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EU Access to Finance Days: Helping to shape an SME-friendly financing market



Hand greift nach EuroscheinenCredit availability for non-financial businesses in the eurozone is now at its lowest point since the beginning of the credit crunch, according to the latest figures from the European Central Bank. Small- and medium-sized enterprises, on which the EU relies for 85% of new jobs in the private sector, are particularly badly affected by this decline as they cannot invest or extent their businesses as long as conditions for credits remain so difficult. Therefore, the European Commission is taking action to rapidly bridge the market gap in the provision of SME financing by providing €3.5 billion of additional funding for SMEs each year from 2014 to 2020, using the new Competitiveness of Enterprises and SMEs programme (COSME). For COSME to be successful is it vital that an effective partnership between EU institutions and the financial organisations that provide SMEs with access to credit is created. This is why Commssion Vice-President Antonio Tajani, commissioner for enterprise and industry, will launch today (18 October) in Rome a series of events - EU Access to Finance Days - to explain how COSME's new financial instruments will work and to encourage reputable financial market operators to become COSME intermediaries.

EU Access to Finance Days will be organised in all EU capitals from autumn 2013 to the end of 2014. The next event will be in Vilnius, Lithuania on 5 November 2013.

Prominent speakers at today's "Access to Finance Day" in Rome include Flavio Zanonato, Italian Minister of Economic Development; Dario Scannapieco, Vice-President of the European Investment Bank; Luigi Federico Signorini, Vice-Director-General of the Bank of Italy; Giovanni Sabatini, Director-General of the Italian Banking Association; Aurelio Regina, Vice-President of Confindustria; and Richard Pelly, CEO of the European Investment Fund. The event will also present the SME-focused activities of the European Investment Bank and other EU programmes that support SMEs.

More information on the EU Access to Finance Days.

What is the new COSME programme? What will it offer SMEs?

Vice President Tajani underlined today that the Programme for the Competitiveness of Enterprises and SMEs (COSME), which will run between 2014 and 2020, is the first ever European Commission programme that is exclusively dedicated to supporting SMEs. COSME is first and foremost an instrument to improve access to finance for SMEs, support their internationalisation and improve their access to markets.

COSME will largely continue the successful activities of the current Competitiveness and Innovation Framework Programme (CIP), but aims to better respond to SMEs' needs, by targeting the more vulnerable categories of small businesses that are currently underserved by the market.

60% of COSME's estimated budget of €2.3 bn will be dedicated to financial instruments, providing guarantees and venture capital, with the aim of encouraging the flow of credit and investment into the SME sector. COSME will provide a guarantee facility for SME loans of up to €150 000, with a focus on SMEs that would otherwise have difficulty accessing finance. COSME's equity facility will stimulate the supply of venture capital, with a particular focus on the expansion and growth phase of SMEs.

COSME support will be delivered to SMEs via reputable financial intermediaries in participating countries - such as banks, leasing companies, mutual guarantee societies or venture capital funds - in order to ensure that credit is as easy to access as possible. In order to cater for the diversity of the SME financing market in Europe, COSME will allow financial intermediaries to create individual products that best suit the needs of SMEs in their particular market.

The COSME budget will also maintain many of the same successful programmes already in place, including co-financing for the European Enterprise Network, with its more than 600 offices in the EU and beyond. COSME will also support internationalisation of SMEs, Erasmus for Young Entrepreneurs, entrepreneurship education, IPR Helpdesks and the reduction of administrative burdens.

See the full interview with VP Tajani

What are COSME's expected impacts?

The impact of the programme will be enormous. COSME-backed financial instruments should result in an annual increase of €3.5 billion in additional lending to and/or investment in EU companies. Each year, COSME is expected to contribute to an increase in the EU’s GDP of €1.1 billion, and assist 40 000 firms in creating or saving 30 000 jobs and launching 1 200 new business products, services or processes.

