1. Regional Policy EUROPEAN COMMISSION JEREMIE, by George Kolivas REGIO-B.4 – Financial Engineering JEREMIE stands for : ‘Joint European REsources for MIcro to medium Enterprises’ ‘ Joint resources’: JEREMIE combines resources from OPs( ERDF or SF) + EIB+ other IFIs, banks & financial intermediaries, investors Not an organisation but a series of coherent actions

2. Regional Policy EUROPEAN COMMISSION Why JEREMIE? Enhanced Access to finance for SMEs in the regions is needed Renewed Lisbon Strategy and CSG stress the need to enhance: -market driven - sustainable - financial products and instruments for SMEs

3. Regional Policy EUROPEAN COMMISSION Main Actors of JEREMIE -1 Commission: DG REGIO EIF + EIB (EIB as loan capital provider) Other IFIs, like the EBRD for 8 new MS, the Council of Europe Dev. Bank (CEB) Other specialized financial intermediaries, I.E. KfW (DE), Caisse des dépots (FR),etc Banks, investors

4. Regional Policy EUROPEAN COMMISSION Main Actors of JEREMIE -2 MS, Regions and managing authorities National and regional banks and financial intermediaries, investors SMEs, including - Micro credit (up to 25.000 EUR) beneficiaries

5. Regional Policy EUROPEAN COMMISSION JEREMIE PHASES -1 Phase 1 : Preparation Evaluations (2006-2007) Programming Phase 2: Systems MA selects Holding Fund MA contributes to Holding Fund HF selects Financial Intermediaries HF contributes to fin. intermediaries

6. Regional Policy EUROPEAN COMMISSION JEREMIE PHASES Phase 3: Implementation Financing: - SMEs - micro-credit beneficiaries Closing OPs Recycling OP resources

7. Regional Policy EUROPEAN COMMISSION Phase 1: Evaluation Evaluation consists in: gap analysis of potential supply and demand for financial products for SMEs in the regions identifying and recommending appropriate market driven instruments to fill the gap - proposed action plan

8. Regional Policy EUROPEAN COMMISSION Evaluation - 1 Is carried out by the EIF in close cooperation with the regions, in 2006 and 2007 EIF is assisted by Commission -DG REGIO services: – DG REGIO: B1+ Operational Desks + Evaluation Unit

9. Regional Policy EUROPEAN COMMISSION Evaluation - 2 Evaluations, including Interim reports produced in 2006, will be freely available to: MS, Regions-managing authorities –Interested holding funds and financial intermediaries Associations of SMEs, Chambers of commerce, etc

10. Regional Policy EUROPEAN COMMISSION Who Finances the Evaluation? ERDF- Commission technical assistance credits will cover 75% of the cost EIF will cover 25% of the cost Total Budget for 2006: 3.5 million €

11. Regional Policy EUROPEAN COMMISSION Phase 1: Programming interim evaluations reports available in 2006 Competent national authorities use conclusions and proposed action plan of evaluations ( interim reports) when they elaborate programmes DG REGIO negotiates programmes based on evaluations – interim reports

12. Regional Policy EUROPEAN COMMISSION SYSTEMS: Selecting Holding Fund-option 1 Member States or managing authorities wishing so, can award directly the holding fund tasks to the EIF A funding agreement must be negotiated and signed in this respect between MA and EIF

13. Regional Policy EUROPEAN COMMISSION SYSTEMS: Selecting Holding Fund-option 2 Tendering by MS or MA for the selection of holding fund MS or MA sign a funding agreement with holding fund EIF willing to respond to tenders, alone or with IFIs/local financial institutions

14. Regional Policy EUROPEAN COMMISSION SYSTEMS: OP contributes to Holding Fund OP contributes to the H F for ALL types of financial products Such contributions are eligible for interim ERDF payments ( art 78 - new gen. reg) Such contributions, when reimbursed by the ERDF, are IRREVERSIBLE for the period 2007-2015 Supplementary contributions from the OP to the HF recommended for the whole period 2007-2015

