Utilisation of European Financing Instruments

A major challenge for the Greek banking system in the coming years is the channelling of liquidity to the real economy and its contribution to relaunching the Greek economy. On the part of banks, innovative financing instruments are required for the reduction of risk and the cost of funding to essentially support new investments and SMEs.

Currently implemented instruments

The increased role of the European financing instruments in enhancing the development and entrepreneurship in the country is already noticeable. Τhere are projects / actions currently being implemented by Piraeus Bank which are being financed through the following programs:

a. JESSICA Financial instrument

Piraeus Bank has undertaken to manage a total amount of about € 40m, which are allocated from the JESSICA Holding Fund Greece Program, intended to finance urban development projects in the regions of Central Macedonia and Thessaly.

b. JEREMIE Financing instrument

Piraeus Bank, in cooperation with the European Investment Fund and the Greek Ministry of Economy, Infrastructure, Shipping and Tourism, provides co-financed ‘JEREMIE’ loans, on preferential terms for the support of SMEs through the provision of Working Capital or Investment Loans.

For investment plans of a budget less than €2,5 million, please be informed for the financial instruments and initiatives being implemented through Piraeus Bank here.

Initiatives for the New Investment Period

Having a proven track record and extensive experience in financing Greek companies through the utilisation of European funds, as well as know-how in creating flexible and innovative financing instruments, Piraeus Bank is expected to play an important role in the coming years in the financing of new investments and SMEs, with the target of a clear delineation of the country’s growth path.

Utilizing the possibilities provided by the new European programs’ planning, such as the European Fund for Strategic Investment (EFSI), the provision of direct liquidity to Greek banks from International Financial Institutions to finance investment projects, the new NSRF (ΕΣΠΑ) funds, and the use of existing investment programs are the pillars on which the restart of the Greek economy may be based in the coming years.

The main features of the new financing practices are summarised as follows:

  • Revolving: granting loans on preferential terms, the repaid amounts may be utilised to finance new projects (possibility of future utilization of resources)Leverage: combining loans with private funds (attracting private funds).
  • Sources of funding: allocation of resources from the Operational Programs (on a national or regional level) and combining thereof with additional funding from the International Financial Institutions (e.g. EIB, EBRD, etc.).
  • Fund of Funds: central unit of managing more than one Fund.

In summary, the key-elements for the utilisation of European financing instruments for the new period 2014-2020 are the following:

a. Financing instruments 2014-2020

The design of these programs follows the philosophy and characteristics mentioned above.

Their terms are currently being finalised in order for their implementation period to begin.

b. Investment Plan for Europe - European Fund for Strategic Investments (EFSI)

The European Fund for Strategic Investments - EFSI was established in July 2015 in the framework of promoting investments within the European Union.

The European investment plan, at the center of which lies the EFSI, has three objectives:

  • the removal of investment obstacles by further enhancing the “single” market notion,
  • providing visibility and technical support to investment projects, and
  • the "smart" use of new and already existing financial resources.

The EFSI intends to operate as a lever for the mobilisation of at least €315 billion of private and public investments and is oriented in financing strategic investment plans of high economic and social added value. The aim of EFSI is the mobilisation of funds at European level for the realisation of investment plans in areas such as infrastructure, education, research, innovation and renewable energy sources, focusing on creating employment, maximising long-term growth and competitiveness.

The main target of the EFSI is to create an influx of private funding in the real European economy, mainly through the provision of guarantees up to an amount of about €21 billion as well as the introduction of a European investment portal.

The following entities can apply for EFSI based financing:

  • Project promoters
  • National, regional or local authorities
  • Member states, public sector entities
  • The private sector

Criteria for project evaluation

  • Contribution to the EFSI’s objectives
  • Quality and soundness of the project
  • Technical and economic viability
  • Additional indicators (complementarity, multipliers, private participation, etc.)