Support for the rural economy: EIB, EIF and ICO sign an agreement with Grupo Cajamar to provide over EUR 1bn to SMEs and the self-employed

The EIB Group, BCC-Grupo Cajamar, and ICO are joining forces to ensure that SMEs working in rural areas and agri-food companies can access the credit they need to invest. With this goal in mind, the European Investment Fund (EIF) has provided a guarantee for a Cajamar securitisation (IM BCC Capital 1 Fondo de Titulización) for EUR 610m, EUR 325m of which will be backed by the European Investment Bank (EIB), part of which will be supported by the Investment Plan for Europe. ICO is contributing to this operation by purchasing EUR 283m of senior bonds. With this securitization, the leading light of the Spanish cooperative banking sector Grupo Cooperativo Cajamar will provide over EUR 1bn for the new investment projects of agri-food sector companies, SMEs and the self-employed operating in rural areas.

This is a very innovative operation for Spain, as it is the first cash securitization from a Spanish entity to free up capital under the standard model, facilitating Grupo Cajamar’s resource management via the participation of the EIB, EIF, ICO and a private investor. This operation leads the way for other Spanish organizations to mobilize resources in a similar manner, with the aim of helping to generate new financing for the real economy to benefit the self-employed and SMEs, which lie at the heart of the Spanish economy.

It is also supported by the European Fund for Strategic Investments (EFSI), as EUR 64m of the total guarantee granted by the EIB is being provided under the Investment Plan for Europe (commonly known as the Juncker Plan). This increases the EIB Group’s capacity to finance investment projects that, in line with the Plan’s criteria, involve activities which by their structure or nature have a higher risk profile but which foster firms’ competitiveness and create jobs. In concrete terms, the EIB calculates that this agreement with Grupo Cajamar will enable the favorable conditions of its financing, in terms of both maturities and interest rates, to be passed on to some 15 000 SMEs with a total of over 100 000 employees.

This operation was advised by Banco Santander, the management company for Fondo Intermoney Titulización. As all of the bond tranches have been sold and guaranteed, the risk has been entirely transferred to investors, thereby reducing Cajamar’s risk-weighted assets, with an estimated 36-bp improvement to its tier 1 capital (CET 1).

Original source: EIB
Published on 27 December 2018