Spanish SMEs Get Boost with EIB Group and ICO’s Sabadell ABS Investment

Spanish SMEs Get Boost with EIB Group and ICO’s Sabadell ABS Investment

(IN BRIEF) The European Investment Bank (EIB) Group, along with the European Investment Fund (EIF) and Instituto de Crédito Oficial (ICO), has invested in asset-backed securities (ABS) issued by Sabadell Consumer Finance to support the financial needs of small and medium-sized enterprises (SMEs) and mid-sized companies in Spain. A portion of the funding will be allocated to green projects. The EIB is investing €350 million, the EIF is contributing €30 million, and ICO’s involvement totals €95 million. This investment will enable Banco Sabadell Group to inject €936 million into the economy, with a focus on regions facing difficulties in accessing financing. The transaction aims to aid SMEs and mid-caps in overcoming financial constraints amid challenges like the COVID-19 pandemic, the Ukraine conflict, inflation, and interest rate increases. Additionally, a portion of the funds will support green initiatives.

(PRESS RELEASE) LUXEMBOURG, 31-Oct-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) in collaboration with Instituto de Crédito Oficial (ICO), have made significant investments in senior and mezzanine tranches of newly originated asset-backed securities (ABS) by Sabadell Consumer Finance. The primary objective of this investment is to support working capital, address liquidity needs, and alleviate investment constraints faced by small and medium-sized enterprises (SMEs) and mid-caps in Spain. A substantial portion of the financing generated from this initiative will be directed towards environmentally-friendly projects.

This impactful collaboration will predominantly benefit SMEs located in less developed regions, characterized by a per capita GDP (gross domestic product) below 75% of the EU average. These areas often struggle to secure adequate financing, making this investment all the more crucial.

As part of this transaction, the EIB is acquiring various securitization tranches totaling €350 million, while the EIF is contributing €30 million. ICO’s participation in this ABS transaction translates to a total investment of €95 million. This joint effort will enable the Banco Sabadell Group to inject €936 million into the real economy.

The EIB Group’s combined investment of €380 million is structured through a single securitization, designed for optimal efficiency.

The overarching aim of this transaction is to facilitate SMEs’ and mid-caps’ access to financing, while also catalyzing and expediting private sector investments. It will address critical needs related to working capital, liquidity, and investment hurdles faced by these enterprises in the wake of challenges such as the COVID-19 pandemic, the Ukraine conflict, persistent inflationary pressures, and interest rate hikes.

Of note, this ABS securitization transaction incorporates a green element, stemming from the EIF’s €30 million investment. Banco Sabadell will originate a new portfolio of SME loans, totaling €60 million, with approximately one-third allocated for financing green projects.

This collaborative effort between the EIB Group, ICO, and Banco Sabadell represents a significant step toward bolstering the financial resilience of SMEs and mid-caps in Spain, while also advancing sustainable investments that contribute to a greener future.

“The EIB Group regularly joins forces with ICO and Banco Sabadell to give SMEs and mid-caps easier access to finance, thereby increasing their competitiveness and resilience. Together we are taking a new step to develop attractive credit solutions that help sustain business operations and support investment,” said EIB Vice-President Ricardo Mourinho Félix. “The transaction brings significant added value as it will promote equitable growth and convergence between EU regions, which is one of the key aims of the EIB’s lending activities.”

“We are pleased to collaborate with the EIB Group and Banco Sabadell to develop public-private partnership schemes aimed at channelling financing to Spanish companies. This operation is in line with the 2022-2027 strategy of the ICO Group, whose action plans support the growth of Spanish SMEs and social and territorial cohesion,” said ICO Director for Finance and Strategy Antonio Cordero.

“SMEs and small mid-caps are a key driver for economic development and employment. At the EIF, we are proud to be doing our part in unlocking new financing solutions and boosting economic, socially inclusive and green growth in Spain. The EIF’s investment reflects our commitment to supporting a green and sustainable transformation of the Spanish economy,” said EIF Chief Executive Marjut Falkstedt.

Deputy General Manager and Head of Corporate Banking Banco Sabadell Eduardo Currás De Don Pablos added: “The EIB Group (EIB and EIF) and the Instituto del Crédito Oficial (ICO) have historically been key partners in supporting business development in Spain. For Banco Sabadell it has always been very important to be able to collaborate with these organisations, with the aim of offering the best financing conditions for our customers’ business projects. This credit line is particularly important and timely, given the magnitude of the business and the moment of recovery and future investments that our clients are managing.”

Background information

About the EIB Group

The EIB Group — formed by the EIB and the EIF — signed €9.9 billion in new financing for projects in Spain last year, with record support for climate action and environmental sustainability projects.

The European Investment Fund (EIF)’s 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 ICO

Instituto de Crédito Oficial (ICO) is Spain’s national promotional bank, attached to the Spanish Ministry of Economic Affairs and Digital Transformation. It supports innovative and sustainable business projects in Spain and other markets by granting loans and other forms of financing, contributing to sustainable growth. As a national promotional bank, it offers financing to companies, particularly SMEs and the self-employed.

About Banco Sabadell

With a history spanning 140 years, Banco Sabadell heads the fourth largest private Spanish banking group. Its total assets currently exceed €251 billion and it is trusted by around 12 million customers, with whom it builds long-lasting relationships. The Group has a solid franchise in Spain and occupies a clear leadership position in the business banking segment. It continues to progress with the transformation of its retail business towards a digital banking model.

Since its inception, Banco Sabadell has tried to help people and companies make their projects become a reality, anticipating their needs and taking care to ensure they make the best economic decisions. We do this through responsible management and a steadfast commitment to the environment and to society.

Media contact:

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

Jose Vicente Alzola
j.alzola@ext.eib.org
+352 4379 – 72859

Press Office
press@eib.org
+352 4379 – 21000

SOURCE: European Investment Bank