The president of the European Central Bank Mario Draghi has stressed the need to revive lending to small and medium enterprises (SME) in more favorable conditions.
It has no sense in an Economic and Monetary Union (EMU) that a French or German SME itself at an interest rate of around 2% and a Spanish or Italian one has to pay more than 5%. This is what is known as market fragmentation and in order to solve the problem the institution has already formed a working team with the European Investment Bank (EIB) and other public bodies.
In this sense, the Spanish Official Credit Institute (ICO), together with its counterparts in the eurozone, as the German KFW, will play a key role
ICO signed last week an agreement with the EIB of 500 million euros in order to increase funding for SME and medium-sized companies (up to 3000 employees), mainly in the industrial and service sectors.
The Government approved in mid-March an injection of 22,000 million euros for freelancers and SME through five lines of financing from ICO. The Institute represents 3% of bank assets in Spain, but that 3% turns into 11% of the loan to SMEs.
The ICO is a recurring debt issuer and, in the same way that the state, it has suffered the volatility generated by the increasing lack of investor confidence. In 2013, it has attracted more than 2,500 million euros and the total outstanding balance exceeds 66,000 million. It maintain permanent road shows mainly with investors.
President of ICO in Spain has noticed a change in investor perceptions about the Spanish role. "The rescue is no longer a concern." Furthermore, investors are returning, not only from the eurozone, but also Europeans (UK, Switzerland), from the U.S.A and from East. "We found a clear improvement in confidence in Spain. I think they increasingly see our country as a potential market, with future and to invest. "
At this time, the major concern, the big question for investors is about the ability of the Spanish economy to grow in the long term. "There is a market consensus that we will go to a recovery, probably as early as the fourth quarter of this year, and we will return to positive rates next year."
The president of the Official Credit Institute (ICO), Román Escolano, has put on the table a fund of funds, provided with 1,200 million euros, which seeks "the transformation of venture capital in Spain " with the goal of facilitating the alternative financing to the bank one. In order to cope with the credit lack, the head of the ICO warns that "what is needed is more access to own funds, to equity". "Spain is less developed in this area that the U.S. and Israel," he explains.
From the fund of funds -which will have the name of -Fond- Global ICO- will hang the bilateral fund to finance to SMEs which has been agreed by the Economy Minister , Guindos, and the German Treasury one, Schaüble. Escolano is simplifying credit lines, a change that will allow easier access to the 22,000 million which will be mobilized in the coming months to fund to entrepreneurs.
Sanlúcar de Barrameda, Cádiz, Southwest of Spain