Typical SME recipient: Less than 10 staff, €65 000 credit granted

Under the previous European Commission programme to support competitiveness (CIP), loan guarantees were used to stimulate lending to entrepreneurs or small enterprises that normally would not have sufficient collateral to obtain a loan. Ninety percent of the 220 000 SMEs from across Europe that were CIP's beneficiaries up to the end of 2012 had 10 or fewer employees; precisely the category that finds it most difficult to obtain a loan. But thanks to CIP, the average guaranteed loan these small companies received was about €65 000. By the end of December 2012, CIP's financial instruments had mobilised over €13 billion in loans and more than €2.3 billion in venture capital. Comparable benefits will be achieved under COSME, slighted moderated by the fact that COSME will particularly target SMEs that without its support would have difficulty in accessing external finance.

Accessing financing 'extremely difficult' for SMEs

Surveys show that the EU's SMEs are to a very large extent dependent on bank loans for their external financing and that they have very few alternatives: 30% of companies are using bank loans and 40% bank credit lines or overdraft facilities. For 63% of SMEs bank loans are also the most preferable external financing solution to realise firms' growth ambitions. In the economic downturn banks have become more risk-averse, asking for higher risk margins and offering more demanding conditions. Difficult access to credit is among the top concerns (15%) of SMEs: according to the latest survey by the European Commission about one third of SMEs did not get the finance they had planned for. The latest European Central Bank (ECB) data indicate that overall lending to the non-financial private sector remains weak.

Why we need a specific programme to support SME financing

Despite their importance to the economy, SMEs face particular challenges in the area of access to finance, mostly because of information asymmetries. While SMEs are able to build strong business cases for the creation and expansion of their businesses, lenders tend to be ill-equipped to assess the risks associated with the business models of SMEs and tend to resort to lending decisions based purely on balance sheet figures. But many SMEs do not have strong enough balance sheets to meet bank lending approval criteria, especially if the value of the SME is held in intellectual property, a sound client base or other means which cannot be captured by financial reporting.

The consequences of the debt crisis have also disproportionately affected lending to SMEs. Compared to larger corporations, SMEs have always faced structural problems in the area of access to finance. But these issues have been exacerbated by the financial crisis. Over the last two years, according to statistics from the ECB, almost one-third of the SMEs applying for bank loans were refused or ended up getting less than they requested.

Financial intermediaries are vital lifeline

The EU uses both legislation and the limited EU budget to counteract the current overwhelming reluctance to invest in and lend to SMEs. Two general approaches are taken, first to support the provision of SME loans – thus improving access to credit - and second to stimulate investment in SMEs, for example via co-investments with venture capital funds.

Access to credit assistance is channelled through selected financial intermediaries. These include banks, lessors, mutual guarantees societies, microfinance providers and venture capital funds. The EU guarantees part of the risks they undertake and experience shows that participation in EU access to finance programmes means that they provide more SME loans than they would do otherwise. This approach also generates a high leverage effect: the CIP programme found that every €1 spent by the EU on guarantees used by financial intermediaries making loans to SMEs resulted in €30 being made available to the beneficiary company.

Apart from this multiplier effect, using financial intermediaries also offers other benefits: a policy impact, as participating financial intermediaries subscribe to strong SME credit enhancing conditions and therefore contribute to the pursuit of EU policies; and also access to institutional "know-how" in the form of the existing expertise of financial intermediaries.

How else will SME financing be supported by the EU?

COSME will be complemented by financing for research-and innovation-driven enterprises under the Horizon 2020 programme.

Numerous measures will also be implemented by the EIB Group (the European Investment Bank and the European Investment Fund) as well as will be provided within the framework of European Structural and Investment Funds or under Programme for Employment and Social Innovation and will be linked to the specific policy objectives.

Agreement on Basel III will ensure continued bank loans to SMEs

The European Commission has also proposed legislation to improve the efficiency of financial markets. Agreement has been reached on the review of the Capital Requirements Directive, Basel III (see MEMO/13/338).

The new framework will make banks more solid. In order to ensure an appropriate flow of credit to SMEs in the current difficult economic context, the new rules will introduce a reduction in the capital charges for bank exposure to SMEs, through the application of a 0.76 supporting factor. This will provide credit institutions with an appropriate incentive to increase the available credit to SMEs. The better financial stability of our banks, targeted by Basel III, will therefore not result in credit restriction for most small businesses.

