EUROLEASE FORUM

INCREASING SME ACCESS TO FINANCE

Enrico DurantiGeneral ManagerIccrea BancaImpresa

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Contents

1.UE firms most pressing problems2.The falling in lending volumes in the

euro area (credit crunch)3.The falling of lending volumes in Italy4.ECB’s SME April 2013 Survey5.The importance of leasing for SME

finance6.Financial instruments for RDI and

Growth3

SMEs MOST PRESSING PROBLEMS

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ECB SURVEY

6

SME Business Climate Index

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The unbalances between the EU Member States that were firstly identified at the beginning of 2011 are still significant.

2. The falling in lending volume to firms in the euro area (credit crunch)

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CREDIT CRUNCH: some drives

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The persistence of restraining conditions

On SUPPLY side

• effects of macroeconomic cycle on

banks balance sheets• borrowers’ credit worthiness• the uncertainty about conditions for

banks’ funding• tighter capital ratios for banks (Basel

3)

The persistence of weakness conditions

On DEMAND side

• Quality and quantity of domestic demand

• weak future expectations• fall in infratructure investments• negative outlook of real-estate

market• low innovation investment rate• increasing commercial risks and

bankruptcies

Euro Area Banks lending to firms

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Bank lending to firms(annual growth rate)

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FACTORS AFFECTING BORROWING DEMAND

FACTORS AFFECTING BANKS ABILITY TO LEND

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Euro AreaInterest rates

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Interest rate on new loans to firms(Only loans up to EUR 1 million to firms, percent per annum)

Euro SMEsSources of external financing

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(percentage of respondent SMEs having used the different financing sources)

3. The falling of lending volumes to firms in Italy

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ACCESS TO FINANCE ACCORDING TO SIZE OF FIRM in ITALY

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In recent months banks lending has been contracting at a similar pace among all sizes of firm.

Banks loans to firms(12-month percentage change)

Italy vs Euro areaBank lending to

firms and households(monthly data; 12-month percentage changes)

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ACCESS TO FINANCE IN ITALYACCORDING TO FIRM SIZE

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Lending refusal rate

Credit Quality in Italy

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Ratio of new bad debts to outstanding loans (per cent)

Highest Bankruptcies rateover a decade in Italy

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Total number of business closures breaks the 100k mark in 2012

4. ECB recent SME Survey

(April 2013)

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ECB SURVEYSAMPLES BY COUNTRY

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ECB SURVEYSAMPLES BY SIZE & INDUSTRY

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ECB SURVEYSAMPLES BY OWNERSHIP

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ECB’ SURVEY ACCESS TO FINANCE by COUNTRY

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0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

DE IE GR ES FR IT NL PT

Applied and goteverything

Applied and got most ofit

Applied and got a limitedpart of it

Applied but refusedbecause cost too high

Applied but was rejected

DK

ECB SURVEYNEEDS OF FINANCING

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ECB SURVEYAVAILABILITY OF FINANCING

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5.The importance of leasing for SME finance

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ECB’ SURVEY ACCESS TO FINANCELEASING and FACTORING

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0

10

20

30

40

50

60

DE IE GR ES FR IT NL PT

Leasing or hire-purchase or factoringUsed in the past 6 months

LEASING AS FUNDAMENTAL PART OF THE FINANCING TOOL SET FOR SMEs

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Sources of external financing of Euro area SMEs(percentage of respondents)

LEASING AS FUNDAMENTAL PART OF THE FINANCING TOOL SET FOR SMEs

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SMEs’ Fixed Asset Investment sources of financing in 2010

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Italian leasing penetration on medium-long term financing

2008-2012

2008 2009 2010 2011 201279.543 79.061 78.813 72.896 75.358

38.776 26.146 23.635 21.426 14.497

118.319 105.207 102.466 94.322 89.855

32,8 24,9 23,1 22,7 16,1

34,1 25,2 23,5 23,2 16,3penetration % leasing (excluding civil engineering) 

penetration % leasing

Total M/L term funding

Stipulated Leasing **

Medium/long term bank loans to business*

6. Financial instruments for SMEs R&D, Innovation and Growth

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INNOVATION UNION SCOREBOARD 2013

Findings for member states

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FINANCIAL INSTRUMENTS FORR&D, INNOVATION AND GROWTH

EU Financial Instruments

Equity/risk capital: e.g. venture capital to SMEs with high growth potential or risk capital to infrastructure projects

Guarantees to financial intermediaries which provide lending to e.g. infrastructure projects, SMEs

Other risk-sharing arrangements with financial intermediaries in order to increase the leverage capacity of the EU funds

or a combination of the above with other forms of EU financial assistance

Financial Instruments 2007-2013: SMEs & Innovation

SME Guarantees (SMEG) 2007-2011: approx. EUR 300m of EU budget generated 9.4bn of

lending 155.000 SMEs reached, volumes are increasing fast Target of 315.000 SMEs is attainable

Equity: High Growth and Innovation (GIF) 2007-2011: so far, EUR 344m of EU resources generated EUR 1.9bn of

total investment volume, amounts growing fast. 190 SMEs covered so far

Risk-Sharing Finance Facility (RSFF): EUR 2bn of EU and EIB resources expected to generate over EUR 10bn

of lending to RDI projects. By end 2011 approximately EUR 7.5bn of lending already signed and EUR 5bn disbursed to final beneficiaries. Dedicated RSI facility for SMEs.

