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

3. Financial Instruments 2014-2020
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. Financial Instruments in MMF proposals 2014-2020
Centrally managed by COM (Financial Regulation)
Shared Management with MS (Common Provisions Regulation)
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!
Research, Development Innovation
Growth, Jobs and Social Cohesion
Competitiveness & SME (COSME)
Equity & guarantees
Creative Europe
Guarantee Facility
Social Change
& Innovation
Erasmus for all
Guarantee Facility
Infrastructure
Connecting Europe Facility (CEF)
Risk sharing (e.g. project bonds) and equity instruments

5. Financial instruments 2014-2020: legislation and guidance
Common Provisions Regulation: Title IV, Articles 37 – 46
Delegated Act: Section II, Articles (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

6. Financial instruments 2014-2020: Common Provisions Regulation (1303/2013)
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);

7. Financial instruments 2014-2020: Common Provisions Regulation (1303/2013)
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

8. Financial instruments 2014-2020: "Off-the-shelf"
Two for SMEs
Loan for SME's based on a portfolio risk sharing loan model (Risk Sharing Loan).
Guarantee for SMEs (partial first loss portfolio, capped guarantee).
+ Equity fund for SMEs and start-up companies (in the future).
One for energy efficiency/renewable energies and one for urban development
Renovation Loan based on a Risk sharing loan model (RS Loan).
+ Urban Development Fund (in the future).

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

10. 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. 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. Financial instruments 2014-2020: 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)

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

14. 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

15. Thank you for your attention!