EIB Group’s €360 Million ABS Investment to Drive Green Projects and Support Spanish Businesses

EIB Group’s €360 Million ABS Investment to Drive Green Projects and Support Spanish Businesses

(IN BRIEF) The EIB Group, comprised of the European Investment Bank (EIB) and European Investment Fund (EIF), has invested €360 million in a new asset-backed securities (ABS) issuance with Banco Santander. The investment will support working capital and liquidity needs for Spanish small and medium-sized enterprises (SMEs), small mid-caps, and mid-caps. It will also enable Banco Santander to direct up to €990 million into the real economy, including up to €300 million for green projects. Approximately €110 million of the investment will finance environment and climate action projects, promoting energy efficiency and reducing carbon emissions. The operation will benefit regions with lower per capita income, promoting equitable growth and convergence in the EU. This collaboration builds on a previous partnership between the EIB Group and Banco Santander to fund energy efficiency projects in Spain.

(PRESS RELEASE) LUXEMBOURG, 4-Aug-2023 — /EuropaWire/ — The European Investment Bank (EIB), the lending arm of the European Union, announces that the EIB Group (European Investment Bank and European Investment Fund) has recently investment in the senior and mezzanine tranches of a groundbreaking asset-backed securities (ABS) issuance, totaling €360 million, in partnership with Banco Santander. This strategic investment has been made in the Santander Consumo 5 securitisation fund, which aims to support working capital and liquidity needs for Spanish small and medium-sized enterprises (SMEs), small mid-caps, and mid-caps, while also addressing investment constraints.

Through this collaboration, Banco Santander will unlock valuable capital and channel up to €990 million, nearly three times the EIB Group’s investment, into the real economy, with a significant portion, up to €300 million, dedicated to financing green projects.

The EIB’s commitment to this transaction amounts to approximately €330 million, complemented by an additional €30 million from the EIF. This substantial investment is efficiently executed through a single securitisation structure, maximizing its impact.

A major focus of this initiative is to foster economic growth and private sector investment, with approximately €250 million of the notes specifically targeting SMEs and mid-caps. This targeted approach will facilitate access to finance and provide crucial support for these firms’ economic recovery in light of challenges like the pandemic, geopolitical events, inflationary pressures, high energy costs, and rising interest rates.

Moreover, the ABS securitisation transaction is underpinned by a strong green component. An estimated €110 million of the EIB Group’s investment will be directed towards financing environment and climate action projects, with a special emphasis on energy efficiency initiatives. This includes funding the construction of nearly zero-emissions buildings by real estate developers and the installation of solar photovoltaic equipment in residential buildings. As a result, Banco Santander will be empowered to allocate up to €300 million for green projects, further contributing to the fight against climate change.

In addition to its environmental impact, this investment supports national and European targets for energy efficiency and renewable energy, playing a crucial role in reducing carbon emissions. This aligns with the EIB Group’s overarching objective of climate change mitigation and the EU’s REPowerEU plan to enhance energy independence and reduce fossil fuel dependence.

It is projected that over one-third of the final beneficiaries of this agreement will be located in cohesion regions, where per capita income falls below the EU average. This underscores the commitment to promote equitable growth and convergence between EU regions, a core pillar of the EIB’s lending activities.

“We are pleased to join forces with a longstanding partner like Banco Santander to support SMEs and mid-caps as they navigate the challenging current environment, with issues like high energy prices and inflation,” stated EIB Vice-President Ricardo Mourinho Félix. “This agreement is aligned with our climate action and environmental sustainability objectives and accelerates green transformation for both companies and private individuals.”

“This transaction reflects our ongoing commitment to supporting economic growth and access to finance for businesses in Spain. We are determined to mobilise our expertise and proven financial instruments in co-operation with Banco Santander because these investments are expected to bring long-term benefits – for the people and the planet,” said EIF Chief Executive Marjut Falkstedt.

This agreement builds upon a previous successful partnership between the EIB Group and Banco Santander, which financed energy efficiency projects for buildings developed in Spain by homeowner associations, individuals, SMEs, and mid-caps. The prior transaction, a synthetic RMBS securitisation, saw the EIB and EIF providing guarantees of up to €105 million on the upper mezzanine tranche, with Banco Santander originating €141 million in funding for energy efficiency projects.

With this latest investment, the EIB Group and Banco Santander continue to demonstrate their commitment to driving sustainable and inclusive growth while advancing the transition towards a greener and more resilient future.

Background information:

About the EIB Group

The EIB Group — formed by the EIB and the EIF — reported another year of excellent results in Spain, with record support for climate action and environmental sustainability projects and €9.9 billion of total financing signed in 2022.

The European Investment Bank (BEI) is the long-term lending institution of the European Union owned by its Member States. It finances sound investments that contribute towards EU policy goals.

The European Investment Fund (EIF) central mission is to support Europe’s SMEs by helping them to access finance. The EIF designs and develops venture and growth capital, guarantees and microfinance instruments that specifically target this market segment. In this role, it helps achieve key EU policy goals such as competitiveness and growth, innovation and digitalisation, social impact, skills and human capital, climate action and environmental sustainability.

About Banco Santander

Banco Santander (SAN SM, STD US, BNC LN) is a leading commercial bank, founded in 1857 and headquartered in Spain. It has a meaningful presence in 10 core markets in the Europe, North America and South America regions, and is one of the largest banks in the world by market capitalization. Santander aims to be the best open financial services platform providing services to individuals, SMEs, corporates, financial institutions and governments. The bank’s purpose is to help people and businesses prosper in a simple, personal and fair way. Santander is building a more responsible bank and has made a number of commitments to support this objective, including raising €220 billion in green financing between 2019 and 2030. In the first half of 2023, Banco Santander had €1.25 trillion in total funds, 164 million customers, 9,000 branches and 212,000 employees.

Media contacts:

press@eib.org
+352 4379 – 21000

Maite Cordero
m.corderomunoz@eib.org
+34 606 66 82 62

SOURCE: European Investment Bank