The European Investment Bank Group (EIB Group), made up of the European Investment Bank (EIB) and the European Investment Fund (EIF), has participated in two securitisation transactions with BBVA, investing a total of €714 million. This investment enables BBVA to mobilise approximately €1.3 billion to finance liquidity and investment needs for SMEs, mid-cap companies and entrepreneurs in Spain, as well as the construction and refurbishment of sustainable housing. The EIB Group’s investment is channelled through two securitisation transactions.
The first is a securitisation of a consumer loan portfolio, designed to facilitate approximately €1.1 billion in financing to enable companies to address their liquidity needs and undertake investments. This financing is expected to primarily impact companies operating in cohesion regions, where per capita income is below the EU average. It also provides financing to entrepreneurs, particularly those launching new projects or in the early stages of business growth.
The second transaction is a synthetic securitisation of a mortgage loan portfolio, aimed at promoting the creation by BBVA of a portfolio of approximately €230 million in 100% green mortgages for individuals and real estate developers to finance energy efficiency projects and the construction of near-zero-emissions buildings in Spain. The objective is to improve access to financing for investments related to climate action.
“We are very pleased to be able to work with BBVA to boost the construction and refurbishment of sustainable housing in Spain, as well as other investments that promote energy efficiency and business competitiveness. These financing lines will enable Spanish SMEs and mid-caps to develop more efficient, affordable residential projects aligned with sustainability standards. They will also increase the availability of financing to facilitate investments that strengthen competitiveness, consolidate growth and generate employment,” said Gemma Feliciani, Director of Financial Institutions at the EIB.
“These two investments are a clear demonstration of our commitment to supporting the green transition and the competitiveness of Spanish SMEs. They are also excellent examples of how securitisation activity can mobilise private investor resources and strengthen the savings and investment union, in line with the EU’s strategic priorities,” stated Marjut Falkstedt, Chief Executive of the EIF.
“These two agreements we have signed with the EIB Group will allow us to continue supporting SMEs in their growth and development and to back entrepreneurs in their first steps. In addition, we will promote environmental projects through the financing of sustainable housing. Both transactions are aligned with BBVA’s strategic priorities, which include becoming the reference bank for businesses and promoting sustainability as a driver of growth,” noted Ignacio Fernández Palomero, Global Head of Capital and Active Balance Sheet Management at BBVA Group.
These agreements with BBVA once again demonstrate the role played by the EIB Group in promoting financial instruments such as securitisation that help unlock capital to support projects benefiting SMEs, reduce the risk assumed by financial institutions and strengthen the EU Capital Markets Union, one of the EIB Group’s eight strategic priorities. The agreements also contribute to other EIB Group strategic priorities, including climate action and environmental sustainability, economic, social and territorial cohesion, and the promotion of sustainable housing in the EU.
More information on the transactions
The EIB Group’s investment in the first securitisation of a consumer loan portfolio aimed at meeting the financing needs of companies and entrepreneurs amounts to €600 million in the senior tranche, through: (i) an acquisition by the EIB of €400 million in securitisation notes, and (ii) a bilateral guarantee from the EIF to ING for €200 million. The securitisation meets the STS (Simple, Transparent and Standardised) criteria in line with European securitisation standards to foster a robust and efficient capital market.
In the synthetic securitisation of a mortgage loan portfolio, the EIF covers losses on the “upper mezzanine” tranche of approximately €114 million, with part of that risk counter-guaranteed by the EIB (with risk-sharing of €85 million by the EIB and €29.5 million by the EIF). Under this structure, private investors cover losses on the “lower mezzanine” tranche, and BBVA retains the junior and senior tranches. In this way, the transaction promotes collaboration between private and public investors in the securitisation market, fostering market integration and the savings and investment union. Amortisation of the tranches is pro rata, subject to sequential amortisation depending on the performance of the portfolio.
Both transactions promote increased participation by private investors in the securitisation market and the savings and investment union.
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