Source: European Investment Bank
The agreement is the first synthetic corporate loan securitisation signed by the EIB Group and BBVA and also the first one supported by blockchain technology
The European Investment Bank Group, formed by the European Investment Bank (EIB) and European Investment Fund (EIF), have granted BBVA a EUR 60 million synthetic guarantee that will be used , to provide up to EUR 360 million to finance new investment projects of small Spanish SMEs and Midcaps. This is the third mezzanine guarantee operation and the first synthetic corporate loan securitisation in which the EIB, EIF, and BBVA are jointly participating in Spain.
The agreement has been made possible thanks to the support of the European Fund for Strategic Investments (EFSI). EFSI is the central pillar of the Investment Plan for Europe, known as the “Juncker Plan”. Its support increases the EIB Group’s capacity to finance investment projects that, in line with the Plan’s criteria, involve activities that by their structure or nature have a higher risk profile but which foster firms’ competitiveness and create jobs.
The agreement is an innovative financing operation, as it is the first corporate loan securitization to be supported by the blockchain technology in the European Union. Blockchain offers a better client experience by automating the negotiation process and minimizing operational risks, thanks to the inherent characteristics of this technology. The DLT platform developed by BBVA was used by the three parties to negotiate this agreement, from the origination to the agreement signing, and also ensuring traceability and immutability, making that way the documentation process safer and more transparent. All the negotiation was recorded on the private blockchain Hyperledger, while a hash or unique identifier of the signed agreement were recorded on the public blockchain Ethereum (testnet).
About this project, EIB Vice President Emma Navarro stated: “We are delighted to support the EIB Group’s third mezzanine guarantee operation in Spain. Thanks to our partnership with BBVA, Spanish SMEs will be able to benefit from the advantages of our financing. This agreement combines EIF and EIB resources under the Juncker Plan to increase BBVA’s support for Spanish businesses, fostering job creation and economic growth”.
European Commission Vice-President Jyrki Katainen, responsible for Jobs, Growth, Investment and Competitiveness, said: “The European Fund for Strategic Investments was designed to help facilitate access to finance for small and medium-sized enterprises so that they can take their next steps. I welcome today’s agreement which will allow Spanish businesses to access some €360 million in financing to invest in their future growth. They will join over 850,000 other small and medium-sized businesses who are already expected to benefit from the Investment Plan across Europe.”
EIF’s Chief Executive, Pier Luigi Gilibert said: “SME synthetic securitisation agreements are deployed by a number of European banks to provide regulatory capital relief. EIF is pleased to be working with BBVA and the EIB to allow BBVA to provide additional access to finance for Spanish SMEs. Joint EIB and EIF support via EFSI funds offer a competitive solution for BBVA which will serve to boost the supply of finance in the real economy.”
The CEO of BBVA, Carlos Torres, added: “BBVA is committed to boosting the growth, competitiveness and digitization of the Spanish SMEs. In addition, we are proud of the DLT platform developed in-house by BBVA, which was used to negotiate this agreement.”
Over the last few years, the EIB and BBVA have signed a number of other operations targeting SMEs. In November 2017, they provided EUR 300 million to finance innovation and the digitalisation of small Spanish businesses; in June 2016, they launched a EUR 600 million credit line; and in 2015, they approved a EUR 1 billion credit line to foster economic recovery and job creation in SMEs.
The first mezzanine guarantee signed in June 2017 with BBVA has so far enabled approx. EUR 1 billion worth of finance for firms in various sectors, such as wholesale, transport and tourism. The agreement signed today aims to foster support for small and medium-sized firms in all sectors of the Spanish economy, providing them with loans with favourable conditions of interest rates and longer repayment periods.