1. SME Initiative Malta
TAIEX-Regio Workshop
Bucharest
11th July 2017

2. Performance Review
SME Initiative Malta: overview
SME Initiative Malta: absorption as at 31 December 2016
Main events in 2016
Profile of the Final Recipients
Processing the information received from Financial Intermediaries
Internal Control Framework
Conclusions

3. Overview
Objectives:
As per the Operational Programme, the SME Initiative aims at:
Improving competitiveness of SMEs in Malta by reaching 845 SMEs and achieving a leverage of 4x
Reduce pricing and collateral requirements
Financial Instrument:
Uncapped guarantee for a portfolio of new loans to SMEs supporting 75% of the risk of each loan originated by financial intermediaries
Purpose of the loan:
Investment in both intangible and tangible investments, working capital, others

4. Overview (2)
Malta has earmarked EUR 15m of ERDF resources for this initiative.
EIB Group has committed EUR 32m, the EC through H2020 EUR 0.23m
The Financial Intermediary has committed EUR 31.77m
Financial Intermediaries are contractually committed to achieve a leverage effect of 4x with respect to ERDF resources.

5. Signature of the Funding Agreement
Main Events in 2016
Allocation to Financial Intermediaries
2015
2016
2017
July
January
September
July
Signature of the Funding Agreement

6. Risk supported by ERDF, H2020 and EIF Financial Intermediaries
Overview (3)
Guarantee
EUR
61m available for SMEs
Risk takers
Loan to SMEs
Guarantee
FEI
Risk supported by EIB
Risk supported by ERDF, H2020 and EIF
Risk supported by ERDF
Financial Intermediaries
Enhancing the competitiveness of SMEs in Malta: 845 SMEs
Financial Intermediary Risk (25%)
DESIRED
IMPACT
SME Initiative risk (75%)
Financial Intermediary Risk (25%)
ERDF
15 m
EUR 15m of ERDF resources will potentially generate EUR 61m of financing to SMEs

7. Absorption as at 31st Dec 2016 259 SMEs reached
Of which 35 SMEs in Gozo
Of which EUR4m in Gozo
259 SMEs reached
EUR 31.6m Loans committed
EUR 13.5m
ERDF allocated to guarantee agreements
50% of the portfolio has been generated as at 31 December 2016

8. Absorption as at 31st March 2017
320 SMEs reached
EUR 38.4m Loans committed
EUR 13.5m
ERDF allocated to guarantee agreements
In 3 months, 61 SMEs were included in the portfolio of loans and additional financing of approx. EUR 7m was committed

9. Evolution of absorption
Absorption higher by 33%
Actual absorption rate (67%) is well above the expected absorption (34%), EUR 20m more than expected

10. Evolution of absorption
The portfolio should be fully built up by the second semester of 2018 with 1.5 year of advance

11. Profile of final recipients
Who is benefiting? (end 2016)

12. Profile of final recipients (2)
Who is benefiting? (end 2016)

13. Profile of final recipients (3)
Sectors receiving financing (end 2016)
DIVERSIFICATION BY SECTOR
17 sectors received financing (NACE code level 1)
4 sectors account for approx. 70% of SMEs receiving financing
More than 55% of the financing reached SMEs of the retail and hospitality sectors

14. Profile of final recipients (4)
Loan Purpose (end 2016)

15. Processing the information received from FIs
Signing the guarantee agreement with the financial intermediary:
Establishing the checklist for the criteria of elgibility
Defining the reporting template and timeframe for reportind
Excel in annex of each contract, the reporting template is also included in the Call for Expression of Interest
Q+30 days (20 for Q1)
Receipt of the quarterly report:
, o
Portal:
Only for bank for which the system has already been tested
Automatic messages and alerts
Issuance of report to stakeholders
Annual progress report
Audited financial statements
Pipeline
‘ad hoc’ request:
Indicative absorption
Info. para Investor’s board

16. Control Framework Automatic checklist when receiving the information:
Automatic control:
Format: e.g. numbers / text
Consistency with SME definition: e.g. SME – less than 250 employees y EUR 50m of revenues o EUR 43m of assets
Eligibility: e.g.:
Signing date of the loan
Loan purpose–
Maximum size of the loan– EUR 12.5m
Minimum duration– 12 months
Purchase of land limit– 10% principal
Analysis of issues/errors
Communication with banks for corrections
Monitoring visit/ desk review
Sampling of transactions
At least 1 visit per bank
Notice of 1 month
Agenda – 1 week before the meeting
Visit with the sending of expert from luxembourg
Presentation from the bank in relation to the policy from granting loans, signing process, collection and issuance of data – ½ day
Gathering of documents related to the loans that are sampled– 1 day
Review of all aspects that could not be detected trhough automatic checks, checklist of inclusions e.g.:
visibility
Data protection
Notification to final receipient (Financial Benefit)
GGE calculation methodology
Review of document related to the size of the SME (evidences)
Investment invoices
Monitoring report with conclusions and points to be followed-up
Control of the monitoring activity through the Agreed Upon Procedure done by an external auditor.

17. Conclusions
Full allocation of ERDF resources to guarantee agreements with 2 financial intermediaries, the first signature took place 6 months after the signature of the funding agreement and a second operational agreement was signed 14 months after the signature of the Funding Agreement.
Absorption is going well as at May 2017, 66.9% of the resources were committed by the banks to SMEs (67% for Bank of Valletta and 63% for BANIF).
Financing is reaching SMEs from different sectors and generating a great support to financing tangible assets of SMEs while reducing the level of collateral required by banks. However the size of the loan is higher than expected.
Successful implementation of the financial instrument with full allocation of resources and the progress of implementation shows a strong market appetite for even more operations…

18. Contact Details Planning and Priorities Co-ordination Division,
Triq il-Kukkanja,
Santa Venera
Tel:
Fax:
Website: