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Opinion of the Economic and Social Committee on JEREMIE (Joint European Resources for Micro-to-Medium Enterprises)

(2006/C 110/08)

On 20 December 2005 Margot Wallström, member of the European Commission, asked the European Economic and Social Committee, on behalf of the European Commission, to draw up an opinion on the joint initiative: JEREMIE (Joint European Resources for Micro-to-Medium Enterprises).

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 24 February 2006. The rapporteur was Mr Pezzini.

At its 425th plenary session, held on 15 and 16 March 2006 (meeting of 15 March), the European Economic and Social Committee adopted the following opinion by 142 votes to one with two abstentions.

1.   Conclusions and recommendations

2.   Reasons

2.2   The regional dimension

2.3   The social dimension of credit and financial engineering

2.4   The function of loan consortia, financial engineering and JEREMIE

2.5   The function of multipliers in credit management and the function of JEREMIE

2.6   JEREMIE and the CIP

2.7   JEREMIE and tendering and accreditation procedures

Brussels, 15 March 2006.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND

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(1)JEREMIE:a joint REGIO-EIB group initiative for supporting improved access to finance for SME and micro-enterprise development in the regions (Document 2 of 21 November 2005), presented at the Conference on Financing growth and cohesion in the enlarged EU, held in Brussels on 24 November 2005.

(2)  1982: European Year of SMEs and the Craft Industry.

(3)  In the wake of the problems which emerged in 1982, the Commission also set up a Task Force, headed by Commissioner Cresson, to gear European policies to the needs of SMEs. In the course of the second half of the 1980s, the Task Force became DG XXIII.

(4)  Now the Directorate-General for Enterprise and Industry (Enterprise DG).

(5)  Held in Avignon in 1990, Berlin in 1994 and Milan in 1997.

(6)  See footnote 28.

(7)  On 20 and 21 November 1997, the Luxembourg Extraordinary European Council, whose agenda contained a single item – employment – launched three practical initiatives to help businesses stay competitive in the markets, and called upon the Commission to put forward proposals that would boost the business sector and promote employment in that field. The three initiatives were: the ETF Start-Up Facility, the JEV (Joint European Venture) and SME-Guarantee Facility.

(8)  C.f. COM(2005) 121 final.

(9)  Consultation document on the Community programme on enterprise and competitiveness, 2006/2010, DG Enterprise, 2004, point 46, http://europa.eu.int/yourvoice/consultations/index_htm#open.

(10)  Ibid., point 118.

(11)  See also footnote 29.

(12)  An arrangement under which a party's own risk capital may be sold to other parties, thereby increasing the original party's capacity for granting loans to SMEs. See also footnote 56.

(13)SMEs and craft industries, OJ C 332 of 16.12.1992.

(14)Craft industries and small- and medium-sized enterprises, OJ C 158 of 26.5.1997.

(15)OJ C 221 of 7.8.2001.

(16)The role of micro and small enterprises in Europe's economic life and productive fabric, OJ C 220 of 16.9.2003.

(17)OJ C 48 of 21.2.2002.

(18)  Observatory of European SMEs, 2003/7, EU-25.

(19)  C.f. for example experiments with bipartite entities throughout Italy and other European countries.

(20)  See the EESC opinion on the Partnership for implementing the Structural Funds, OJ C 10 of 14.1.2004, p. 21.

(21)  23 million in EU-25, SME Observatory, 2005.

(22)  1.8 million, SME Observatory, 2005.

(23)  In Italy, the SME index is called STAR.

(24)  Avoiding the use of cross-selling.

(25)  There are 254 NUTS II level regions in the EU-25. Of these (approximately 100 convergence) have income levels of less than 75 % of the Community average.

(26)  Interest rates in the less developed regions are, on average, 3 % higher than those in more developed regions (source: Artigiancassi, Italy).

(27)  Usually for renewable amounts of EUR 30 or 50 million.

(28)  Generally one percentage point above Euribor 6 months.

(29)  The EIF (European Investment Fund) was set up in 1994 with two objectives: (1) to support the European networks, and (2) to facilitate access to credit for SMEs. The EIF shareholders are: the EIB, the European Commission and a large number of European banks. In recent years in particular, support for micro and small businesses has been a hallmark of the EIF (c.f., amongst others, the SME Guarantee programme, which – together with JEV and ETF Start-Up – stemmed from the 1997 Luxembourg European Council.

(30)  The EIF is currently managing three projects: (1) initial help for undertakings in the start-up phase; (2) ETF Start up (European Technology Facility for technologically advanced businesses), contributions to company funds, mezzanine investment (3) SME guarantees (loan guarantees, micro-credit, own funds, debt securitisation).

(31)Sviluppo Italia, the official body concerned with job creation in the south of Italy on behalf of the Italian State, has calculated the average cost of creating one job to be EUR 40 000.

(32)  Average insolvencies for micro and small enterprises are no higher than 3 % of the loans granted.

(33)  Generally 0.50 %.

(34)  On average, 15 business points lower than Euribor 6 months, with the obligation to grant the loan to businesses at a rate on average no higher than 100 business points (one point) above Euribor 6 months.

(35)  Research by the Osservatorio imprese (business observatory) shows that the rate of business failures stands at close to 20 % a year, and that the main cause of failure can be traced to credit-related problems (management, extension, need for innovation).

(36)  Around 2 %.

(37)  The multiplier allows possibilities of granting loans to be increased, in proportion to the estimated percentage of insolvencies in a given territory and to the percentage of guarantees attached to the loans. If, in the territory, historical analysis of loan-related insolvencies shows a rate of less than 5 %, then it is possible, with a fund of EUR 1 million, to grant loans to a number of people, of up to EUR 20 million, since the million euros available means that insolvencies can be absorbed: 5 % of 20 million, i.e. one million. In this case the multiplier is 20. If the guarantee granted by the credit consortium covers 50 %, with the other 50 % being the bank's responsibility, the multiplier rises to 40, i.e. with one million loans, divided appropriately, can be granted to the value of EUR 40 million.

(38)  COM(2005) 121 final of 6 April 2005.

(39)OJ L 167 of 6.7.2005.

(40)OJ C 333 of 29.12.2000, as amended by OJ L 268 of 16.8.2004.

(41)OJ L 192 of 28.7.2000, as amended by OJ L 308 of 5.10.2004.

(42)  Decision No. 2256/2003/EC.

(43)  Decision No. 2001/48/EC.

(44)  Regulation No. 2236/95.

(45)OJ L 183 of 11.7.1997 as amended by OJ L 200 of 30.7.2002.

(46)OJ L 176 of 15.7.2003.

(47)  C.f. INT/261 2005, rapporteur: Mr Pezzini.

(48)  C.f. Conclusions and recommendations, page 6, footnote 15 above.

(49)  SMEG, SME-Guarantee.

(50)  Source: EIF annual report.

(51)  ETF: European Technology Facility, Start-up Scheme.

(52)  Decision 593/2004/EC of 21 July 2004.

(53)  Source: Fourth EIF report, first quarter 2004.

(54)  Ibid, access to mezzanine finance.

(55)  Mezzanine credit is based more on beneficiary companies' expected cash flow than on real guarantees. It can work in two ways: (1) subordinate debt (loans at a fixed rate or index-linked rate); (2) equity kicker (the lender/investor is entitled to a percentage share of the increased worth of the property to which the loan refers). Mezzanine finance mature at between four and eight years.

(56)  Debt securitisation works by ceding part or all of the amount owed to a credit consortium (or bank) to specialised financial institutions in order to enable credit consortia in particular to boost the credit guarantees they can offer to undertakings.

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