Better integration of the venture capital market

A Regulation on European venture capital funds adopted in April 2013 (REGULATION (EU) No 345/2013) will enable venture capitalists to operate more efficiently within the EU. With the help of a European passport fund managers can market their funds across the EU. This will facilitate cross-border fundraising and create a genuine internal market for venture capital funds.

See also MEMO/13/209.

Improving SME access to capital markets

By helping to attract more private investments the European Commission also seeks to develop a framework for efficient, diversified and improved long-term financing for SMEs. One of the solutions is to improve SME access to capital markets: investors could be encouraged to make more investments in SMEs through more visible SME markets and more visibly listed SMEs and mid-caps.

Two recent proposals to attract investors through more visible SME markets and more visible listed SMEs:

  • A proposal for the Markets in Financial Instruments Directive (MiFID) to sustain the development of stock markets specialised in SMEs. (see IP/11/1219 and MEMO/11/716)
  • A proposal for a modification of the Transparency Directive to give better information on listed SMEs.

EU actions to date to increase lending to SMEs

As at 31 December 2012, the EU's Competitiveness and Innovation Framework Programme had mobilised more than €15 billion to finance SMEs.

  1. With a budget of €1.1 billion, the CIP programme has already helped to mobilise over €16 billion for SMEs across Europe.
  2. SME guarantee facility (SMEG); thanks to its guarantee schemes, CIP has already helped over 220 000 SMEs to access over €13 billion in loans.
  3. The high growth and innovative SME facility (GIF): CIP-funded investments in venture capital funds, already supported investment in over 300 fast growing SMEs of more than €2.3 billion.

How the CIP works

The CIP Programme (running from 2007-2013) has helped SMEs to find finance they need to operate, develop or grow at different stage of development.

CIP aims at making funding for SMEs easier through the development of the most relevant channel for SME external finance: a bank loan. This is of paramount importance for the vast majority of SMEs. The programme also provides measures focused on the particular needs of SMEs with high growth potential, for which equity investments can be a more suitable source of finance.

The CIP financial instruments are managed by the European Investment Fund through national and regional financial intermediaries (e.g. banks and venture capital funds) in the member states.

The architecture of the programme mobilises financial institutions to provide additional finance to SMEs.

Loan guarantees: EU-backed loans available to SMEs

  1. Younger and smaller firms are more likely to get only some of the finance they requested from the lending institution (financial intermediary), and, in many cases, to be rejected outright. Support is available in the form of loans backed by the EU.
  2. Guarantees offered to banks give SMEs access to bank loans
  3. under SME Guarantee Facility (SMEG) a lending institution can receive EU guarantee if it intends to lend to SMEs. With an EU guarantee bank can lend to more risky category of clients (young companies, entrepreneurs without a credit history, sufficient collateral, etc.) or simply lend more to SMEs.

Improved access to equity finance

  1. Small-scale, highly-innovative companies involve a category of risk, which can rarely be accepted by traditional finance providers and as such need a tailored support – other than bank loan.
  2. Half of the CIP resources devoted to SME access to finance are invested by the European Investments Fund in venture capital funds that, in turn, invest in start-ups and SMEs with high growth potential.
  3. The high growth and innovative SME facility (GIF) provides capital – usually in the order of millions of Euros – for innovative SMEs in different stages of development.


Success for 1 Million Genome Stakeholder Co-ordination Framework meeting, Health Union takes shape, second wave hits Italy and Germany



Welcome, colleagues, to the European Alliance for Personalised Medicine (EAPM) update, as we assess the success of its recent meeting yesterday (21 October), and how it ties in to the new Commission’s efforts towards “a healthy planet and a new digital world”, writes EAPM Executive Director Denis Horgan.

