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A deal has been struck by the European Investment Bank (EIB) that will assist SMEs in Germany

The European Investment Bank has announced it is providing IKB Leasing GmbH (IKBL) with €97m by purchasing asset-backed securities (ABS); the transaction was closed yesterday. It will contribute to further opening up the securitisation market for financing SMEs in Germany. The EIB finance will be used to support projects involving leasing finance that will be carried out in Germany or other EU countries by SMEs or midcaps, i.e. firms with up to 3,000 employees.

EIB vice-president Wilhelm Molterer, who is responsible for the Bank’s financing operations in Germany, said that the transaction gave an important signal to investors: “The agreement with IKB Leasing reflects the fact that financial markets are becoming more stable. By purchasing these ABS notes, the EIB is offering finance that goes beyond the traditional loan to SMEs.

“Because of its greater engagement in the asset-backed securities market, the EIB will help to make this segment more attractive to other investors, as well, so that in the future more finance will be made available to SMEs and midcaps.”

For IKBL, the EIB’s involvement in the transaction and thus the finance that will be made available will strengthen its business with SMEs and midcaps in Germany and other EU countries where IKBL is active in the market.

Last year alone, the EIB and its subsidiary, the European Investment Fund (which specialises in risk capital finance), provided a record amount of nearly €22bn for SMEs and midcaps, benefitting some 230,000 companies across Europe. Apart from SMEs, the EIB’s lending is focused on innovation, research and development, strategic infrastructure and resource efficiency.