Italy: Post-COVID recovery – EIB and UniCredit launch Italy’s first EGF-backed initiative to mobilise €2.5bn in business investment

(Source: EIB)

  • The EIB will use the Pan-European Guarantee Fund (EGF) to facilitate UniCredit lending to large, medium and small companies
  • Around 100 large corporates and mid-caps and more than 10 000 small and medium-sized enterprises (SMEs) across Italy stand to benefit
  • Long-term loans and working capital financing available
  • Loans at sub-market rates to be disbursed by 31 December 2021

UniCredit and the European Investment Bank (EIB) have signed an agreement to mobilise €2.5bn of investments in large, medium and small Italian businesses, to help them meet the challenge of recovering from the COVID-19 crisis. The deal is the first in Italy to be backed by the Pan-European Guarantee Fund (EGF), one of the EU’s instruments for responding to the pandemic.

The EGF is a guarantee structure supported by 22 EU Member States, organised and managed by the EIB Group in partnership with Europe’s leading financial intermediaries. Its aim is to increase lending to businesses, with credit lines offering advantageous terms and fast availability.

The agreement hinges on a €750m EIB guarantee on a portfolio of new UniCredit loans. Thanks to additional financing and the complementarity mechanism, this will enable companies of all sizes to access €2.5bn of investment by the end of 2021.

Under the agreement, UniCredit will create a €1bn portfolio of new loans over the coming months to both large companies (3000+ employees) and medium-sized firms (250-3 000 employees). The new loans can be used to both finance long-term investments and to fund working capital, helping companies to carry on their core business. The EIB will use the EGF to guarantee up to €750m (75%) of UniCredit’s new loan portfolio. The guarantee will mean that the new loans will have less impact on the bank’s capital ratios, freeing up capital for regulatory purposes. In turn, this will allow UniCredit to make available an additional €750m in loans for SMEs (under 250 employees). The total amount of new loans (across large, small and medium-sized enterprises) will therefore be €1.75bn, which UniCredit will distribute through its branch network across Italy. Thanks to co-financing and a prudent leverage effect, around €2.5bn in investments are expected to be mobilised by the end of the year (including companies’ own funds). More than 10 000 SMEs and around 100 large and medium-sized companies are likely to benefit from the scheme. 

In the EGF’s first six months (October 2020-April 2021), the EIB approved €11.7bn in EGF funding, which is expected to generate €93.9bn in investments across Europe. The UniCredit operation is the first time the EIB guarantee scheme has been used in Italy.

Since 2015, positive and effective collaboration between UniCredit and the EIB has led to the disbursement of over €4bn to businesses in Italy.

Background information

EIB and EGF

The EIB’s remit is to contribute to the achievement of the EU’s policy objectives by providing long-term finance for viable projects. The European Guarantee Fund(EGF) was set up by the EIB Group with contributions from EU Member States to shield companies suffering from the COVID-19 crisis. Using nearly €25bn in guarantees, the EGF enables the EIB and the EIF to quickly make loans, guarantees, asset-backed securities, equity and other financial instruments available to mostly small and medium-sized enterprises. The EGF is part of the European Union’s recovery package aiming to provide a total of €540bn to boost those parts of the EU economy that have been hit the worst. Its goal is to ensure that SMEs with sustainable business plans can get the liquidity to overcome COVID-19 related adversities, and that healthy businesses can get the support they need, in order to grow.

UniCredit

UniCredit is a simple successful pan-European commercial bank, with a fully plugged-in Corporate and Investment Banking (CIB) arm, delivering a unique Western, Central and Eastern European network to its extensive client franchise. UniCredit offers both local and international expertise to its clients, providing them with unparalleled access to leading banks in its 13 core markets through its European banking network: Italy, Germany, Austria, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Hungary, Romania, Russia, Serbia, Slovakia and Slovenia. Leveraging on an international network of representative offices and branches, UniCredit serves clients in another 16 countries worldwide.

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