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Structure of Presentation

Convent of Marshals Szczecin, 19-20 June 2008 JEREMIE Financial engineering ROP’s Pascal Boijmans Unit Poland Directorate General for Regional Policy European Commission. Structure of Presentation. Introduction: demand for financial engineering Solution: Jeremie Added value of a Holding Fund

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Structure of Presentation

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  1. Convent of MarshalsSzczecin, 19-20 June 2008JEREMIEFinancial engineering ROP’sPascal BoijmansUnit PolandDirectorate General for Regional PolicyEuropean Commission

  2. Structure of Presentation • Introduction: demand for financial engineering • Solution: Jeremie • Added value of a Holding Fund • Added value of role EIF • Jeremie in the EU • Jeremie in Poland • Conclusions/recommendations Structure

  3. LIMITED ACCESS TO FINANCEObservatory of European SMEs (April 2007)

  4. . EU SMEs -BARRIERS TO INNOVATION Observatory of European SMEs (April 2007)

  5. Financial Engineering • Lisbon strategy: role of SMEs for growth and jobs, development of entrepreneurship • Improving access to financing for SMEs and micro enterprises • Traditionally support through grants; increasingly non grant instruments are used: • Loans • Guarantees • Equity • Tech-transfer • Mezzanine forms

  6. Added ValueFinancial engineering • Sustainability: transformation from grants into revolving funds • Leverage: attract and combine with private capital • Know How: new sources of technical, financial, and managerial expertise for economic development • Stronger Incentives: for better performance by beneficiaries due to obligatory repayments • Financial Sector Development: development and modernisation of financial sector in regions

  7. SOLUTION: JEREMIE • JEREMIE stands for:‘Joint European Resources for Micro to Medium Enterprises’ • JEREMIE is a joint initiative of the Commission and the EIF/EIB • Its objective is to address market failures regarding access to finance for SMEs and to support new business creation in the regions of the EU

  8. MAIN FEATURE: HOLDING FUND • Jeremie: 3 levels: • Holding Fund • Financial intermediaries • Final beneficiaries: SME’s • Advantages of Holding Fund: • Risk diversification and better reaction to market conditions • Flexibility: at any moment most appropriate allocation of financial tools according to regional demands • Tailor made financial support to SMEs • Strengthening of existing financial intermediaries (not replacing them)

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

  10. JEREMIE PHASES

  11. JEREMIE PHASE 1 AND 2 Phase 1 : Preparation • Evaluations (2006-2007-2008) • Programming Phase 2: Set-up and implementation • MAs select Holding Fund (EIB/EIF, national institution (Law) or public procurement) • MAs contribute to Holding Fund • HF selects financial intermediaries (public procurement) • HF supports /takes participations in financial intermediaries

  12. JEREMIE PHASE 3 Phase 3: Disbursement • Financial intermediaries support: - SMEs - micro-credit beneficiaries • Closing OPs in 2015, or earlier • Recycling OP resources

  13. ROLE AND ADDED VALUE EIF • Profound knowledge on situation in regions/MS due to evaluations • Institutional basis: established by EIB in 1994 to pursuit Community objectives • International expertise: in SMEs finance, notably guarantees, venture capital and loans • Market terms: encourage participation of both public and private financial institutions • Know how transfer: product expertise in different regions/MS • Local offices: information, marketing, contacts

  14. Jeremie in EU

  15. JEREMIE in EU • About 20 MS envisage implementing JEREMIE or JEREMIE type actions • Some 85 OPs includean option to have JEREMIE or a JEREMIE type action • Greece (June 2007) and Romania (early 2008) first to sign a holding fund agreement with EIF • Other MS (Bulgaria, Slovakia, Latvia, Lithuania) expected to sign funding agreements with EIF soon • Hungary and Wales implement JEREMIE through national financial institutions

  16. JEREMIE IN POLAND Based on the results of national study for Poland JEREMIE recommended to concentrate public support to SMEs in a form of holding fund with the total allocation up to EUR 1,160m. The potential split between support mechanisms, identified in this study, should be as follows:

  17. JEREMIE POLAND: THREE LEVELS • Regional OP’s (100% ERDF), planned: • Wielkopolskie 60 million € • Pomorskie 42 million € • Zachodniopomorskie 30 million € • Lodzkie 25 million € • Dolnoslaskie 38 million € (indicative) • OP Eastern Poland • Warminsko-Mazurskie, Podlaskie, Lubelskie, Swietokrzyskie, Podkarpackie • Evaluation study, then decision on allocation

  18. JEREMIE IN POLAND: THREE LEVELS • National level: OP Innovative Economy • National Capital Fund (KFK) • Possible support by advisor, selected by public tender • More focus on venture and capital funds • ERDF contribution: 153 million €

  19. RECOMMENDATIONS/CONCLUSIONS • Congratulationsto frontrunners Wielkopolskie and Pomorskie • Take advantage of important preparatory work done by « group of 5 regions » • Funding agreement • Management costs • Legislative and organisational framework • Support national level is needed • MoF: allow national co-financing for JEREMIE • Clarification on national legislative and organisational framework (outcome expert study)

  20. Recommendations/conclusions • Rules on financial engineering apply to all regions (with or without JEREMIE) • Respect public procurement (also « key projects ») • Respect state aid rules • Make use of experience in other MS: • workshops, seminars • Timing is crucial: • reflect but do not forget to capitalise regional funds allocated to your regions!

  21. DZIEKUJE PANSTWU BARDZO ZA UWAGE Inforegio website: http://europa.eu.int/comm/regional_policy

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