1. Regional Policy EUROPEAN COMMISSION 1 Convent of Marshals Szczecin, 19-20 June 2008 JEREMIE Financial engineering ROP’s Pascal Boijmans Unit Poland Directorate General for Regional Policy European Commission Convent of Marshals Szczecin, 19-20 June 2008 JEREMIE Financial engineering ROP’s Pascal Boijmans Unit Poland Directorate General for Regional Policy European Commission

2. Regional Policy EUROPEAN COMMISSION 2 Structure of Presentation Introduction: demand for financial engineering Solution: Jeremie Added value of a Holding Fund Added value of role EIF Jeremie in the EU Jeremie in Poland Conclusions/recommendations Structure

3. Regional Policy EUROPEAN COMMISSION 3 LIMITED ACCESS TO FINANCE Observatory of European SMEs (April 2007)

4. Regional Policy EUROPEAN COMMISSION 4. EU SMEs - BARRIERS TO INNOVATION Observatory of European SMEs (April 2007) EU SMEs - BARRIERS TO INNOVATION Observatory of European SMEs (April 2007)

5. Regional Policy EUROPEAN COMMISSION 5 Financial Engineering Lisbon strategy: role of SMEs for growth and jobs, development of entrepreneurship Improving access to financing for SMEs and micro enterprises Traditionally support through grants; increasingly non grant instruments are used: –Loans –Guarantees –Equity –Tech-transfer –Mezzanine forms

6. Regional Policy EUROPEAN COMMISSION 6 Added Value Financial engineering Sustainability: transformation from grants into revolving funds Leverage: attract and combine with private capital Know How: new sources of technical, financial, and managerial expertise for economic development Stronger Incentives: for better performance by beneficiaries due to obligatory repayments Financial Sector Development: development and modernisation of financial sector in regions

7. Regional Policy EUROPEAN COMMISSION 7 SOLUTION: JEREMIE JEREMIE stands for: ‘Joint European Resources for Micro to Medium Enterprises’ JEREMIE is a joint initiative of the Commission and the EIF/EIB Its objective is to address market failures regarding access to finance for SMEs and to support new business creation in the regions of the EU

8. Regional Policy EUROPEAN COMMISSION 8 MAIN FEATURE: HOLDING FUND Jeremie: 3 levels: –Holding Fund –Financial intermediaries –Final beneficiaries: SME’s Advantages of Holding Fund: –Risk diversification and better reaction to market conditions –Flexibility: at any moment most appropriate allocation of financial tools according to regional demands –Tailor made financial support to SMEs –Strengthening of existing financial intermediaries (not replacing them)

9. Regional Policy EUROPEAN COMMISSION 9 JEREMIE FLOW CHART Operational Programme SMEs FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIARIES HOLDING FUND

10. Regional Policy EUROPEAN COMMISSION 10 JEREMIE PHASES

11. Regional Policy EUROPEAN COMMISSION 11 JEREMIE PHASE 1 AND 2 Phase 1 : Preparation Evaluations (2006-2007-2008) Programming Phase 2: Set-up and implementation MAs select Holding Fund (EIB/EIF, national institution (Law) or public procurement) MAs contribute to Holding Fund HF selects financial intermediaries (public procurement) HF supports /takes participations in financial intermediaries

12. Regional Policy EUROPEAN COMMISSION 12 JEREMIE PHASE 3 Phase 3: Disbursement Financial intermediaries support: - SMEs - micro-credit beneficiaries Closing OPs in 2015, or earlier Recycling OP resources

13. Regional Policy EUROPEAN COMMISSION 13 ROLE AND ADDED VALUE EIF Profound knowledge on situation in regions/MS due to evaluations Institutional basis: established by EIB in 1994 to pursuit Community objectives International expertise: in SMEs finance, notably guarantees, venture capital and loans Market terms: encourage participation of both public and private financial institutions Know how transfer: product expertise in different regions/MS Local offices: information, marketing, contacts

14. Regional Policy EUROPEAN COMMISSION 14 Jeremie in EU

15. Regional Policy EUROPEAN COMMISSION 15 JEREMIE in EU About 20 MS envisage implementing JEREMIE or JEREMIE type actions Some 85 OPs include an option to have JEREMIE or a JEREMIE type action Greece (June 2007) and Romania (early 2008) first to sign a holding fund agreement with EIF Other MS (Bulgaria, Slovakia, Latvia, Lithuania) expected to sign funding agreements with EIF soon Hungary and Wales implement JEREMIE through national financial institutions

16. Regional Policy EUROPEAN COMMISSION 16 JEREMIE IN POLAND Based on the results of national study for Poland JEREMIE recommended to concentrate public support to SMEs in a form of holding fund with the total allocation up to EUR 1,160m. The potential split between support mechanisms, identified in this study, should be as follows: Based on the results of national study for Poland JEREMIE recommended to concentrate public support to SMEs in a form of holding fund with the total allocation up to EUR 1,160m. The potential split between support mechanisms, identified in this study, should be as follows:

17. Regional Policy EUROPEAN COMMISSION 17 JEREMIE POLAND: THREE LEVELS Regional OP’s (100% ERDF), planned: –Wielkopolskie60 million € –Pomorskie42 million € –Zachodniopomorskie30 million € –Lodzkie 25 million € –Dolnoslaskie38 million € (indicative) OP Eastern Poland –Warminsko-Mazurskie, Podlaskie, Lubelskie, Swietokrzyskie, Podkarpackie –Evaluation study, then decision on allocation

18. Regional Policy EUROPEAN COMMISSION 18 JEREMIE IN POLAND: THREE LEVELS National level: OP Innovative Economy –National Capital Fund (KFK) –Possible support by advisor, selected by public tender –More focus on venture and capital funds –ERDF contribution: 153 million €

19. Regional Policy EUROPEAN COMMISSION 19 RECOMMENDATIONS/CONCLUSIONS Congratulations to frontrunners Wielkopolskie and Pomorskie Take advantage of important preparatory work done by « group of 5 regions » –Funding agreement –Management costs –Legislative and organisational framework Support national level is needed –MoF: allow national co-financing for JEREMIE –Clarification on national legislative and organisational framework (outcome expert study)

20. Regional Policy EUROPEAN COMMISSION 20 Recommendations/conclusions Rules on financial engineering apply to all regions (with or without JEREMIE) –Respect public procurement (also « key projects ») –Respect state aid rules Make use of experience in other MS: –workshops, seminars Timing is crucial: –reflect but do not forget to capitalise regional funds allocated to your regions!

21. Regional Policy EUROPEAN COMMISSION 21 DZIEKUJE PANSTWU BARDZO ZA UWAGE Inforegio website: http://europa.eu.int/comm/regional_policy