Investment & Fund Management
The European Investment
Full Credential Description
The European Investment Fund (EIF) and the Banca Popolare di Puglia e Basilicata (BPPB) entered into a significant agreement aimed at bolstering small and medium-sized enterprises (SMEs) in Southern Italy. The primary challenge faced by BPPB was the need to provide substantial financing to local SMEs while navigating the complexities of funding sources and risk management. To address this, the EIF implemented a guarantee mechanism that combined resources from the European Investment Bank (EIB), COSME funds, and European Structural and Investment Funds (ESIF), allowing BPPB to extend EUR 120 million in new loans over a 36-month period.
This innovative financial solution utilized a synthetic securitization approach on a portfolio of existing financing, which enabled BPPB to offer competitively priced loans to SMEs. The EIF's backing included EUR 11 million from ESIF funds to cover potential losses, effectively mitigating the risk for BPPB and allowing them to free up resources from regional guarantee consortia (confidi) in Apulia. This strategic move not only enhanced BPPB's capacity to support local businesses but also ensured that the confidi could issue new guarantees, thereby strengthening the overall banking system in the region.
As a result of this collaboration, BPPB was able to reaffirm its commitment to the local economy by providing essential financing to SMEs across various sectors, fostering growth and development in Southern Italy. The EIF's Chief Executive highlighted the operation's goal of delivering tangible support to entrepreneurs in the region, emphasizing the importance of such initiatives in driving economic progress.