COMMISSION STAFF WORKING DOCUMENT Accompanying the document REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS ON THE MANAGEMENT OF THE GUARANTEE FUND OF THE EUROPEAN FUND FOR STRATEGIC INVESTMENTS IN 2018
Date: 2019-05-28
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: European Investment Bank, European Investment Fund, financial control, fund (EU), investment, operation of the Institutions

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 28.5.2019  SWD(2019) 188 final  COMMISSION STAFF WORKING DOCUMENT Accompanying the document REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS ON THE MANAGEMENT OF THE GUARANTEE FUND OF THE EUROPEAN FUND FOR STRATEGIC INVESTMENTS IN 2018 {COM(2019) 244 final}  
 
 
TABLE OF CONTENTS 
1. 

INTRODUCTION .......................................................................................................................................... 2 

2.  EFSI OPERATIONS SUPPORTED BY THE EU GUARANTEE ................................................................ 2 
IIW OPERATIONS ............................................................................................................................... 2 

2.1 

2.2  SMEW OPERATIONS ......................................................................................................................... 2 
2.3  BREAKDOWN OF EFSI OPERATIONS BY SECTOR AND COUNTRY ........................................ 3 

3.  EFSI GF FINANCIAL STATEMENTS ......................................................................................................... 5 
4.  PROVISIONING OF THE EFSI GF .............................................................................................................. 7 

5.  ASSET MANAGEMENT ............................................................................................................................... 8 
5.1  COMPOSITION OF THE PORTFOLIO .............................................................................................. 8 

5.2  KEY RISK CHARACTERISTICS OF THE PORTFOLIO .................................................................. 9 

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1.  INTRODUCTION 

This  Staff  Working  Document  (SWD)  accompanies  the  Report  on  the  Management  of  the 
European  Fund  for  Strategic  Investments  Guarantee  Fund  (EFSI  GF)  in  2018.  The  SWD 
provides  further  information  and  tables  on  (2)  operations  under  the  IIW  and  SMEW 
(signatures  and  disbursed  amounts,  breakdown  by  sector  and  country),  (3)  financial 
statements, (4) provisioning of the EFSI GF and (5) asset management. 

2.  EFSI OPERATIONS SUPPORTED BY THE EU GUARANTEE 

This section provides a breakdown of the EFSI operations supported by the EU Guarantee in 
terms  of  number  of  operations,  investment  volume  (signature  and  investment  mobilised)  as 
well sector and country breakdown.  

2.1

 IIW OPERATIONS  

As  at  31  December  2018,  407  operations  in  28  Member  States  were  signed  under  the  IIW. 
The total signatures amount to EUR 39.1 billion which is expected to mobilise investments of 
EUR 196.3 billion. Half of the signed operations in terms of volume were in the energy (27%) 
and research sector (21%), followed by the provision of financial support to SMEs and small 
Mid-Cap companies (20%) and transport (13%). 

2.2

 SMEW OPERATIONS 

As at 31 December 2018, 470 operations in 28 Member States were signed under the SMEW. 
The  total  financing  of  EUR  14.5  billion  is  expected  to  mobilise  investments  of  EUR  104.6 
billion. The most important sectors in terms of volume were research and development (70%) 
and digital (15%). 

2 

 
 
2.3

  BREAKDOWN OF EFSI OPERATIONS BY SECTOR AND 

COUNTRY 

Table 1:  Distribution  of  signed  EFSI  IIW  and  SMEW  operations  by  sector  as  at  31 

December 2018 (EUR million). 

Source: EFSI Operational Report provided by the EIB 
Note:  Objective  and  subcategory  as  defined  in  Art.9  of  EFSI  Regulation.  Totals  may  not  always  add  up  exactly  due  to 

rounding.  

3 

Objective and subcategoryIIWSMEWTotalEFSI: research, development and innovation           8.367,59          10.219,83          18.587,42 EFSI:developmentoftheenergysectorinaccordancewiththeEnergy Union priorities         10.522,94                     -            10.522,94 EFSI:developmentoftransportinfrastructures,andequipmentandinnovative technologies for transport           5.270,51                     -              5.270,51 EFSI:financialsupportthroughtheEIFandtheEIBtoentitieshaving up to 3 000 employees           7.796,51            1.125,61            8.922,12 EFSI:developmentanddeploymentofinformationandcommunication technologies           2.981,53            2.206,59            5.188,11 EFSI: environment and resource efficiency           2.666,45                     -              2.666,45 EFSI: human capital, culture and health           1.087,25              948,47            2.035,72 EFSI: Less-developed regions and transition regions             263,27                     -                263,27 EFSI:sustainableagriculture,forestry,fishery,aquacultureandother elements of the wider bioeconomy             170,00                     -                170,00 Total         39.126,03          14.500,50          53.626,53 Signed operations 
 
 
 
Table 2: Distribution of signed EFSI IIW and SMEW operations by country as at 31 

December 2018 (EUR million) 

Source: EFSI Operational Report provided by the EIB 
Note: Totals may not always add up exactly due to rounding.  

