Investment & Fund Management

In October 2016, the Italian government launched the SME Initiative, aimed at addressing the significant financing challenges faced by small and medium enterprises (SMEs) in southern Italy, particularly in regions like Abruzzo, Basilicata, Calabria, Campania, Molise, Puglia, Sardinia, and Sicily. These SMEs have historically struggled with access to finance, especially in the context of a prolonged credit crunch. The initiative was designed to provide a total of EUR 1.2 billion in new loans at favorable rates, leveraging both national and European resources to stimulate economic growth and competitiveness in these regions.

The SME Initiative operates through an innovative financial instrument based on the securitization of existing loans. Italy allocated EUR 100 million from the European Regional Development Fund (ERDF) and an additional EUR 102.5 million from the government, creating a total of EUR 202.5 million in state contributions. This funding serves as a catalyst, allowing financial intermediaries to securitize existing loan portfolios, thereby freeing up capital for new lending. The European Investment Bank (EIB) and the European Investment Fund (EIF) participate by purchasing asset-backed securities, which enables the release of over EUR 1 billion for new loans to SMEs.

The expected outcome of this initiative is a leverage effect of approximately one to six, meaning that for every EUR 1 of domestic resources, at least EUR 6 of new finance will be injected into the economy. This approach not only aims to alleviate the financing difficulties faced by SMEs but also seeks to enhance their competitiveness and stimulate job creation in the southern Italian regions. The EIF is set to publish a call for expressions of interest to select eligible financial intermediaries, ensuring that the initiative effectively reaches the intended beneficiaries.