EIB Group and Erste Bank partner to support SMEs and mid-caps in Austria

The capital relief will enhance Erste Bank’s risk-taking capacity and create additional lending headroom.

The EIB Group — consisting of the European Investment Bank (EIB) and the European Investment Fund (EIF) — has provided Erste Bank der oesterreichischen Sparkassen AG (Erste Bank) with a guarantee for a €49 million mezzanine tranche of a synthetic securitisation transaction. The transaction is expected to provide capital relief, as provided for by the EU Capital Requirements Regulation. It is the first synthetic securitisation transaction in Austria that qualifies as a simple, transparent and standardised (STS) transaction under the European Securitisation Regulation.

The capital relief will enhance Erste Bank’s risk-taking capacity and create additional lending headroom. As a result, Erste Bank will create a new portfolio of eligible loans to small and medium-sized enterprises (SMEs) and mid-caps in Austria. The portfolio is set to be equal to four times the EIB’s guarantee amount, or up to €196 million. Thanks to this operation, the new portfolio will increase SME investments in Austria. 

The operation is a synthetic securitisation whereby the EIF will issue a guarantee covering a mezzanine tranche for a total of €49 million referencing a granular portfolio of €907 million of loans to SMEs and mid-caps originated by Erste Bank. The guarantee will be fronted by the EIF and counter-guaranteed by the EIB for the entire amount. The transaction is structured with a two-year replenishment period and uses synthetic excess spread equivalent to the one-year expected loss of the reference portfolio. 

EIB Vice-President Thomas Östros, who is responsible for operations in Austria, said: “The transaction with Erste Bank increases support for small and medium-sized companies, an important sector of the Austrian economy. I am glad that we can rely on Erste Bank as a trusted partner to provide the financial means needed by businesses in Austria in these challenging times.”

EIF Chief Executive Marjut Falkstedt added: “We are very happy to be extending our cooperation with Erste Bank through our proven securitisation expertise and toolkit deployed with the EIB to unlock financing opportunities for small businesses in Austria.”

Erste Bank Board Member for Corporate Clients Hans Unterdorfer stated: “This marks Erste Bank's third synthetic securitisation collaboration with the EIB Group and the very first Austrian synthetic STS securitisation. We highly appreciate the partnership and productive cooperation with the EIB Group, as it supports us in pursuing our goal of always providing the best solutions to the market as a reliable, long-term partner to Austrian enterprises. With the assistance of these EIB Group funds, our clients can accelerate crucial initiatives such as the economy’s green transition and further digitalisation, thereby fostering key developmental strides for Austria’s economy and society.”