The European Investment Bank Group has signed a €112 million deal with BNP Paribas that it said would support about €337 million in new lending to small and medium-sized businesses and mid-sized companies in France.
The arrangement is a “synthetic securitisation”, a risk-sharing structure in which part of the potential losses on an existing loan portfolio are guaranteed so the bank can free up regulatory capital and make new loans, EIB said in a statement on Monday.
BNP Paribas has committed to provide the new lending over a two-year period, the organisation said.
At least 30% of the new financing — at least €101 million — will be allocated to projects linked to climate action and environmental sustainability.
Clotilde Quilichini, Head of Corporate Clients within BCEF at BNP Paribas, said the bank would commit to €337 million in new loans for French SMEs and mid-caps, including financing linked to companies’ energy transition.
How the risk-sharing is structured
The European Investment Fund is providing protection on a €112 million “mezzanine tranche” — a middle layer of risk in the portfolio — and this is counter-guaranteed by the European Investment Bank, EIB said.
The underlying loan portfolio totals about €1.5 billion and consists of mid-corporate loans originated by BNP Paribas unit BCEF.
EIB Vice-President Ambroise Fayolle said the transaction was intended to facilitate access to finance for small businesses and mid-caps and support investments linked to climate action and environmental sustainability.
