EIB Group will rapidly mobilise up to EUR 40 billion to fight crisis caused by Covid-19 and calls on Member States to set up a further guarantee for SME and mid-cap support from EIB Group and national promotional banks
The article originally appeared on the EIB website.
- EIB Group offers support to European companies under strain from the coronavirus pandemic and its economic effects
- Potential financing of up to EUR 40 billion can be mobilised at short notice, backed up by guarantees from the European Investment Bank Group and the European Union budget
- Extra funding available for healthcare sector for emergency infrastructure and development of cures and vaccines
- President Hoyer calls for significant, scalable additional guarantee from Member States to ensure access to finance for SMEs and midcaps
The rapid spread of the virus is putting a heavy strain on both public health and the economy. Today 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
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. “This would help reassure markets and citizens at this time of unprecedented uncertainty”, said President Hoyer.