European Progress Microfinance Facility (EPMF, est. 2010) by 2020, the EU contribution of EUR 100m is expected to have

generated EUR 500m of micro-loans.

allows EIB Group to provide up to € 10 billion of RSFF loans and guarantees

FP7 Contribution: up to € 1 billion

EIB Contribution:up to € 1 billion

up to € 2 billionfor Risk coverage for potential losses

(non-repayment of RSFF loans by borrower/ beneficiary)

for Research, Development & Innovation investments

EU/EIB Risk-Sharing and mobilisation of RSFF Finance

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RSFF FINANCE SCHEME Guarantees & Funding

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FINANCIAL INSTRUMENTS FORR&D, INNOVATION AND GROWTH

RSFF signed loans for innovative technologies (Energy)

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FINANCIAL INSTRUMENTS PROPOSALS FOR 2014-2020 MFF

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Goal: Improve access to Equity/ venture capital for companies investing in R&D and Innovation

Focus: Early-stage capital; expansion/ growth capital provision also possible within limits

Target group: Innovative companies (start-ups, SMEs)

Implementation: intermediaries (funds)

Implementation in conjunction with the "Equity facility for Growth" of COSME (focus: expansion and growth investments) and FIs proposed under the Structural/ Regional funds

H2020: Equity Facility for Research & Innovation

HORIZON 2020

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Horizon 2020 (Industrial Leadership) “Access to risk finance”

o € 3.768 million in current prices (net of administrative costs) for financial facilities supporting all sizes of companies and types of entity

o At least 1/3 (ca. € 1.250 million) likely to be absorbed by SMEs and small midcaps

COSME – “Actions to improve SME access to finance”o € 1 436 million in current prices

o Equity Facility for Growth: € 690 milliono Loan Guarantee Facility: € 746 million

PROPOSED BUDGET

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Goal: Improve access to debt finance for private companies and public entities investing in R&D and Innovation

Two parts:

1. "RSFF II": Loan Guarantee Facility For broad Mid-sized and larger companies, research institutions, PPPs, stand-alone projects, single SMEs

2. "RSI II": Guarantee facility for SMEs and small midcaps For SMEs and small mid-caps investing in R&D and Innovation Guarantees for loans of EUR 150,000 or more within loan portfolios

Implementation in conjunction with the "Loan Guarantee facility for SMEs" under COSME and FIs proposed under the Structural/Regional funds

H2020: Loan and Guarantee facility

RSI FOCUS Eligible financing:

portfolio of new loans and/or financial leases;

to be originated within a two-year period by the selected intermediary

Eligible debtors:

SMEs (EC definition) and Small Mid-caps (< 500 employees);

Operating in EU-27 and other RSFF eligible countries (Norway, Turkey…); and

Innovative: invest in producing or developing innovative

products, processes and/or services and where there is a risk of technological or industrial failure; or

“innovative” SMEs/Small Mid-caps, i.e. satisfying at least one of a list of pre-defined criteria;

“fast growing enterprises”, measured by employment or by turnover: annual increase > 20%

RSI Structure – Guarantee Level

Risk covered by EIF as guarantor

EIFasguarantor

Loan 1 Loan 2 Loan n

Guarantee Fee

Guarantee

Risk retained by the FIs

Financial Intermediary

Beneficiaries

SM

E 1

S. M

id-c

ap 1

SM

E n

Guarantee Rate: 50% of losses incurred in each loan

Min 20% economic exposure to be retained by FI throughout the loan life

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7. Anything else for leasing?

CAN WE ENLARGE LEASING SOLUTIONS?

• Working capital financing needs (inventory items)

• Householdings leasing contracts (proxi for covered bonds)

• Innovations leasing (patents)• Exports leasing (buyers credit)

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CONCLUSIONS

1. Lack of public and private investments across Europe

2. Lack of borrowing demand3. Deterioration of domestic business margins4. Deterioration of companies credit quality5. Increase banks assets deterioration6. Increase banks capital requirements7. Need of investments into research, innovation

infrastructures8. Needs of entrepreneurial spirit

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Let’s employ our human and capital resources!

Thank you for the attention!

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