IMPLEMENTATION LEVEL

NFI

AFFECTED FLOW

Outflow (subsidised)

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
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Inception date: No inception date

Trade finance

On 5 May 2015, the European Commission allowed the French development bank SFIL/CAFFIL to offer refinancing on export credit loans to French exporters.
France had notified the extension of SFIL/CAFFIL's scope to ensure that it the creation of the new business activity is in line with European State Aid Rules. According to the EC press release, the "role of development banks is to grant loans to sectors where there is insufficient availability of such loans from commercial banks because of the high risk or the low profitability involved. Currently, SFIL/CAFFIL's remit is to grant loans to French local authorities and French public hospitals."
In its conclusion, the "Commission found in particular that these services are currently not provided to a sufficient extent by private players" and that there currently is a market failure in the industry.
The SFIL/CAFFIL bank was created after the resolution of the Dexia bank (cf. Related Measures) and has focused until now on refinancing public loans. With the Commission's decision, up to 95% of the export credits issued by private banks may be transferred to SFIL (art. 29 of the letter from the EC to France, 05.05.2015). The private financial institutions will thus serve "as intermediaries for the conclusion of new 'export credit' transactions and the management of loans. They would compete for the provision of these services, which would be renumerated at a market price" (cf. press release).
SFIL will raise its funds through covered bonds instead of obtaining capital from the state. As the development bank is nevertheless owned by the state, it will be able to benefit favourable financing conditions on internatinal capital markets.
 
 

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