The rapid spread of the virus is putting a heavy strain on both public health and the economy. With this in mind, the European Investment Bank Group (EIBG) has proposed measures to be taken in cooperation with the European Commission and national partners in support of European companies, health expenditure, and the EU economy as a whole.
“Covid-19 is exacting a tragic toll in human suffering across Europe and the world. The Bank, and I personally, are close to the people hit by the contagion. The pandemic is also having a devastating economic impact which is already showing,” said EIB President Werner Hoyer.”We need a strong European response and we need it now. Europe needs another ‘whatever it takes’ moment. The EU bank will help in this crisis as it did in every past moment of hardship in Europe, be it due to economic downturns or natural catastrophes. We will immediately focus on assisting small and medium companies and mid-caps. They badly need help, and they need it quickly. In partnership with the Member States, the European Commission and other financial partners, including most notably national promotional banks, we want to develop a substantial financial package that can be rolled out straight away, without recourse to new legislation.”
The EIB Group has proposed a plan to mobilize up to EUR 40 billion of financing. This will go towards bridging loans credit holidays and other measures designed to alleviate liquidity and working capital constraints for SMEs and mid-caps. The EIB Group, including the European Investment Fund (EIF) which specialises in support for SMEs, will work through financial intermediaries in the Member States and in partnership with national promotional banks.
The proposed financing package consists of:
- Dedicated guarantee schemes to banks based on existing programmes for immediate deployment, mobilising up to EUR 20 billion of financing;
- Dedicated liquidity lines to banks to ensure additional working capital support for SMEs and mid-caps of EUR 10 billion;
- Dedicated asset-backed securities (ABS) purchasing programmes to allow banks to transfer risk on portfolios of SME loans, mobilising another EUR 10 billion of support.
All these actions can be implemented quickly to ease liquidity shortages and will be implemented in partnership with National Promotional Banks wherever feasible. In addition, EIB President Werner Hoyer called for Member States to set up a significant and scalable additional guarantee for the EIB and national promotional Banks to ensure that access to finance for SMEs and midcaps remains open. The guarantee would offer a pan-European solution of credible size and usable immediately.
Read the full article here: https://www.eif.org/what_we_do/news/2020/covid19-eib-group-response.htm