4 

CountryIIWSMEWTotalAustria             718,35              146,85              865,19 Belgium           1.120,44              168,58            1.289,03 Bulgaria             295,00              120,15              415,15 Croatia               97,76                94,38              192,14 Cyprus               35,96                10,00                45,96 Czech Republic             124,75              500,29              625,04 Denmark             440,09              194,30              634,38 Estonia               40,99                26,64                67,63 Finland           1.454,03              134,93            1.588,96 France           7.468,97            1.985,83            9.454,79 Germany           4.067,82              920,05            4.987,87 Greece           2.113,51              405,56            2.519,07 Hungary             355,39              127,12              482,51 Ireland             518,66              214,25              732,91 Italy           6.103,92            2.309,68            8.413,60 Latvia             120,79                22,04              142,83 Lithuania             208,73                18,77              227,51 Luxembourg               16,45                68,00                84,45 Malta                 5,00                  6,00                11,00 Netherlands           1.229,59              149,91            1.379,50 Poland           2.347,85              196,45            2.544,30 Portugal             829,53              989,82            1.819,35 Romania             346,90              106,82              453,72 Slovakia             456,80                39,62              496,42 Slovenia               51,42                20,07                71,49 Spain           4.845,51            1.164,54            6.010,05 Sweden           1.555,07              320,14            1.875,21 United Kingdom           1.477,57              447,45            1.925,03 Regional - EU countries             679,18                     -                679,18 Multi-country (SMEW)           3.501,10            3.501,10 Total EU-Countries         39.126,03          14.409,35          53.535,38 No. of Countries                    28                     28                     28 Non-EU/non-EFSI-IFE Operations (SMEW)                    -                  91,15                91,15 Non-EU (IIW)                    -                       -                       -   Total         39.126,03          14.500,50          53.626,53 Signed operations 
 
 
 
 
3.  EFSI GF FINANCIAL STATEMENTS 

STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2018 

ASSETS 

NON-CURRENT ASSETS 

Available for sale financial assets 

CURRENT ASSETS 

Available for sale financial assets 

31 December 2018  31 December 2017 

EUR 

EUR 

4 233 866 211 

3 070 600 996 

4 233 866 211 

3 070 600 996 

1 217 907 446 

433 762 404 

765 897 485 

343 757 854 

Financial assets at fair value through surplus or deficit 

1 923 458 

6 307 288 

Short-term deposits (>3 months and ≤ 1 year) 
incl. accrued negative interest 
Receivables (i.e. bond lending fees) 

Cash and cash equivalents 
Current accounts 

  Cash equivalents  

  Accrued interest on cash and cash equivalents 

- 

39 991 422 

160 147 

8 456 

449 926 356 
418 899 111 
31,139,540 
(112,295) 

43 697 384 
18 683 831 
25,013,519 
35 

TOTAL ASSETS  

5 451 773 656 

3 504 363 400 

NET ASSETS AND LIABILITIES 

NET ASSETS 
Contribution from EU Budget1 
Fair value reserve 
Retained earnings 
Economic result of the year 

CURRENT LIABILITIES 

Financial liabilities at fair value through surplus or deficit 
Other payables 
Accrued charges 

31 December 2018  31 December 2017 

EUR 

EUR 

5 451 673 202 

3 504 263 077 

5 460 743 179 

3 507 682 256 

1 442 436 

3 364 100 
(13 876 513) 

(6 783 279) 
933 894 
2 430 206 

100 455 

100 324 

- 

100 455 

- 

- 
54 145 

46 179 

TOTAL NET ASSETS AND LIABILITIES 

5 451 773 656 

3 504 363 400 

1 Net of the guarantee call paid out from the EFSI GF (EUR 60.8 million) 

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STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 31 DECEMBER 2018 

Revenue from operating activities 
Foreign exchange gains 
Other revenue from operating activities 

Expenses from operating activities 
Foreign exchange losses 

Other expenses from operating activities 
     Audit fees 
     IT cost 

2018 
EUR 

103 725 359 
103 679 180 
46 179 

2017 
EUR 

22 721 597 
22 721 597 
- 

(86 684 186) 

(86 669 186) 

(60 846 316) 

(60 742 759) 

(15 000) 
(15 000) 
- 

(103 557) 
(15 000) 
(88 557) 

RESULT FROM OPERATING ACTIVITIES 

17 041 173 

(38 124 719) 

Financial  revenue  
Interest revenue on: 
     Cash and cash equivalents 
     Available for sale assets 
Other interest revenue 

