ANNOUNCEMENT 23 Jul 2018

In July 2018, the European Fund for Strategic Investment (EFSI) approved a loan guarantee to Banco Santander, S.A. to support small and medium-sized enterprises (SMEs) and mid-cap companies in Spain.

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising

SOURCE

The European Investment Bank, Financed Projects, SANTANDER RISK SHARING LOAN FOR SMES AND MIDCAPS: http://www.eib.org/en/projects/loan/loan/20180080
The European Investment Bank, Project summary, Project No. 20180080, SANTANDER RISK SHARING LOAN FOR SMES AND MIDCAPS: http://www.eib.org/en/projects/pipelines/pipeline/20180080
EFSI Operation Scoreboard, 17 July 2018: http://www.eib.org/attachments/scoreboards/86326440.pdf
European Commission (13 January 2015): The Investment Plan for Europe: Questions and Answers: http://europa.eu/rapid/press-release_MEMO-15-3223_en.htm
EIB: European Fund for Strategic Investments - Questions and Answers. Available at: http://www.eib.org/attachments/press/investment_plan_for_europe_qa_en.pdf

Inception date: 23 Jul 2018 | Removal date: open ended
Still in force

Loan guarantee

On 23 July 2018, the European Fund for Strategic Investment (EFSI) approved a loan guarantee to Banco Santander, S.A. to finance Spanish small and medium-sized enterprises (SMEs) and mid-caps. The loan guarantee has a total value of EUR 250 million (approx. USD 292.5 million).

The EIB noted, that: "The operation addresses a suboptimal investment situation for the SME market segment in Spain, after Banks have redirected lending to bigger corporates or are unable to assume risk in already highly concentrated loan portfolios. The operation addresses this gap by sharing risk with Santander, allowing it to expand its lending to SMEs." In this context, 70% of the Banco Santander loan portfolio will be dedicated to SMEs.

According to the EIB, the guarantee operation will  also "improve competitiveness and access to finance at favourable conditions for SMEs and mid-caps in Spain."

A state act in the GTA database is assessed solely in terms of the extent to which its implementation affects foreign commercial interests. On this metric, the investment support granted here is discriminatory.

The EFSI is a joint initiative by the EIB and the European Commission to promote investment in Europe. The EIB has designated EUR 7.5 billion of its capital for lending to European projects with a higher risk profile than usually taken on by the bank. To compensate for the increased lending risk, the European Commission has agreed to fully guarantee all lending under the EFSI up to a budget of EUR 26 billion.

EFSI support does not fall under EU State Aid rules as it is meant as a tool to address "market failures or sub-optimal investment situations". However, the investment support does include favourable conditions in the form of public assumption of risk.

As described in the European Commission's Fact Sheet from 13 January 2015: "The type of risk-financing instruments will be designed so as to take uncertainty out ("first loss protection") of as such viable projects and therefore crowd-in private sector investments. Since the EFSI will take riskier tranches in investment projects, the private sector will be able to join under more favourable conditions." Furthermore, the EIB states that "The new initiative [i.e. the EFSI] will benefit from the EIB’s strong credit standing that enables funding at favourable conditions and across maturities".

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