1 Million Genome

The Beyond 1 Million Genome meeting yesterday (21 October) was very successful, with more than 220 participants, and one of the core aims of the 1 Million Genome Stakeholder Coordination Framework initiative is to support the connection, through stakeholder alignment and implementation, of national genomics and data infrastructures, co-ordinate the harmonization of the ethical and legal framework for sharing data of high privacy sensitivity, and give practical guidance for the pan-European co-ordination of implementing genomic technologies in national and European health-care systems. 

Now, at the close of 2020s, wide-ranging changes are under way in European society and governance, with a European Commission working on an European Health Data governance framework, an European Parliament active on funding allocation for healthcare issue, and a growing conviction among Europe’s policymakers that people must be at the centre of any successful and sustainable strategy to drive forward health care. 

The ambition of new Commission President Ursula von der Leyen is a Europe that ‘must lead the transition to a healthy planet and a new digital world’. Health Commissioner Stella Kyriakides acknowledges: “European citizens expect the peace of mind that comes with access to health care… and protection against epidemics and diseases.”

This discussion yesterday of personalised healthcare depicts a Europe where many chances for improvement are not yet fully being taken up. But this is not merely a catalogue of deficiencies. The variations and inefficiencies it presents are an argument for triggering radical rethinking, and for making the most of personalised healthcare. It highlights the endorsement of incentives, innovation, and investment by a new breed of Europe’s leaders that stakeholders can support translation through implementation in health-care systems.

Some meeting recommendations

In yesterday’s meeting, it was felt that secure and authorized cross-border access to genomic and other health data in the European Union is necessary to:

  • Improve patient outcomes and ensure sustainability of health and care provision in the EU;

  • learn to identify and treat cancer at a much earlier stage;

  • advance the understanding of genetic associations that cause or predispose common complex diseases;

  • strengthen the effectiveness of prevention by improving the screening accuracy and reducing its costs.

A more detailed report will follow in November. 

European Health Union en route

To fill gaps exposed by COVID-19 and ensure that health systems can face future threats to public health, an ambitious EU health programme is needed, say MEPs, who want to raise the budget for the programme to €9.4 billion, as originally proposed by the Commission, to enhance health promotion and make health systems more resilient across the EU. COVID-19 has shown that the EU is in urgent need of an ambitious EU health programme to ensure that European health systems can face future health threats. 

Gateway’ arrives just in time for second wave

Italy, Germany and Ireland, all of whom are currently suffering from the second wave of coronavirus, became the first countries to join up their local national COVID-19 apps to a European Commission-backed gateway, which will allow national health services to share data between themselves. 

Is coronavirus undermining German democracy? 

A heated debate is under way over who should decide on COVID-19 regulations in Germany. Critics argue that Chancellor Angela Merkel and the state premiers are bypassing parliament in their bid to fight the pandemic. Repeatedly Chancellor Merkel met with all 16 premiers of Germany's powerful federal states to decide on measures to curb the coronavirus pandemic. After the latest one, last week, politicians across the spectrum began complaining that, for months now, such measures were all decided behind closed doors and without due parliamentary debate or consultation. 

Among the most vehement critics of this apparent marginalization of parliament is Florian Post, a member of the Bundestag and legal affairs expert with the Social Democrats (SPD), the junior partners in Angela Merkel's coalition government. "For nearly nine months now, regulations have been put in place by local, regional and central authorities which are restricting people's freedoms in a manner unprecedented in post-war Germany," he told the mass-circulation Bild newspaper. "And not even once has an elected parliament been called on to vote on the measures," he complained.

Health passport’ set to fly in

A new digital health passport is to be piloted by a small number of passengers flying from the UK to the US for the first time under plans for a global framework for Covid-safe air travel. The CommonPass system, backed by the World Economic Forum (WEF), is designed to create a common international standard for passengers to demonstrate they do not have coronavirus. However, critics of similar schemes point to concerns over the sensitivity and specificity of the tests in various countries amid fears over greater monitoring over people’s movements.

French run out of flu jabs

The annual flu vaccination campaign in France was only launched last week, yet already pharmacies across the country have sold out of doses. Desperate to avoid hospitals facing the combined pressure of flu patients and Covid-19 patients this winter, the French government launched a greatly expanded flu vaccination programme this year, urging anyone in a risk group to get vaccinated as soon as possible. 

