The European Investment Bank (EIB) group announced on Tuesday 17 March €40 billion to tackle the crisis caused by the COVID-19 outbreak and called on Member States to provide an additional guarantee to support SMEs and mid-cap companies.
These funds will be used to ease liquidity and working capital constraints for SMEs and mid-sized companies, the Bank said in its press release.
More specifically, these are guarantee systems dedicated to banks for “immediate” deployment that can mobilise up to €20 billion of financing. In addition, dedicated liquidity lines to banks are being provided to ensure an additional €10 billion in working capital support for SMEs and medium-sized enterprises. Finally, asset-backed securities purchasing programmes have been announced to enable banks to transfer risk from SME loan portfolios, thereby mobilising an additional €10 billion.
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 press release states.
In addition, EIB President Werner Hoyer called on the Member States to introduce a “significant and flexible” additional guarantee for the EIB and national promotional banks to ensure access to finance for SMEs and mid-cap companies. This guarantee would offer a pan-European solution of a credible size that could be used immediately, according to the banking institution. “This would help reassure markets and citizens at this time of unprecedented uncertainty”, said President Hoyer.
Mobilising the EIB is part of a broad strategy announced on Monday 16 March by the European Commission to address the health and economic consequences of coronavirus (see EUROPE 12447/1). (Original version in French by Pascal Hansens)