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Convent of MarshalsConvent of MarshalsSzczecin, 19-20 June 2008Szczecin, 19-20 June 2008

JEREMIEJEREMIEFinancial engineering ROP’sFinancial engineering ROP’s

Pascal BoijmansPascal Boijmans

Unit PolandUnit Poland

Directorate General for Regional PolicyDirectorate General for Regional PolicyEuropean CommissionEuropean Commission

Convent of MarshalsConvent of MarshalsSzczecin, 19-20 June 2008Szczecin, 19-20 June 2008

JEREMIEJEREMIEFinancial engineering ROP’sFinancial engineering ROP’s

Pascal BoijmansPascal Boijmans

Unit PolandUnit Poland

Directorate General for Regional PolicyDirectorate General for Regional PolicyEuropean CommissionEuropean Commission

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Structure of PresentationStructure of Presentation

• Introduction: demand for financial engineering

• Solution: Jeremie

• Added value of a Holding Fund

• Added value of role EIF

• Jeremie in the EU

• Jeremie in Poland

• Conclusions/recommendations

StructureStructure

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LIMITED ACCESS TO FINANCELIMITED ACCESS TO FINANCEObservatory of European SMEs (April 2007)Observatory of European SMEs (April 2007)

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• .

EU SMEs - BARRIERS TO INNOVATIONObservatory of European SMEs (April 2007)

EU SMEs - BARRIERS TO INNOVATIONObservatory of European SMEs (April 2007)

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Financial EngineeringFinancial Engineering

• Lisbon strategy: role of SMEs for growth and jobs, development of entrepreneurship

• Improving access to financing for SMEs and micro enterprises

• Traditionally support through grants; increasingly non grant instruments are used:– Loans– Guarantees– Equity– Tech-transfer– Mezzanine forms

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Added ValueAdded ValueFinancial engineeringFinancial engineering

• Sustainability: transformation from grants into revolving funds

• Leverage: attract and combine with private capital

• Know How: new sources of technical, financial, and managerial expertise for economic development

• Stronger Incentives: for better performance by beneficiaries due to obligatory repayments

• Financial Sector Development: development and modernisation of financial sector in regions

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SOLUTION: JEREMIESOLUTION: JEREMIE

• JEREMIE stands for:‘Joint European Resources for Micro to Medium Enterprises’

• JEREMIE is a joint initiative of the Commission and the EIF/EIB

• Its objective is to address market failures regarding access to finance for SMEs and to support new business creation in the regions of the EU

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MAIN FEATURE: HOLDING FUNDMAIN FEATURE: HOLDING FUND

• Jeremie: 3 levels:– Holding Fund– Financial intermediaries– Final beneficiaries: SME’s

• Advantages of Holding Fund:– Risk diversification and better reaction to

market conditions– Flexibility: at any moment most appropriate

allocation of financial tools according to regional demands

– Tailor made financial support to SMEs– Strengthening of existing financial

intermediaries (not replacing them)

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JEREMIE FLOW CHARTJEREMIE FLOW CHART

Operational Operational ProgrammeProgramme

SMEsSMEsFINANCIALINTERMEDIARIES

FINANCIALINTERMEDIARIESHOLDING FUNDHOLDING FUND

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JEREMIE PHASESJEREMIE PHASES

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JEREMIE PHASE 1 AND 2JEREMIE PHASE 1 AND 2

Phase 1 : Preparation• Evaluations (2006-2007-2008)• Programming

Phase 2: Set-up and implementation• MAs select Holding Fund (EIB/EIF, national

institution (Law) or public procurement)• MAs contribute to Holding Fund• HF selects financial intermediaries (public

procurement)• HF supports /takes participations in financial intermediaries

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JEREMIE PHASE 3JEREMIE PHASE 3

Phase 3: Disbursement

• Financial intermediaries support:

- SMEs

- micro-credit beneficiaries

• Closing OPs in 2015, or earlier

• Recycling OP resources

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ROLE AND ADDED VALUE EIFROLE AND ADDED VALUE EIF

• Profound knowledge on situation in regions/MS due to evaluations

• Institutional basis: established by EIB in 1994 to pursuit Community objectives

• International expertise: in SMEs finance, notably guarantees, venture capital and loans

• Market terms: encourage participation of both public and private financial institutions

• Know how transfer: product expertise in different regions/MS

• Local offices: information, marketing, contacts

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JeremieJeremie in EU in EU

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JEREMIE in EUJEREMIE in EU

• About 20 MS envisage implementing JEREMIE or JEREMIE type actions

• Some 85 OPs include an option to have JEREMIE or a JEREMIE type action

• Greece (June 2007) and Romania (early 2008) first to sign a holding fund agreement with EIF

• Other MS (Bulgaria, Slovakia, Latvia, Lithuania) expected to sign funding agreements with EIF soon

• Hungary and Wales implement JEREMIE through national financial institutions

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JEREMIE IN POLANDJEREMIE IN POLAND

Based on the results of national study for Poland JEREMIE recommended to concentrate public

support to SMEs in a form of holding fund with the total allocation up to EUR 1,160m.

The potential split between support mechanisms, identified in this study, should be as follows:

Based on the results of national study for Poland JEREMIE recommended to concentrate public

support to SMEs in a form of holding fund with the total allocation up to EUR 1,160m.

The potential split between support mechanisms, identified in this study, should be as follows:

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JEREMIE POLAND: THREE LEVELSJEREMIE POLAND: THREE LEVELS

• Regional OP’s (100% ERDF), planned: – Wielkopolskie 60 million €– Pomorskie 42 million €– Zachodniopomorskie 30 million €– Lodzkie 25 million € – Dolnoslaskie 38 million € (indicative)

• OP Eastern Poland– Warminsko-Mazurskie, Podlaskie, Lubelskie,

Swietokrzyskie, Podkarpackie– Evaluation study, then decision on allocation

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JEREMIE IN POLAND: THREE LEVELSJEREMIE IN POLAND: THREE LEVELS

• National level: OP Innovative Economy– National Capital Fund (KFK)– Possible support by advisor, selected by

public tender– More focus on venture and capital funds– ERDF contribution: 153 million €

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RECOMMENDATIONS/CONCLUSIONSRECOMMENDATIONS/CONCLUSIONS

• Congratulations to frontrunners Wielkopolskie and Pomorskie

• Take advantage of important preparatory work done by « group of 5 regions »– Funding agreement– Management costs– Legislative and organisational framework

• Support national level is needed– MoF: allow national co-financing for

JEREMIE– Clarification on national legislative and

organisational framework (outcome expert study)

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Recommendations/conclusionsRecommendations/conclusions

• Rules on financial engineering apply to all regions (with or without JEREMIE)– Respect public procurement (also « key

projects »)– Respect state aid rules

• Make use of experience in other MS:– workshops, seminars

• Timing is crucial: – reflect but do not forget to capitalise regional

funds allocated to your regions!

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DZIEKUJE PANSTWU DZIEKUJE PANSTWU BARDZO ZA UWAGE BARDZO ZA UWAGE DZIEKUJE PANSTWU DZIEKUJE PANSTWU BARDZO ZA UWAGE BARDZO ZA UWAGE

Inforegio website:

http://europa.eu.int/comm/regional_policy