But demand has far outstripped what the government anticipated, and just a week after the campaign was launched on 13 October, pharmacies across the country are declaring rupture de stock (sold out) of vaccines. Around 60% of pharmacies are reporting shortages of the flu vaccine. Gilles Bonnefond, president of the pharmacists union l' Union des syndicats de pharmaciens d'officine (USPO) told France Info: "We have already vaccinated nearly five million people in less than five days. "This is almost half of what was done all last year during the entire vaccination campaign."

President Sassoli seeks prolongation of working methods

European Parliament President David Sassoli says the Parliament has “worked to ensure…that it can continue to perform its core functions”, suggesting a possible prolongation of pandemic working methods. “This is a clear example of how Parliament is adapting and fulfilling its role under even the most challenging circumstances,” Sassoli said.

Coronavirus second wave brings EU summit

European Union leaders will hold a video-conference next week to discuss how to better cooperate against the COVID-19 pandemic as infections rise, European Council President Charles Michel said on Wednesday (21 October). 

The video-summit, to be held on 29 October, will be the first of a series of regular discussions that EU leaders have committed to hold to tackle the pandemic at a time when most of the member countries report alarming figures confirming a second wave. “We need to strengthen our collective effort to fight COVID-19,” Michel said on Twitter. 

The discussion, due to start in the late afternoon, will take place a day after the Commission is expected to announce new plans to strengthen coordination among EU states on testing strategies, contact tracing and quarantine length, officials told Reuters. The EU’s 27 nations fought COVID-19 with different, sometimes contrasting measures, in the first months of the pandemic. The tighter co-ordination is expected to prevent a repeat of the divisions seen after the first wave. 

And that is everything from EAPM for now – do stay safe, enjoy the end of your week, and the weekend.


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Coronavirus likely to affect Belgium Poppy Remembrance appeal



It is feared that the health pandemic could affect this year's Remembrance Sunday commemorations in Belgium. The coronavirus crisis is likely to have a financial impact on the local Poppy Appeal, given that it is feared the public may well be cautious about the risks of touching collection tins and the poppies themselves. 

Even so, the Legion's Brussels branch plans to go ahead with holding a social distanced/masked ceremony at Heverlee Commonwealth War Graves Commission cemetery at Leuven on 8 November (11am).

This will be in the presence of British Ambassador Martin Shearman, UK Ambassador to NATO Dame Sarah Macintosh, as well as top brass from the US, Canada, Australia, New Zealand, Poland, and Belgium.

Belgian rules currently allow for the event to proceed.

The Brussels branch, which celebrates its centenary in 2022, will be represented by Zoe White MBE (pictured), a former major in the British Army and the first female chair in its history.

White joined the international staff at NATO HQ in Brussels as an executive officer in 2017. She said she moved to NATO "to develop my political knowledge of defence and security matters and, most importantly, to continue to serve in an organization whose ethos and values I truly believe in."

She entered the Royal Military Academy Sandhurst in 2000, after a short stint in her home unit, the Royal Gibraltar Regiment. She was commissioned into the Royal Signals and served in the Army for 17 years.

White has considerable operational experience. She deployed to Kosovo on Op Agricola, Iraq on Op Telic (three times), Afghanistan on Op Herrick (three times) and Northern Ireland on Op Banner (for two years).

She specialized in providing lifesaving measures to counter radio controlled explosive devices and was awarded the MBE for her work in Iraq, Afghanistan and Northern Ireland.

During her last nine-month operational tour of Afghanistan she was embedded with the US Marine Corps and among other tasks, was responsible for mentoring and training the communications directors across the local uniformed services (Army, Police, Border Patrol) in Helmand - a role, she says, that taught her much about the value of authentic dialogue (and left her with a love of cardamom tea and dates).

Looking back at her military career, she says: "I was privileged to command soldiers who were technical experts and absolute forces of nature. It was a joy to serve with them."

A self-confessed "defence geek", Zoe studied Battlespace Technology at Cranfield University where she expanded her knowledge of heavy armour and "exquisite" weaponry.  She is currently studying for an MBA in her spare time.

