Spanish SMEs to Benefit from EIB and ICO Investments in BBVA ABS, Focusing on Green Development

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(IN BRIEF) The European Investment Bank (EIB) and the Instituto de Crédito Oficial (ICO) have invested in asset-backed securities (ABS) issued by BBVA to support Spanish small and medium-sized enterprises (SMEs) and mid-caps. The investment aims to address working capital and liquidity needs while promoting green projects. The EIB Group’s investment commitment is €460 million, with €430 million from the EIB and €30 million from the European Investment Fund (EIF), while ICO invests €100 million. This collaboration allows BBVA to direct up to €1.26 billion into the real economy. The transaction focuses on facilitating access to finance for SMEs and mid-caps and includes a green component to support energy efficiency projects aligned with climate change mitigation objectives.

(PRESS RELEASE) LUXEMBOURG, 4-Jul-2023 — /EuropaWire/ — The EIB Group, consisting of the European Investment Bank (EIB) and the European Investment Fund (EIF), together with the Instituto de Crédito Oficial (ICO), have made strategic investments in senior and mezzanine tranches of asset-backed securities (ABS) issued by BBVA. The aim of this investment is to address the working capital and liquidity needs of Spanish small and medium-sized enterprises (SMEs) and mid-caps, while also promoting green initiatives. The proceeds from this collaboration will be channeled into projects with an environmental focus.

This partnership is especially significant for SMEs located in cohesion regions, where accessing financing is challenging due to a lower per capita gross domestic product compared to the EU average. By targeting these regions, the operation aims to foster equitable growth and convergence between EU regions, a key objective of the EIB’s lending activities.

Under this transaction, the EIB commits to an investment of €430 million, while the EIF contributes €30 million. Additionally, ICO’s participation translates into a total investment of €100 million. Overall, these investments enable BBVA to direct up to €1.26 billion into the real economy.

The EIB Group’s total investment of €460 million is facilitated through a single securitization structure designed for optimal efficiency.

One aspect of the transaction involves the purchase of notes worth approximately €400 million, specifically targeting SMEs and mid-caps. The goal is to enhance their access to finance and facilitate private sector investments. This initiative will address post-pandemic challenges, the war in Ukraine, persistent inflationary pressures, interest rate increases, and other obstacles faced by enterprises.

The ABS securitization transaction also includes a green component, with the EIB Group investing €60 million. These funds will support environment and climate action projects, such as energy-efficient construction of nearly zero-emissions buildings and solar photovoltaic installations. The transaction aligns with national and European energy efficiency and renewable energy targets, contributing to the reduction of carbon emissions. This focus on energy efficiency supports the EIB Group’s cross-cutting objective of climate change mitigation and aligns with REPowerEU, the EU plan for enhanced energy independence.

“We are pleased to join forces with ICO and BBVA in this transaction in Spain covering priorities for the EIB Group, such as supporting the financial needs of SMEs, the backbone of the European economy. An initiative with added value as many of the beneficiaries are in cohesion regions, in line with the Group’s objective of promoting economic, social and territorial cohesion in the European Union,” stated EIB Vice-President Ricardo Mourinho Félix. “The EIB Group is also strengthening the energy transition, boosting energy efficiency investments on the Spanish market to meet EU policy objectives.”

ICO Chairman José Carlos García de Quevedo said: “This transaction is part of the ICO Group’s 2022-2027 strategy, whose action plans promote the growth of Spanish SMEs and the green and digital transition. We are pleased to join forces with the EIB Group and BBVA in this operation, which will channel finance to Spanish companies to support their projects and growth plans.”

“The EIF is delighted to be renewing our partnership with BBVA and ICO,” said EIF Chief Executive Marjut Falkstedt. “This transaction puts our securitisation tools to good use, generating fresh lending capacity in support of small Spanish businesses, strengthening their competitiveness and boosting growth and jobs. At the same time, the intention is to support small businesses in navigating the green transition, as a third of the new loan portfolio will be green loans, which is a key objective for the EIB Group and the European Union.”

Luisa Gómez Bravo, Head of BBVA Corporate & Investment Banking, added: “At BBVA CIB we strive to become relevant for our clients by helping them to achieve their business goals with wholesale solutions, and thus contribute to a more sustainable future. With the signing of this new line, together with the EIB Group and the ICO, we continue to support the Spanish business community and are betting on promoting sustainable financing, in this case, through energy transition projects.”

Background information

About the EIB

The European Investment Bank (EIB) 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 Bank Group (EIB Group) — formed by the European Investment Bank (EIB) and the European Investment Fund (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.

About the EIF

The European Investment Fund (EIF) is part of the European Investment Bank Group. Its central mission is to support Europe’s micro, small and medium-sized businesses (SMEs) by helping them to access finance. The EIF designs and develops venture and growth capital, guarantees and micro-finance instruments that specifically target this market segment. In this role, it contributes to the achievement of 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

The 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 BBVA

BBVA is a global financial services group founded in 1857 with over 68 million active clients and nearly 117,000 employees. The bank is present in more than 25 countries, has a strong leadership position in the Spanish market, is the largest financial institution in Mexico and it has leading franchises in South America and Turkey. BBVA contributes with its activity to the progress and welfare of all its stakeholders: shareholders, clients, employees, providers and society in general. In this regard, BBVA supports families, entrepreneurs and companies in their plans, and helps them to take advantage of the opportunities provided by innovation and technology.  Likewise, BBVA offers its customers a unique value proposition, leveraged on technology and data, helping them improve their financial health with personalized information on financial decision-making.

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SOURCE: European Investment Bank