50 409 147 
17 548 278 
134 210 
17 412 590 
1 478 

51 393 189 
6 435 843 
53 004 
6 382 100 
739 

Realised gains on sale of AFS assets 

4 275 489 

4 135 733 

Other financial income - fair value changes of derivatives 

28 389 730 

40 754 819 

Bond lending income 

195 651 

66 794 

Financial expenses  
Interest expenses on cash and cash equivalents 

(81 326 833) 
(247 367) 

(10 838 265) 
(63 603) 

Realised losses on sale of AFS assets 

(17 550 692) 

(386 120) 

Other financial expenses - fair value changes of derivatives 

(62 913 181) 

(10 139 884) 

Custody fees and other financial expenses 

(615 593) 

(248 658) 

FINANCIAL RESULT 

(30 917 686) 

40 554 924 

ECONOMIC RESULT OF THE YEAR 

(13 876 513) 

2 430 206 

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4.  PROVISIONING OF THE EFSI GF 

The Guarantee Fund is provisioned through: 

  Contributions from the general budget of the Union; the budget allocated for the EFSI 

contributions amounts to EUR 8 425 million; 

  Revenues and any other payments received by the Union in accordance with the EFSI 
Agreement  (i.e.  projects  benefitting  from  EFSI  support);  these  assigned  revenues  to 
the EFSI GF amount to EUR 675 million. 

  Returns (interests) on guarantee fund resources invested in the financial markets; 
  Amounts  recovered  from  projects  for  which  the  EU  Guarantee  was  called  (i.e. 

defaulting debtors); 

The  Guarantee  Fund  is  provisioned  progressively  up  to  the  target  amount  of  EUR  9  100 
million by 2022. 

Table 3: Provisioning of the EFSI GF for the period 2015-2022 (EUR million) 

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5.  ASSET MANAGEMENT 

The  following  sections  provide  some  further  details  on  (a)  the  composition  of  the  portfolio 
and (b) the key risk characteristics of the portfolio. 

5.1       COMPOSITION OF THE PORTFOLIO 

The EFSI GF portfolio at the year-end is well diversified in terms of asset classes and rating 
categories. In addition, it is diversified in non-euro denominated securities (USD) in the form 
of  an  allocation  to  US  Treasuries  and  other  issuers  (e.g.  Supranational,  other  Sovereigns  or 
Agencies)  for  about  9%  of  the  portfolio.  The  currency  risk  is  hedged.  The  exposure  of  the 
portfolio  to  bonds  complying  with  environmental,  social  and  governance  criteria  was  more 
then 3 times higher when compared to its benchmark (2,31% for the portfolio vs  0,68% for 
the benchmark). 

As  shown  in  Figure  1,  over  40%  of  the  market  value  of  the  portfolio  is  invested  in  AAA 
securities and the rest is well distributed across the whole spectrum of the investment-grade 
scale. The AAA category includes for example securities issued by the US Government and 
covered bonds issued by financial institutions. 

In  terms  of  main  asset  classes,  27.3%  of  the  portfolio  is  invested  in  Sovereign  securities, 
17.8% in  sub-sovereigns, supra-nationals  and agencies (SSA)  and foreign Governments  and 
25%  in  covered  bonds  while  only  15.5%  in  bonds  issued  by  corporates  and  financial 
institutions (other than covered bonds). 

FIGURE 1: PORTFOLIO EXPOSURE BY RATING AS AT 31 DECEMBER 2018 

Source: European Commission services 

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FIGURE 2: PORTFOLIO EXPOSURE BY ASSET CLASS AS AT 31 DECEMBER 2018 

(¹) Corporate: unsecured bonds issued by financial and non-financial corporations. 
(²) Derivative: inflation-linked bonds. 
Source: European Commission services 

5.2      KEY RISK CHARACTERISTICS OF THE PORTFOLIO 

Market Risk 

Market risk is, inter alia, assessed by way of calculating the duration2 of the portfolio. 
As at 31 December 2018, the portfolio had a duration of 2.41 years.  

Currency risk and hedging activities 

USD investments represented 9% of the portfolio market value as at 31 December 2018. The 
currency risk of USD-denominated investments was hedged via forward contracts.  

Credit Risk 

The credit quality of the EFSI GF portfolio is high with an average rating3 of A-, suggesting a 
low default probability (0.07% at 1-year). 

Liquidity characteristics of the portfolio 

About 21% of the portfolio consists of bonds with a maturity below 1-year, floating rate notes 
and  short-term  money  market  instruments  which  provide  a  further  liquidity  buffer  for  the 
portfolio. 

2  

3  

The duration figure refers to 'modified duration' which measures the price sensitivity of a bond to interest 
rate movements. 
The average rating is calculated on the basis of portfolio’s average 1-year default probability. 

9