10 June 2021
EIF Webinar: European Guarantee Fund - EIB Group COVID-19 response measures
A webinar on the European Guarantee Fund: EIB Group COVID-19 response measures was hosted by the European Investment Fund (EIF) on 3 June 2021, with the slides above being presented during this event.
25 March 2021
EU Commission (DG COMP) Letter Reply Original letter from AECM to DG COMP
The European Commission - DG Competition described the relationship between state aid rules and the European Guarantee Fund in a letter to the European Association of Guarantee Institutions (AECM).
1 September 2020
EIF Presentation: EGF Guarantees
On Tuesday, 1 September 2020, the European Investment Fund (EIF) hosted a WebEx meeting whereby they provided a clear and interesting update of the European Guarantee Fund (EGF), notably covering the guarantee products which the EIF intends to implement.
Funding
EU Member states contribute pro rata to their shareholiding in the EIB and/or other institutions.
Vehicle
An EIB Partnership Platform for Funds, providing guarantees to the EIB and the EIF to reimburse any possible losses.
Intermediaries
Using standard products to share risk with our intermediairies. EIB will also engage in direct lending for some beneficiaries.
Beneficiairies
Mitigating Liquidity risk for SMEs and mid-caps and lending to public health organisations. By sharing risk with our intermediairies €25bn is scaled up to €200bn.
31 August 2020
EGF Call Launched List of Participating MS
Through the European Guarantee Fund (EGF), the EIF will deploy a number of equity, debt funds and guarantee products in cooperation with selected financial intermediaries for the benefit of SMEs and Mid-Caps. This Call for Expression of Interest was launched with the aim of selecting financial intermediaries according to the EIF’s standard processes. The first call was published on Monday, 31 August 2020.
"In the context of the COVID-19 pandemic, the EIB Group (the EIB and the EIF) was asked to enhance its operations significantly in support of EU-based companies affected by the crisis. Hence, the Pan-European Guarantee Fund (EGF) was established in response.
The EGF forms part of the overall package of measures agreed by the Eurogroup on 9 April 2020 and further endorsed by the European Council on 23 April 2020."
28 May 2020
European Guarantee Fund Annex
Objectives
The COVID-19 pandemic constitutes an unprecedented challenge with very severe socio-economic consequences.
The objective of the Fund is to respond to the economic impact of the COVID-19 pandemic outbreak by ensuring that eligible entities and primarily SMEs in the participating Member States have sufficient liquidity available and access to finance to weather the rapidly unfolding crisis, and are able to continue their development in mid/long term.
The Fund is designed to support final recipients that are considered:
- (i) viable in the long term and
- (ii) able to meet a lender’s or other financial intermediaries’ requirements for commercial financing, were it not for the economic impact of the COVID-19 pandemic.
The Fund is designed to be a high-risk, high-impact intervention of limited time.
25 May 2020
Creation of the Pan-European Guarantee Fund in response to COVID-19
Objective
The objective of the Guarantee Fund is to respond to the economic impact of the COVID-19 pandemic outbreak by ensuring that SMEs, midcaps, corporates and other eligible entities in the participating Member States have sufficient
liquidity available to weather the rapidly unfolding crisis.
Background
There is an urgent need for a strong and coordinated response at the EU level to the unprecedented economic challenges brought on by the COVID-19 pandemic, which is affecting all EU Member States. This shock brings multiple challenges at the same time: it is halting production in affected countries, hitting supply chains across the world, and is leading into a steep drop in consumption together with a collapse in confidence levels. The stringent lockdown measures being applied, albeit essential to contain the virus, are pushing the EU economy into an unprecedented sudden stop, from which recovery will not be straightforward or automatic.
The rescue measures and firewalls that were put in place after the global financial and euro crises have been designed to fight crises that originate in the financial or sovereign sector. This time is different. What we face today is a
shock first and foremost to the real economy. This is why the most effective intervention we can have is one that targets the millions of SMEs, midcaps and corporates that are struggling under the fallout of the coronavirus.
The European Investment Bank Group has already presented a Support Action Plan amounting up to EUR 28bn. However, given the gravity of the challenges facing the EU economy this is far from sufficient.
To significantly and rapidly extend the EU’s support for struggling EU SMEs, midcaps and corporates, the EIB Group is proposing to establish a Pan-European Guarantee Fund in response to COVID-19 (“Guarantee Fund”). The EC has been supportive and is proactively reaching out to EIB to find ways of joining forces to maximise impact.
With regard to strengthening EIB activities, the Eurogroup concluded the following on 9 April as part of its Report on the comprehensive economic policy response to the COVID-19 pandemic: “Strengthening EIB activities. We welcome the initiative of the EIB Group to create a pan-European guarantee fund of EUR 25 billion, which could support EUR 200 billion of financing for companies with a focus on SMEs, throughout the EU, including through national promotional banks. We invite the EIB to operationalize its proposal as soon as possible and stand ready to put it in place without delay, while ensuring complementarity with other EU initiatives and the future Invest EU programme. This initiative is an important contribution to preserving the level playing field of the single market in light of the national support schemes.
The Guarantee Fund, was endorsed by the European Council on 23 April as a part of the overall EU Package. Furthermore, in its conclusions, the Council called for the package to be operational by 1 June 2020.
Member States will be invited to participate in the Guarantee Fund with an amount equal to their EIB capital key applied to EUR 25bn. Should the Fund reach a total subscription of EUR 25bn, it is expected to support up to EUR 200bn of additional targeted financing for with a focus on SMEs impacted by the COVID-19 crisis. It should be noted, that the foreseen multiplier will ultimately depend on the deployed product mix, itself a function of market needs, absorption capacity and other operational constraints.