Tranched Cover Piemonte

Details

COUNTRY: Italy
REGION: Piemonte
PERIOD: 2018-2020
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Goals, Recipients, Beneficiaries

The objective is to promote access to credit and the provision of new finance for SMEs through a synthetic securitization, named “Tranched Cover Piemonte”, on some selected portfolios of Bank loans.

Thanks to the securitizazion, that involves a risk coverage through cash collateral, the Banks (Originators) can provide loans to Small and Medium Enterprises with medium-low ratings, without compromising the portfolio rating.
The risk coverage is provided with cash collateral on a “junior tranche” (first losses) by the public entity and on a “mezzanine tranche” by one or more mutual guarantee institutions/funds.

The beneficiary of the Fund is Finpiemonte S.p.A., intermediate body for ERDF in Piemonte.

The final recipients are SMEs: active and registered; that carry out an activity included among those eligible for Reg 1407/13 (“de minimis”); not the subject of protests and/or prejudicial registrations; not “undertaking in difficulty” (art. 2 par. 18 of Reg. EU 651/2014).

Eligible Projects / Expenses

Development projects, even aimed at starting-up a new business, to be started after submitting the application for the loan.
The development project of SMEs can include:

a) investment costs in tangible and intangible assets

  • machinery
  • equipment
  • HW and SW
  • patent and intellectual property

b) capitalization of the company

  • capital contribution of current shareholders
  • capital contribution of new shareholders
  • transfer of shareholder financing to equity

c) working capital, inventory, and liquidity needs

  • stock financing
  • salaries
  • energy costs
  • lease payments and rental fees

Support

Unsecured loan at a fixed or variable rate, lower than the market rate, including the maximum spread that the bank is bound to respect, due to the public guarantee.

Duration and guarantee coverage:

  • min. 36 months and max of 60 months + more possible pre-amortization (for productive and infrastructural investments and company capitalisation);
  • min. 18 months and max 36 months + possible pre-amortization (for needs of working capital, inventories and liquidity).

Line A: loans > €150.000 supported only by public guarantee.
Line B: loans between €10.000 and €100.000 assisted both by public guarantee and by that of the mutual guaranteed institution.
Loans between €100.000 and €150.000 can be supported by the public guarantee or by both guarantees, based on the Bank’s choice.

Procedure

Setting up procedure

The intermediate body has to:
1. select the Originators and the partner mutual guarantee institution, considering:

  • ability to implement the instrument;
  • rates applied to the loans;
  • level of required junior tranche;
  • range of SMEs included in the portfolio (in terms of rating);
  • portfolio diversification (SMEs rating and size);
  • size of the target portfolio.

2. assign the cash collateral sums to the selected originators, proportionally to the size of each portfolio expected portfolios.

The Banks selected by Finpiemonte were (Line A):

  • Intesa Sanpaolo: Target portfolio: 60 €/Mln, Tranche junior 6,9 €/Mln
  • Monte dei Paschi di Siena: Target portfolio: 29 €/Mln, Tranche junior 2 €/Mln
  • Unicredit: Target portfolio: 58 €/Mln, Tranche junior 6 €/Mln

SMEs access procedure

  • SMEs submit the request for loan to the bank
  • the bank proceeds with the evaluation
  • the bank grants the loan and, if eligible to the portfolio, applies the best conditions, including it in the securitization.

Status and Results

2 calls were opened between 2018 and 2020, more than 250 €/Mln of loans were granted to SMEs.
More than 500 SMEs were supported in 3 years.

Remarks

  • The guarantee with cash collateral (securitization) is more appreciated by financial intermediaries because it allows them to improve the rating of the portfolio, unlike the traditional guarantee.
  • The securitization is concretely practicable by intermediaries who have Internal rating – based approach, IRB.

Contacts

ORGANISATION: Finpiemonte SpA
CONTACT PERSON: Gianfranco DI SALVO
EMAIL: Gianfranco.disalvo@finpiemonte.it
PHONE: +39 0115717711

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