Bank Millennium and the European Investment Bank Group (EIB and EIF) are joining forces to meet working capital and liquidity needs and to offset the investment constraints of Polish small and medium-sized enterprises affected by the COVID-19 crisis. In this transaction, StormHarbour Securities LLP acted as the Organizer for Bank Millennium S.A.
To this end, the European Investment Bank (EIB) and the European Investment Fund (EIF) will grant guarantees for PLN 1.5 billion (PLN 1.202 million for the senior tranche and PLN 300 million for the subordinated tranche) for the synthetic securitization of the portfolio of loans for SMEs granted by Bank Millennium S.A. The Polish bank will be able to provide financing and meet the liquidity needs of SMEs through new loans in the total amount of approx. PLN 4.2 billion (which corresponds to 6 times the subordinated tranche and 2 times the senior tranche). 80% of funding is also directed to SMEs in Poland’s cohesion regions and helps to reduce regional disparities – thus contributing to the EU’s Cohesion Objective.
The operation covers both the first loss of the synthetic securitization structure through the European Guarantee Fund (EGF) – an integral part of the EUR 540 billion packages of measures approved by the European Union in 2020 to counter the economic difficulties and production downturns caused by the pandemic – and the senior tranche through the EIF’s own risk.
It is the first synthetic securitization operation between the EIB Group and Bank Millennium S.A.
“I am glad that the EIB Group and Bank Millennium have signed another capital aid transaction to support Polish SMEs. Thanks to this financing, Polish companies will be able to support jobs and will be better prepared to maintain stability in this very demanding situation. It is also worth noting that 80% of this funding will go to SMEs in the Polish cohesion regions” – said Teresa Czerwińska, the EIB Vice President.
“With the European Guarantee Fund, the EIF continues to develop its securitization and risk-sharing initiatives in Poland. We are glad that Bank Millennium is joining the group of selected banks and that we can sign our first agreement with them. The operation responds to the working capital and liquidity needs and investment constraints faced by SMEs in these difficult times” – said Alain Godard, the EIF CEO.
“Thanks to the agreement with the EIB and the EIF, Bank Millennium will be a partner of an even wider group of enterprises, financing their current operations and planned investments. The EIB support will be an added value for the bank’s customers, who have to operate in an increasingly complex and dynamic economic environment” – said Andrzej Gliński, member of the Management Board of Bank Millennium.
The European Investment Bank (EIB) is the long-term lending institution of the European Union owned by its Member States. It makes available long-term financial resources for sound investments to contribute to the achievement of EU policy goals. The bank finances projects in four priority areas – infrastructure, innovation, climate and environment, and small and medium-sized enterprises (SMEs).
The European Investment Fund (EIF) is part of the European Investment Bank Group. Its main mission is to support Europe’s micro, small and medium-sized enterprises (SMEs) by helping them access finance. The EIF designs and develops venture capital and growth capital, guarantees, and microfinance instruments that target this market segment. In this role, the EIF supports the EU’s objectives of fostering innovation, research, and development, entrepreneurship, growth, and employment.
In 2021, the EIB Group allocated EUR 6.5 billion to finance projects in Poland.
The European Guarantee Fund (EGF) was established by the EIB Group with contributions from Poland and the other EU Member States to protect companies affected by the COVID-19 crisis. By making use of guarantees of almost EUR 25 billion, the EGF enables the EIB and the EIF to provide loans, guarantees, asset-backed securities, equity instruments, and other financial instruments that are mainly available to small and medium-sized enterprises. The EGF is part of the European Union’s recovery package, which aims to provide a total of EUR 540 billion to re-energize the hardest-hit parts of the EU economy.
Source: Bank`s press release from March 15, 2022