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Guarantee systems in European Union countries – searching for the best model Warsaw, 09 February 2011 Speaker – Ceretto Massimo.

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Presentation on theme: "Guarantee systems in European Union countries – searching for the best model Warsaw, 09 February 2011 Speaker – Ceretto Massimo."— Presentation transcript:

1 Guarantee systems in European Union countries – searching for the best model Warsaw, 09 February 2011 Speaker – Ceretto Massimo

2 2 Agenda I Guarantee institutions in Italy II Our position in the market III Guarantee products Some figures IV W&Ts V

3 3 Institutions Features Credit Guarantee Corporation 107 Supervised by Bank of Italy With total Asset above 75 million Number of entities 41 Credit Guarantee Corporation 106 Not Supervised Total Asset below 75 million Number of entities 753 Guarantee institutions

4 4 Numbers of CGCs by District Source: SME report, Unicredit Bank,2006 Country distribution

5 5 Standardized approach IRB foundation approach IRB advanced approach Tranched cover (both 106 & 107) Its relevant only when the coverage guarantee % is high Depends on the quality of the guaranteed portfolio Ex art.106Rating A-; 1:1 counter-guarantee of public funds Rating A- (or equivalent PD); 1:1 counter- guarantee of public funds Low PD, 1:1 counter- guarantee of public funds Ex art.107Always valid for RWA 20% Confidi rated by the bank; 1:1 counter- guarantee of public fund Basel II compliant guarantees under ex art. 106 and ex art.107 Guarantee & Basel 2

6 6 Framework of guarantee Counter Guarantor SME Application for Loan 1 Credit investigation 2 CGCs Application for guarantee 3 Guarantee contract 5 Counter Guarantee (optional) 6 Bank Credit investigation 4

7 7 Piedmont Region Finance Company Main Banks Member enterprises FINPIEMONTE PARTECIPAZIONI SPA 18,22% SMEs Shareholder base 23,74% 51,20%

8 8 BBB+, Outlook: stable BBB, Outlook: negative Personnel approx 400 Banking agreements 140 Eurofidi at a glance

9 9 Organization Board of Directors Chief Executive Officer Supervisory Board AuditorChief Risk Officer Guarantee Department 28 Branches 5 Regional HQs Executive Committee

10 10 Eurofidi rules 50 ~ 80% depending on the credit rating of the borrower and available counter guarantee. Coverage ratio up to 6,8% upfront fee depending on the credit rating of the enterprise and available counter guarantee Guarantee fee Normal ceiling for a single enterprise : Euro 4,4 million Special ceiling for group enterprises : up to 25% of Total Capital Ceiling

11 11 Management of Defaulted Loan -Eurofidi notified of the enterprises default mainly from creditor institution. -Upon receiving the notification, Eurofidi initiates default handling procedure. Notification of Default Default handling Preservation of Property

12 12 Claims for Payment -When the enterprise defaults, the creditor institution makes claim for payment to Eurofidi. -After evaluating the claim, when there are no causes for exemption, Eurofidi makes payment under guarantee. Claims for Payment Evaluation Payment under Guarantee

13 13 Recovery from Payment -Eurofidi is subrogated to creditors claim and gains the right recover to its payment. -Only when there is no way to recover payment, Eurofidi stops collection. Collection Recovery of Payment Lawsuit Auction Exercise of security right

14 14 Guarantee Market Outstanding guarantee in Italy as of December 2009* 21,545 Billion Eurofidi outstanding guarantee as of December ,247 Billion Eurofidi24,35% *Source: Bank of Italy, Regional Economies-Economic developments in the Italian regions

15 15 The Marketplace

16 16 Short term loans Revolving loans Mid long term loans Leasing Tranched Cover Special loans such as (Flood, Usury…) Working capital Rescheduling agreements Restructuring Products

17 17 Weakness CGF Basel 2 compliance is a temporary counter crisis measure. What will a happen after the CGF deadline? Threats Transfer the guarantee RWA benefit to the SMEs and not only to the banks. W&T

18 18 Contact Eurofidi S.c.p.a. Via Perugia, Torino – Italy Massimo Ceretto, Chief Risk Officer Office:

19 This presentation is made purely for information. We have tried to give relevant information which we believe will help in knowing our experience. The viewers may use their own judgment and are advised to make their own calculations before deciding on any matter based on the information given herein. While every care is taken to verify the accuracy of the information given in this presentation, neither the Eurofidi nor its officials would in any way be liable for any action taken or not taken by the viewers or the users of this presentation or for any claims, losses etc.


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