources must be invested again in favour of SMEs

  24. JEREMIE FLOW CHART Operational Programme FINANCIAL INTERMEDIARIES HOLDING FUND SMEs

  25. JEREMIE Added Value-1 • ERDF Programmes planned timely on the basis of the gap analysis • Only two selection procedures for • the 9 years period 2007- 15 • Strategy and policy mix based on the gap analysis • on going monitoring • Updating - adjusting policy mix • One professional Holding Fund selected • by the Program to : • promote all financial products, • to accredit and select financial • intermediaries

  26. JEREMIE Added Value-2 • OPTIMUM FLEXIBILITY and SIMPLIFICATION • One professional Holding Fund to • - manage ALL financial products, based on gap analysis and demand • select-accredit and contribute funds to financial intermediaries • monitor implementation by financial intermediaries and report to MA

  27. JEREMIE Added Value-3 • Recycling OP resources contributed to JERREMIE = sustainability. • Leveraging OP resources with private capital contributed by • IFIs and other Banks, • financial intermediaries, • other investors.

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