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EUROLEASE FORUM INCREASING SME ACCESS TO FINANCE

EUROLEASE FORUM INCREASING SME ACCESS TO FINANCE. Enrico Duranti General Manager Iccrea BancaImpresa. Contents. UE firms most pressing problems The falling in lending volumes in the euro area (credit crunch ) The falling of lending volumes in Italy ECB’s SME April 2013 Survey

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EUROLEASE FORUM INCREASING SME ACCESS TO FINANCE

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  1. EUROLEASE FORUMINCREASING SME ACCESS TO FINANCE Enrico Duranti General Manager Iccrea BancaImpresa

  2. Contents • UE firms most pressing problems • The falling in lending volumes in the euro area (credit crunch) • The falling of lending volumes in Italy • ECB’s SME April 2013 Survey • The importance of leasing for SME finance • Financial instruments for RDI and Growth

  3. SMEs MOST PRESSING PROBLEMS

  4. ECB SURVEY

  5. SME Business Climate Index The unbalances between the EU Member States that were firstly identified at the beginning of 2011 are still significant.

  6. 2. The falling in lending volume to firms in the euro area (credit crunch)

  7. CREDIT CRUNCH: some drives • The persistence of restraining conditions On SUPPLY side • effects of macroeconomic cycle on banks balance sheets • borrowers’ credit worthiness • the uncertainty about conditions for banks’ funding • tighter capital ratios for banks (Basel 3) • The persistence of weakness conditions On DEMAND side • Quality and quantity of domestic demand • weak future expectations • fall in infratructure investments • negative outlook of real-estate market • low innovation investment rate • increasing commercial risks and bankruptcies

  8. Euro Area Bankslending to firms Bank lending to firms (annual growth rate)

  9. FACTORS AFFECTING BORROWING DEMAND

  10. FACTORS AFFECTING BANKS ABILITY TO LEND

  11. Euro AreaInterestrates Interest rate on new loans to firms (Only loans up to EUR 1 million to firms, percent per annum)

  12. Euro SMEsSources of externalfinancing (percentage of respondent SMEs having used the different financing sources)

  13. 3. The falling of lending volumes to firms in Italy

  14. ACCESS TO FINANCE ACCORDING TO SIZE OF FIRM in ITALY Banks loans to firms (12-month percentage change) In recent months banks lending has been contracting at a similar pace among all sizes of firm.

  15. Italy vs Euro areaBank lending to firms and households(monthly data; 12-month percentage changes)

  16. ACCESS TO FINANCE IN ITALYACCORDING TO FIRM SIZE Lending refusal rate

  17. Credit Quality in Italy Ratio of new bad debts to outstanding loans (per cent)

  18. Highest Bankruptcies rateover a decade in Italy Total number of business closures breaks the 100k mark in 2012

  19. 4. ECB recent SME Survey (April 2013)

  20. ECB SURVEYSAMPLES BY COUNTRY

  21. ECB SURVEYSAMPLES BY SIZE & INDUSTRY

  22. ECB SURVEYSAMPLES BY OWNERSHIP

  23. ECB’ SURVEY ACCESS TO FINANCE by COUNTRY

  24. ECB SURVEYNEEDS OF FINANCING

  25. ECB SURVEYAVAILABILITY OF FINANCING

  26. 5.The importance of leasing for SME finance

  27. ECB’ SURVEY ACCESS TO FINANCELEASING and FACTORING

  28. LEASING AS FUNDAMENTAL PART OF THE FINANCING TOOL SET FOR SMEs Sources of external financing of Euro area SMEs (percentage of respondents)

  29. LEASING AS FUNDAMENTAL PART OF THE FINANCING TOOL SET FOR SMEs SMEs’ Fixed Asset Investment sources of financing in 2010

  30. Italian leasing penetration on medium-long term financing 2008-2012

  31. 6. Financial instruments for SMEs R&D, Innovation and Growth

  32. INNOVATION UNION SCOREBOARD 2013 Findings for member states

  33. FINANCIAL INSTRUMENTS FOR R&D, INNOVATION AND GROWTH EU Financial Instruments Equity/risk capital:e.g. venture capital to SMEs with high growth potential or risk capital to infrastructure projects Guarantees to financial intermediaries which provide lending to e.g. infrastructure projects, SMEs Other risk-sharing arrangements with financial intermediaries in order to increase the leverage capacity of the EU funds or a combination of the above with other forms of EU financial assistance

  34. Financial Instruments 2007-2013: SMEs & Innovation • SME Guarantees (SMEG) • 2007-2011: approx. EUR 300m of EU budget generated 9.4bn of lending • 155.000 SMEs reached, volumes are increasing fast • Target of 315.000 SMEs is attainable • Equity: High Growth and Innovation (GIF) • 2007-2011: so far, EUR 344m of EU resources generated EUR 1.9bn of total investment volume, amounts growing fast. • 190 SMEs covered so far • Risk-Sharing Finance Facility (RSFF): • EUR 2bn of EU and EIB resources expected to generate over EUR 10bn of lending to RDI projects. By end 2011 approximately EUR 7.5bn of lending already signed and EUR 5bn disbursed to final beneficiaries. Dedicated RSI facility for SMEs. • European Progress Microfinance Facility (EPMF, est. 2010) • by 2020, the EU contribution of EUR 100m is expected to have generated EUR 500m of micro-loans.

