1 JEREMIE: Joint European Resources for Micro to Medium Enterprises “Train the trainers” European Commission seminar for managing and certifying authorities Brussels, 9 June 2009 Georges Kolivas - DG REGIO, Financial Engineering

2 Contents of the presentation Introduction – SMEs access to finance and new business creation in the EU JEREMIE: objectives and phases Legal framework of JEREMIE JEREMIE evaluations and JEREMIE in operation JEREMIE networking platform

3 JEREMIE Introduction SMEs access to finance and new business creation in the EU

4 SME ACCESS TO FINANCE IN THE EU SOURCE: EUROSTAT - FLASH EUROBAROMETER 174 SMEs basically use banks for their financing (8 SMEs out of 10) Venture capital is envisaged only by about 14% of SMEs 50% of SMEs seem to make use of leasing, renting, overdrafts 70% of SMEs surveyed think that banks do not want to take any risk

5 Key factors for new business success Source: EUROSTAT survey, 29/2006 Experience of a new entrepreneur in the branch helps, but is not essential “Administrative problems” and “relations with customers” are considered to be the main start up problems Age and education of the entrepreneur play a key role in launching new business

6 Observatory of European SMEs (April 2007). EU SMEs barriers to innovation:

7 Observatory of European SMEs (April 2007) Main European SMEs’ business constraints: purchasing power of customers (46%), administrative regulations (36%), lack (35%) and costs (33%) of human resources, infrastructure problems (23%), limited access to finance(21%) smaller enterprises ~> more likely to have funding difficulties:

8 JEREMIE: objectives and phases

9 JEREMIE JEREMIE stands for: ‘Joint European REsources for MIcro to medium Enterprises’ JEREMIE is a joint initiative of the Commission and the EIF/EIB for the period of the Structural Funds JEREMIE targets market failures to finance SMEs expansion and to support new business creation in the regions of the EU

10 JEREMIE PHASES Phase 1 : Preparation Evaluation studies (mainly in ) Operational programmes of the SF Phase 2: Setting up Systems Managing authority selects Holding Fund MA contributes to Holding Fund HF selects Financial Intermediaries HF supports /takes participations in financial intermediaries

11 JEREMIE PHASES Phase 3: Implementation Financial intermediaries support: - SME - micro-credit beneficiaries Closing OPs in 2015, or earlier for partial closure Recycling OP resources invested and returned, in favor of SMEs

12 JEREMIE FLOW CHART Operational Programme SMEs FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIARIES HOLDING FUND

13 JEREMIE Legal framework

14 LEGAL FRAMEWORK - 1 Legislation for the Structural Funds- specific provisions for financial engineering:  General Regulation 1083/2006, Art 44, Art 78(6) and 78(7)  Commission Regulation 1828/2006 for the implementation of the Structural Funds, Articles 43 to 46 All other relevant provisions of the regulations for the Structural Funds

15 Recovery package Revision of legal framework in 2009 Revision-simplification of Articles 44 and 56(2) of the General Regulation 1083/2006, adopted in April 2009 Revision of Article 7 of ERDF Regulation adopted in May 2009 – energy efficiency and renewable energy in the housing sector eligible in all MS Revision–simplification of COM Regulation, Articles 43-46, on going

16 LEGAL FRAMEWORK - 2 Guidance Note COCOF I on financial engineering, July 2007 Guidance Note COCOF II, September 2008 The two COCOF notes will be reviewed after the completion of the revision of the SF regulations in 2009

17 LEGAL FRAMEWORK - 3 EU legislation on - Public procurement - State Aid Applicable national legislation

18 JEREMIE evaluations JEREMIE in operation

19 JEREMIE EVALUATIONS-1 Evaluation studies about:  Supply – demand gaps in Member States or regions for SMEs access to finance  Proposed action to take to fill the gaps Studies are co-financed : -85% by the Commission – DG REGIO -15% by the EIF Studies are carried out by the EIF

20 JEREMIE EVALUATIONS National evaluation reports: GR, RO, BU, PL,LT, EE, LV, SE, DN, SK, CZ, MT, CY, HU, Pt Regional evaluation reports: regions of UK, FR, ES, IT, DE Overall 55 national or regional reports were completed by the end of 2008 Executive summaries published now in INFOREGIO – JEREMIE page

21 JEREMIE IN OPERATION-1 85 OPs foresee JEREMIE type action EIF: THE KEY ACTOR FOR JEREMIE GR signed a funding agreement with EIF in 2007, RO signed early 2008 LV, Lt, Languedoc Roussillon in FR, Campania in IT, SK, CY, BU have signed so far agreements with the EIF Hungary and Wales-UK implement now JEREMIE with national fin. institutions

22 JEREMIE IN OPERATION-2 Andalusia signed in 2009 a funding agreement with the public bank IDEA More Regions in Poland, France, UK, Spain, Italy, expected to implement JEREMIE More than 20 MS expected to implement or to be inspired by JEREMIE for the period

23 JEREMIE IN OPERATION EARLY 2009 EIF as Holding FundEIF/National institution(s) National institution(s) Greece Romania Latvia Lithuania Languedoc- Roussillon (FR) Campania (Italy) Cyprus Slovakia Bulgaria Hungary Wales (+loan from EIB to the holding fund) Andalusia

24 JEREMIE IN OPERATION-3 Perspectives are excellent Hard work needed REGIO - EIF – MS are the key players EIF expected to assume the holding fund challenge in about 15 MS The financial crisis of makes JEREMIE more useful for SMEs access to finance

25 JEREMIE NETWORKING PLATFORM

26 JEREMIE NETWORKING PLATFORM - OBJECTIVES Exchanging know-how and good practices about JEREMIE Increasing the knowledge about financial engineering instruments in the field of SME financing Monitoring the implementation of the initiative in Member States and regions

27 JNP- Initiator and Members Launched by the Commission- DG REGIO Participants:  EIF and other Commission services  Managing Authorities of Operational Programmes implementing or to implement JEREMIE,  Open to other interested stakeholders

28 JNP- SPECIFIC TOPICS JEREMIE and SMEs: new business creation, types and demand for specific JEREMIE products, monitoring and adjusting the JEREMIE product mix; JEREMIE in operation in the context of the current financial and economic crisis; The role, leverage effect and best practices of JEREMIE holding funds; The response, efficiency and leverage effect of financial intermediaries implementing JEREMIE; JEREMIE and EU legislation, in particular state aid and public procurement.

29 JEREMIE PERSPECTIVES Very good perspectives for the benefit of SMEs Good luck JEREMIE

30 Thank you for your attention For further Information Website: DG REGIO – Unit D3 –Financial Engineering