Zoe, whose husband David is also a retired Royal Signals officer ,was elected Chair of the Brussels branch of the Royal British Legion in September 2020, succeeding Commodore Darren Bone RN. She is the first female chair of the branch since its launch in 1922.

The Prince of Wales and future King Edward VIII met founding members of the branch in June 1922.

White adds, “I am delighted to take custody of the Branch chair role. It is both a way to meaningfully continue my service to veterans and those still serving, and to continue the tradition of Remembrance in a country where so many made the ultimate sacrifice for the lives we live today.”

Branch website & contact details. 

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Greek court orders jail for neo-Nazi leaders



A Greek court today (22 October) ordered neo-Nazi Golden Dawn chief Nikos Michaloliakos and his former top aides to begin immediately serving prison sentences, capping one of the most significant trials in the country's political history, writes Erika Vallianou.

Following the ruling, warrants are to be issued for the immediate arrest of Michaloliakos and several former party lawmakers, the court said.

Several of those convicted including some lawmakers have already turned themselves in, state television ERT said.

Michaloliakos and other former members of his inner circle were sentenced two weeks ago to more than 13 years in prison for running a criminal organization after a five-year trial.

Michaloliakos, a long-term Hitler admirer and Holocaust denier, has rejected his party's prosecution as a political witch hunt.

He remained defiant Thursday after the court ordered his imprisonment.

"I'm proud to be taken to jail for my ideas...we will be vindicated by history and by the Greek people," he told reporters outside his home in an affluent northern Athens suburb.

"I thank the hundreds of thousands of Greeks who stood by Golden Dawn all these years," said the 62-year-old mathematician and former protege of Greek dictator Georgios Papadopoulos.

Those going to jail include deputy Golden Dawn leader Christos Pappas and the party's former spokesman Ilias Kassidiaris, who recently formed a new nationalist party.

But the ruling cannot be immediately enforced in the case of former Golden Dawn lawmaker Ioannis Lagos, who was elected to the European parliament in 2019 and has immunity.

Greek judicial authorities must formally request that Lagos' immunity be lifted by the European parliament before he can be imprisoned.

The court had issued guilty verdicts to Michaloliakos and over 50 other defendants, including his wife, on October 7.

But the conclusion was delayed by a number of legal disputes, including last week when Lagos tried to have the court's three judges recused for bias.

The head judge Maria Lepenioti on Monday also publicly questioned the state prosecutor's demand that most of the convicted be provisionally released pending appeals trials, which could take years to adjudicate.

Modelled on Nazi party

The court has accepted that Golden Dawn was a criminal organization run by Michaloliakos using a military-style hierarchy modelled on Hitler's Nazi party.

The probe was sparked by the 2013 murder of anti-fascist rapper Pavlos Fyssas, who was ambushed by Golden Dawn members and fatally stabbed.

Fyssas' murderer, former truck driver Yiorgos Roupakias, has been handed a life sentence.

In a lengthy investigation, pre-trial magistrates outlined how the group formed black-clad militia to intimidate and beat up opponents with knuckle dusters, crowbars and knives.

A search of party members' homes in 2013 uncovered firearms and other weapons, as well as Nazi memorabilia.

Another former Golden Dawn organiser, former death metal bassist Georgios Germenis who is now an assistant for Lagos at the European parliament, on Thursday said his conviction was "absurd" and politically motivated.

"I am 100% innocent. I was just helping people," Germenis said as he turned himself in at his local police station.

For Michaloliakos, the sentence caps a stunning downfall for a man whose party was the country's third most popular in 2015, the year the trial began.

The party won 18 seats in parliament in 2012 after tapping into anti-austerity and anti-migrant anger during Greece's decade-long debt crisis.

It failed to win a single seat in last year's parliamentary election.

Michaloliakos and other former Golden Dawn lawmakers had already spent several months in prison after Fyssas' murder in 2013.

Time served in pre-trial detention will be deducted from the overall sentence.

Under Greek law, they must serve at least two-fifths of their sentence before requesting an early release.

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