15. Regional Policy EUROPEAN COMMISSION SYSTEMS: JEREMIE policy mix The MS or MA with the Holding Fund: define and review the JEREMIE strategy and policy mix : -financial products offerred, -targeted SME etc monitor implementation ofJEREMIE

16. Regional Policy EUROPEAN COMMISSION SYSTEMS: Selecting Financial Intermediaries Holding Fund proceeds to Call for expression of interest addressed to financial intermediaries. Holding Fund evaluates, selects and accredits financial interm. Accreditation subject to periodic review Holding Fund provides equity, loans or guarantees to selected fin. intermediaries

17. Regional Policy EUROPEAN COMMISSION SYSTEMS: Types of Finan. Intermediaries -1 Venture capital funds, including: -Start ups and Seed capital funds -Business angels -Technology and innovation funds

18. Regional Policy EUROPEAN COMMISSION Types of Financial Intermediaries - 2 Guarantee funds Loan and mezzanine funds Micro credit providers Fin. intermediaries offering any combination of the above financial products and services

19. Regional Policy EUROPEAN COMMISSION Phase 3: What kind of support for SMEs? Maximum publicity for JEREMIE products for SMEs to be ensured by: -OP, -Holding Fund -Financial Intermediaries) Financial interm. evaluate proposals by SMEs and support them with: Equity and Venture capital Mezzanine financing Guarantees Loans Advice and assistance

20. Regional Policy EUROPEAN COMMISSION Phase 3: Supporting Micro Credit Operations Banks reluctant to consider such "social economy" operations Specialized Micro Credit Providers fill the gap Credit up to 25.000 EUR to: –micro enterprises – First time entrepreneurs –Young or old entrepreneurs – Women –Minorities, unemployed, etc

21. Regional Policy EUROPEAN COMMISSION Phase 3: Monitoring implementation of JEREMIE Holding Fund, in close cooperation with OP, monitors JEREMIE implementation by Financial intermediaries and reports to the MA Following effective demand for each type of financial product, MA channels funds from the OP to the HF HF following demand and efficient management, supports FI during the whole period 2007-2015

22. Regional Policy EUROPEAN COMMISSION Phase 3:Closure of OPs end 2015 At the closure of OPs at the end of 2015, ERDF grants transferred to Holding Funds must have been used at least once, paid out of Financial Intermediaries, to: finance SMEs( equity,VC, loans, guarantees) finance micro credit beneficiaries, cover guarantees offered by Guarantee Funds finance eligible management costs

23. Regional Policy EUROPEAN COMMISSION Recycling JEREMIE resources Contributions from OPs invested in SMEs under JEREMIE, when repaid to funds or holding funds, belong to the MS or MA Such Repaid resources must be invested again in favour of SMEs

24. Regional Policy EUROPEAN COMMISSION JEREMIE FLOW CHART Operational Programme SMEs FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIARIES HOLDING FUND

25. Regional Policy EUROPEAN COMMISSION JEREMIE Added Value-1 ERDF Programmes planned timely on the basis of the gap analysis Only two selection procedures for the 9 years period 2007- 15 Strategy and policy mix based on the gap analysis on going monitoring Updating - adjusting policy mix One professional Holding Fund selected by the Program to : promote all financial products, to accredit and select financial intermediaries

26. Regional Policy EUROPEAN COMMISSION OPTIMUM FLEXIBILITY and SIMPLIFICATION One professional Holding Fund to - manage ALL financial products, based on gap analysis and demand -select-accredit and contribute funds to financial intermediaries - monitor implementation by financial intermediaries and report to MA JEREMIE Added Value-2

27. Regional Policy EUROPEAN COMMISSION JEREMIE Added Value-3 Recycling OP resources contributed to JERREMIE = sustainability. Leveraging OP resources with private capital contributed by -IFIs and other Banks, -financial intermediaries, -other investors.