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Regional Policy Financial Instruments supported by the European Structural and Investment (ESI) Funds in 2014-2020 9 July 2014, Brussels Stefan Appel,

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Presentation on theme: "Regional Policy Financial Instruments supported by the European Structural and Investment (ESI) Funds in 2014-2020 9 July 2014, Brussels Stefan Appel,"— Presentation transcript:

1 Regional Policy Financial Instruments supported by the European Structural and Investment (ESI) Funds in July 2014, Brussels Stefan Appel, DG Regional and Urban Policy European Commission

2 Regional Policy 2

3 3 Financial Instruments  Commission encourages more extensive use of FIs  Advantages: Efficiency gains due to revolving funds (remain in the programme area) Leverage of resources, increase of impact of ESI funds Financing provided before investment takes place (different from grants) Better quality of projects (investment must be repaid) Incentives to use FIs as alternative to grants (move away from "grant dependency" culture)

4 Regional Policy Financial Instruments in MMF proposals Infrastructure Horizon 2020 Equity and Risk Sharing Instruments Horizon 2020 Equity and Risk Sharing Instruments Instruments under Structural and Cohesion Funds  Contribution to EU level (central management)  National/regional instruments (shared management)  Off-the shelf FIs  Tailor made FIs Significant higher amounts than currently! Instruments under Structural and Cohesion Funds  Contribution to EU level (central management)  National/regional instruments (shared management)  Off-the shelf FIs  Tailor made FIs Significant higher amounts than currently! Competitiveness & SME (COSME) Equity & guarantees Competitiveness & SME (COSME) Equity & guarantees Connecting Europe Facility (CEF) Risk sharing (e.g. project bonds) and equity instruments Connecting Europe Facility (CEF) Risk sharing (e.g. project bonds) and equity instruments Social Change & Innovation Social Change & Innovation Creative Europe Guarantee Facility Creative Europe Guarantee Facility Erasmus for all Guarantee Facility Erasmus for all Guarantee Facility Shared Management with MS (Common Provisions Regulation) Centrally managed by COM (Financial Regulation) Research, Development Innovation Growth, Jobs and Social Cohesion

5 Regional Policy Financial instruments : legislation and guidance Common Provisions Regulation: Title IV, Articles 37 – 46 Delegated Act: Section II, Articles 4-14 (published on the 13/05/2014!) Implementing Act: Off the shelf instruments, funding agreement SME initiative Financial Instruments in ESIF programmes : A short reference guide for Managing Authorities 5

6 Regional Policy Financial instruments : Common Provisions Regulation (1303/2013) 1.Wider scope 2. Ex-ante assessment 3. More implementation options for managing authorities  Traditional implementation: : Tailor made instruments (cf ) Standardised “off-the-shelf” instruments  MA can contribute OP allocations to EU level instrument (COSME, Horizon, "SME Initiative")  MA can implement loans or guarantees directly (or through intermediate body) without formal set-up of a fund 4. Opportunity offered to contribute to the SME Initiative (Art39CPR ); 6

7 Regional Policy 5. Better combination of FIs & other forms of support 6. EU co-financing Incentives regarding EU co-financing rates Flexibility for national public & private co-financing contributions under operational programmes 7. Phased contributions to FIs 8. Eligible expenditure at closure 9. Interest and other gains, re-use of resources 10. Reporting on FI implementation 7 Financial instruments : Common Provisions Regulation (1303/2013)

8 Regional Policy 8 1.Loan for SME's based on a portfolio risk sharing loan model (Risk Sharing Loan). 2.Guarantee for SMEs (partial first loss portfolio, capped guarantee). + Equity fund for SMEs and start-up companies (in the future ). Two for SMEs One for energy efficiency/renewable energies and one for urban development 3.Renovation Loan based on a Risk sharing loan model (RS Loan). + Urban Development Fund ( in the future ). Financial instruments : "Off-the-shelf"

9 Regional Policy 2.Guarantee for SMEs (partial first loss portfolio) (Capped guarantee)

10 Regional Policy 2. Capped Portfolio Guarantee:  Aim of the instrument: Providing credit risk coverage up to a certain limit allowing the financial intermediary to facilitate SMEs access to finance at better/preferential conditions;  Guarantee rate: up to 80% on a loan by loan basis (credit risk retains by the financial institution in no case less than 20%);  Target: Eligible SMEs, are excluded: SME in difficulty, de- minimis exclusions, delinquent/default, etc.  Loan maturity: between 1y and 10y (including grace period);  Guaranteed loan amount: up to EUR 1.5m;  Cap rate (up to 25%) to be further determined in the ex ante risk assessment (Article 8 DA);  Multiplier: min.5x;

11 Regional Policy 2. Capped Portfolio Guarantee:  State aid:  state-aid free at the level of the financial intermediary (full pass on of the financial advantage) and  Compliant with de-minimis rule at the level of SMEs  Duration: typically 4 years after the signature of the funding agreement between the managing authorities and the financial intermediary;  Purpose of the loan guaranteed: financing tangible & intangible investments as well as the working capital link to the investment financed;  Advantage for the SMEs: access to finance at preferential conditions (interest rate and collateral reductions).

12 Regional Policy Financial instruments : key steps  Common Provisions Regulation and ESI Funds specific Regulations adopted, published on 20 December 2013;  Delegated Act published on 13 May 2014 and Implementing Act "on-going"  Development of "off-the-shelf" instruments on-going (to be laid down in Implementing Act) » expected adoption mid 2014;  TA platform for financial instruments in cohesion policy under development.  Negociation of the Partnership Agreements and Operational Programmes with Member States/ Managing Authorities (2014) 12

13 Regional Policy Further publications on ESIF FIs Factsheet: Financial Instruments in Cohesion Policy financial_instruments_en.pdf financial_instruments_en.pdf Panorama Autumn 2012: Using financial instruments to leverage support for regional policy /mag43_en.pdf /mag43_en.pdf Financial Instruments: A Stock-taking Exercise in Preparation for the Programming Period final.pdf final.pdf 13

14 Regional Policy Main points  The Regulation provides greater flexibility for Member States and managing authorities  Help Member States and regions achieve the strategic investment levels needed to implement the Europe 2020 Strategy  Access to finance can be significantly improved for the benefit of a wide range of socio-economic actors on the ground 14

15 Regional Policy Thank you for your attention! 15


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