Brussels, 06/07/2004 (Agence Europe) - The European Association of Craft, Small and Medium-Sized Enterprises (UEAPME) calls on the European Commission to use as much flexibility as possible when presenting, after the summer break, a directive that will transpose the recent Basel II agreement into EU law.
The agreement concluded between representatives of the most industrialised countries defines recommended requirements to be met by financial institutions regarding capital and risk analysis in order to ensure lending operations are covered. The impact of the agreement on relations between SMEs and banks will "substantially depend on the way the agreement is applied in European law", UEAPME points out.
Firstly, the association states in a press release, "banks will be able to measure the risk of their clients more accurately. Therefore, 'riskier' and less stable companies will be confronted with higher costs for their loans and more difficult access to finance".
Furthermore, "with the introduction of new rating systems and instruments for credit scoring, SMEs are likely to often face opaque internal rating procedures which will add to the feeling of uncertainty of many SMEs". It is therefore essential for banks to inform SMEs on how the rating is carried out and what the results of the rating are, the association says.