  35. EU/EIB Risk-Sharing and mobilisation of RSFF Finance RSFF FINANCE SCHEME Guarantees & Funding FP7 Contribution: up to € 1 billion EIB Contribution: up to € 1 billion up to€ 2 billion forRisk coveragefor potential losses (non-repayment of RSFF loans by borrower/ beneficiary) allows EIB Group to provideup to€ 10 billion of RSFF loans and guarantees for Research, Development & Innovation investments 38

  36. FINANCIAL INSTRUMENTS FOR R&D, INNOVATION AND GROWTH RSFF signed loans for innovative technologies (Energy)

  37. FINANCIAL INSTRUMENTS PROPOSALS FOR 2014-2020 MFF

  38. HORIZON 2020 H2020: Equity Facility for Research & Innovation • Goal: Improve access to Equity/ venture capital for companies investing in R&D and Innovation • Focus: Early-stage capital; expansion/ growth capital provision also possible within limits • Target group: Innovative companies (start-ups, SMEs) • Implementation: intermediaries (funds) • Implementation in conjunction with the "Equity facility for Growth" of COSME (focus: expansion and growth investments) and FIs proposed under the Structural/ Regional funds

  39. PROPOSED BUDGET • Horizon 2020 (Industrial Leadership) “Access to risk finance” • € 3.768 million in current prices (net of administrative costs) for financial facilities supporting all sizes of companies and types of entity • At least 1/3 (ca. € 1.250 million) likely to be absorbed by SMEs and small midcaps • COSME – “Actions to improve SME access to finance” • € 1 436 million in current prices • Equity Facility for Growth: € 690 million • Loan Guarantee Facility: € 746 million 42

  40. H2020: Loan and Guarantee facility • Goal: Improve access to debt finance for private companies and public entities investing in R&D and Innovation • Two parts: • 1. "RSFF II": Loan Guarantee Facility For broad Mid-sized and larger companies, research institutions, PPPs, stand-alone projects, single SMEs • 2. "RSI II": Guarantee facility for SMEs and small midcaps ForSMEs and small mid-caps investing in R&D and Innovation Guarantees for loans of EUR 150,000 or more within loan portfolios • Implementation in conjunction with the "Loan Guarantee facility for SMEs" under COSMEand FIs proposedunder the Structural/Regional funds

  41. RSI FOCUS • Eligible financing: • portfolio of new loans and/or financial leases; • to be originated within a two-yearperiod by the selected intermediary • Eligible debtors: • SMEs (EC definition) and Small Mid-caps (< 500 employees); • Operating in EU-27 and other RSFF eligible countries (Norway, Turkey…); and • Innovative: • invest in producing or developing innovative products, processes and/or services and where there is a risk of technological or industrial failure; or • “innovative” SMEs/Small Mid-caps, i.e. satisfying at least one of a list of pre-defined criteria; • “fast growing enterprises”, measured by employment or by turnover: annual increase > 20%

  42. Risk covered by EIF as guarantor Risk retained by the FIs Financial Intermediary EIF as guarantor Guarantee Loan 2 Loan n Loan 1 Guarantee Fee Beneficiaries S. Mid-cap 1 SME n SME 1 RSI Structure – Guarantee Level • Guarantee Rate: 50% of losses incurred in each loan • Min 20% economic exposure to be retained by FI throughout the loan life

  43. 7. Anything else for leasing?

  44. CAN WE ENLARGE LEASING SOLUTIONS? • Working capital financingneeds(inventoryitems) • Householdings leasing contracts (proxi for covered bonds) • Innovations leasing (patents) • Exports leasing (buyers credit)

  45. CONCLUSIONS • Lack of public and private investmentsacross Europe • Lack of borrowingdemand • Deterioration of domestic business margins • Deterioration of companies credit quality • Increasebanksassetsdeterioration • Increasebanks capital requirements • Need of investmentsintoresearch, innovationinfrastructures • Needs of entrepreneurialspirit

  46. Let’semployour human and capital resources! Thankyou for the attention!

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