- EIB Group securitisation will enable Commerzbank to lend up to €500 million to small and mid-sized businesses in Germany in response to COVID-19
- The operation is backed by an EFSI guarantee under the Investment Plan for Europe
The EIB Group, consisting of the European Investment Bank (EIB) and the European Investment Fund (EIF), has provided a mezzanine tranche guarantee of around €125 million to Commerzbank AG on an existing portfolio of loans to small and medium-sized companies (SMEs and mid-caps).
The guarantee will release regulatory capital for Commerzbank and will enable it to provide new lending of up to €500 million to SMEs and mid-caps in Germany under favourable terms. This is expected to mitigate the impact of the COVID-19 crisis on smaller businesses, self-employed individuals and mid-caps, which are currently experiencing shortages in liquidity.
The transaction benefits from the support of the European Fund for Strategic Investments (EFSI). EFSI is the central pillar of the Investment Plan for Europe, in which EIB Group and the European Commission are strategic partners to strengthen the competitiveness of the European economy. Under the guarantee, the EIB takes on the mezzanine risk under a synthetic securitisation transaction with Commerzbank. The EIF will provide a guarantee to Commerzbank in relation to an existing portfolio of SME and mid-cap loans. A counter-guarantee from the EIB will fully mirror the EIF's obligations under this guarantee.
European Commission Executive Vice-President for an Economy that Works for People, Valdis Dombrovskis, said: “This financing under the Investment Plan for Europe will allow Commerzbank to provide new lending of up to €500 million to SMEs in Germany affected by the coronavirus pandemic. SMEs will play a vital role in our economies and societies and they need extra support at this challenging time. More broadly, we will continue to pay special attention to SMEs to ensure they can continue to thrive.”
Full press release:
Source: European Commission – Press Corner