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JEREMIE:

Joint European Resources for Micro to Medium Enterprises

“Train the trainers”European Commission seminar for managing

and certifying authorities Brussels, 9 June 2009

Georges Kolivas - DG REGIO, Financial Engineering

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Contents of the presentation

• Introduction – SMEs access to finance and new business creation in the EU

• JEREMIE: objectives and phases• Legal framework of JEREMIE• JEREMIE evaluations and JEREMIE in

operation• JEREMIE networking platform

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JEREMIE

Introduction SMEs access to finance and

new business creation in the EU

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SME ACCESS TO FINANCE IN THE EU

SOURCE: EUROSTAT - FLASH EUROBAROMETER 174

• SMEs basically use banks for their financing (8 SMEs out of 10)

• Venture capital is envisaged only by about 14% of SMEs

• 50% of SMEs seem to make use of leasing, renting, overdrafts

• 70% of SMEs surveyed think that banks do not want to take any risk

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Key factors for new business successSource: EUROSTAT survey, 29/2006• Experience of a new entrepreneur in the branch helps, but is not essential

• “Administrative problems” and “relations with customers” are considered to be the main start up problems

• Age and education of the entrepreneur play a key role in launching new business

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Observatory of European SMEs (April 2007)

• .

EU SMEs barriers to innovation: EU SMEs barriers to innovation:

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Observatory of European SMEs (April 2007)

Main European SMEs’ business constraints: purchasing power of customers (46%), administrative regulations (36%), lack (35%)

and costs (33%) of human resources, infrastructure problems (23%), limited access to finance(21%) smaller enterprises ~> more likely to have funding difficulties:

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JEREMIE: objectives and phases

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JEREMIE• JEREMIE stands for:

‘Joint European REsources for MIcro to medium Enterprises’

• JEREMIE is a joint initiative of the Commission and the EIF/EIB for the period 2007-2013 of the Structural Funds

• JEREMIE targets market failures to finance SMEs expansion and to support new business creation in the regions of the EU

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JEREMIE PHASES Phase 1 : Preparation • Evaluation studies (mainly in 2007-2008)• Operational programmes of the SFPhase 2: Setting up Systems• Managing authority selects Holding Fund• MA contributes to Holding Fund• HF selects Financial Intermediaries• HF supports /takes participations in

financial intermediaries

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JEREMIE PHASES Phase 3: Implementation• Financial intermediaries support:- SME - micro-credit beneficiaries • Closing OPs in 2015, or earlier for partial

closure• Recycling OP resources invested and

returned, in favor of SMEs

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JEREMIE FLOW CHARTOperational Operational ProgrammeProgramme

SMEsSMEsFINANCIALINTERMEDIARIES

FINANCIALINTERMEDIARIESHOLDING FUNDHOLDING FUND

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JEREMIE Legal framework

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LEGAL FRAMEWORK - 1

• Legislation for the Structural Funds- specific provisions for financial engineering:

1. General Regulation 1083/2006, Art 44, Art 78(6) and 78(7)

2. Commission Regulation 1828/2006 for the implementation of the Structural Funds, Articles 43 to 46

• All other relevant provisions of the regulations for the Structural Funds

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Recovery package Revision of legal framework in

2009

• Revision-simplification of Articles 44 and 56(2) of the General Regulation 1083/2006, adopted in April 2009

• Revision of Article 7 of ERDF Regulation adopted in May 2009 – energy efficiency and renewable energy in the housing sector eligible in all MS

• Revision–simplification of COM Regulation, Articles 43-46, on going

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LEGAL FRAMEWORK - 2

• Guidance Note COCOF I on financial engineering, July 2007

• Guidance Note COCOF II, September 2008

• The two COCOF notes will be reviewed after the completion of the revision of the SF regulations in 2009

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LEGAL FRAMEWORK - 3

•EU legislation on- Public procurement- State Aid

•Applicable national legislation

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• JEREMIE evaluations • JEREMIE in operation

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JEREMIE EVALUATIONS-1

• Evaluation studies about:1. Supply – demand gaps in Member States

or regions for SMEs access to finance2. Proposed action to take to fill the gaps• Studies are co-financed : -85% by the Commission – DG REGIO -15% by the EIF• Studies are carried out by the EIF

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JEREMIE EVALUATIONS

• National evaluation reports: GR, RO, BU, PL,LT, EE, LV, SE, DN, SK, CZ, MT, CY, HU, Pt

• Regional evaluation reports: regions of UK, FR, ES, IT, DE

• Overall 55 national or regional reports were completed by the end of 2008

• Executive summaries published now in INFOREGIO – JEREMIE page

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JEREMIE IN OPERATION-1• 85 OPs foresee JEREMIE type action• EIF: THE KEY ACTOR FOR JEREMIE• GR signed a funding agreement with EIF

in 2007, RO signed early 2008• LV, Lt, Languedoc Roussillon in FR,

Campania in IT, SK, CY, BU have signed so far agreements with the EIF

• Hungary and Wales-UK implement now JEREMIE with national fin. institutions

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JEREMIE IN OPERATION-2

• Andalusia signed in 2009 a funding agreement with the public bank IDEA

• More Regions in Poland, France, UK, Spain, Italy, expected to implement JEREMIE

• More than 20 MS expected to implement or to be inspired by JEREMIE for the period 2007-2013

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JEREMIE IN OPERATION EARLY 2009

EIF as Holding Fund

EIF/National institution(s)

National institution(s)

GreeceRomaniaLatviaLithuaniaLanguedoc-Roussillon (FR)Campania (Italy)Cyprus

SlovakiaBulgaria

HungaryWales (+loan from EIB to the holding fund)Andalusia

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JEREMIE IN OPERATION-3

• Perspectives are excellent• Hard work needed• REGIO - EIF – MS are the key players• EIF expected to assume the holding

fund challenge in about 15 MS • The financial crisis of 2008-09 makes

JEREMIE more useful for SMEs access to finance

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JEREMIE NETWORKING PLATFORM

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JEREMIE NETWORKING PLATFORM - OBJECTIVES

• Exchanging know-how and good practices about JEREMIE

• Increasing the knowledge about financial engineering instruments in the field of SME financing

• Monitoring the implementation of the initiative in Member States and regions

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JNP- Initiator and Members

• Launched by the Commission- DG REGIO

• Participants:1. EIF and other Commission services2. Managing Authorities of Operational

Programmes implementing or to implement JEREMIE,

3. Open to other interested stakeholders

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JNP- SPECIFIC TOPICS• JEREMIE and SMEs: new business creation, types

and demand for specific JEREMIE products, monitoring and adjusting the JEREMIE product mix;

• JEREMIE in operation in the context of the current financial and economic crisis;

• The role, leverage effect and best practices of JEREMIE holding funds;

• The response, efficiency and leverage effect of financial intermediaries implementing JEREMIE;

• JEREMIE and EU legislation, in particular state aid and public procurement.

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JEREMIEPERSPECTIVES

Very good perspectives for the benefit of SMEs

Good luck JEREMIE

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Thank you for your attention

• For further Information

Website:http://jeremie.europa.eu

Email:REGIO-JEREMIE@ec.europa.eu

DG REGIO – Unit D3 –Financial Engineering