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AECM European Mutual Guarantee Association

AECM European Mutual Guarantee Association. Founded in 1992 Open, democratic, independant Association. Partner of the European Commission. Aiming to Represent the interests of the members Consolidate the economic role of M.G.S.

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AECM European Mutual Guarantee Association

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  1. AECM European Mutual Guarantee Association • Founded in 1992 • Open, democratic, independant Association. • Partner of the European Commission. • Aiming to • Represent the interests of the members • Consolidate the economic role of M.G.S. • Promote harmonization of their legal framework • Foment exchange of information in favour of SMEs.

  2. AECM MEMBERS : Some data 31.12.2003 in € 1.000.000 29 active schemes in 15 countries Own Funds : 3.845 SMEs beneficiaries 2 Mln Outstanding commitments 38.210 Leverage Cap / commitments 9x Guarantees granted in 2001 14.970

  3. AECM Definition of European Credit Guarantee Schemes

  4. AECM Common features of European CGO’s (Douette, Pombo) • The European guarantee activity is based on a broad national consensus between authorities, SME lenders and borrowers. • It is exercised by specialised institutions . CGO’s are a part of the financial industry, subject to legal regulation and financial supervision which creates the conditions of their sustainability and trust with lending partners. • Working in a global economy, respecting competition and market rules, CGO’s propose a better access to credit for sustainable projects of viable SMEs in the private sector.

  5. AECM Common features of European CGO’s (Douette, Pombo) • Guarantee schemes are formed of a mix of private and / or public initiatives and tend to involve entrepreneurs directly or indirectly in the shareholding, decision and management (mutuality). • Public support provides equity and protection in order to reach higher leverage and efficiency. • A special feature is the existence of national counter-guarantees and of a platform of supra-national counter-guarantee organised and funded by the EU Commission and managed by the European Investment Fund.

  6. GUARANTEE FUNDS Initiative taken by Public Authorities (State, Region..) Mainly public shareholding Directory Board elected with public prevalence Mission of SME support. Solvency : responsibility with public umbrella. Administration or Ltd Cy Other goals : subsidies.. MUTUAL GUARANTEES Initiative from SMEs and representative organisation Mainly private shareholding Directory Board composed of SMEs, bankers, Mutuality principles Self protected solvency, with public support Coop. Ltd Cy or Ltd Cy. Other missions : no AECM : GUARANTEE SCHEMES : A COMPLEX LANDSCAPE

  7. AECM Roles of credit Guarantee Schemes

  8. AECMCGO’s : a triangular relationship Businesses or Entrepreneurial circles Credit Institutions : banks, leasers C.G.S. Mutual Guar. Soc or Guarantee Fund State -legal environment -support policies

  9. AECMRole of CGO’s : inputs to SME’s * Boosting entrepreneurship (start-ups, take-over) * Support to businesses with “unpredictable” track records (rapid growth, innovation…) * Compensation of a lack of collaterals (insufficient or pledged for previous credit transactions) * Focus in credit assessment on qualitative and personal elements and on field information * Access to longer term credits, to better credit terms * Providing advice and coaching.

  10. AECMRole of CGO’s: inputs to banks * Set-up confident relations with SME sector by familiarizing with business risks, their language * Develop SME loans portfolio to a new pool of smaller businesses * Partial outsourcing of the credit risk to a solid and well managed partner * Reduce their capital requirement on SME loans portfolio and increase their assets leverage.

  11. AECMRole of CGO’s: authorities 1. Prudential environment : legal supervision 2. Modalities of public supports : -Public equity as shareholder or contribution to risk funds as donor or protector of solvency. -Counter-guarantees (loss sharing) -Subsidy of the guarantee premium -Occasional advantages 3. Other missions for CGOs: SME subsidies…

  12. AECM New Challenges for CGOs • Improve risk management : individual (SME monitoring) and portfolio (rating,risk provisions) • Diclosures and corporate governance • Productivity = co-operation with lenders • Risk sharing, upwards and downwards. • Marketing and a possible differentiation of products according to market targets (micro-credits, innovation, equity guarantee)

  13. AECMExternal challenges for CGOs • EIF : a permanent well endowed European tool • Structural Funds : more involvement in G.S. • Basel 2 : reach a financial strength ensuring their recognition as mitigators • European Competition rules : flexible frame allowing a good PPP. • Strong contracts with banks

  14. EUROPEAN MUTUAL GUARANTEE ASSOCIATION • President : H-H. Strombeck, Neuss, Germany. • Secretary General : André Douette 40, Rue Washington, BE 1050 Brussels. info@aecm.bewww.aecm.be THANK YOU FOR THE ATTENTION !

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