BBVA EGF ENHANCED SUPPORT TO MIDCAPS

Operation under the European Guarantee Fund (EGF) to support Spanish small and medium-sized enterprises (SMEs), mid-caps and large corporates in sectors that are in line with the EIB's long-term mission (SME support, innovation, and environment) affected by the COVID-19 pandemic.

The project consists of an unfunded risk participation scheme under a full delegation approach by which the EIB will cover up to 75% of the losses in respect to each defaulted loan of a non-granular portfolio of corporate and mid-cap loans. While access to finance had somewhat improved since the financial crisis, it has again become a critical issue as a result of the COVID-19 crisis, due to both rapid demand and rising constraints on the side of intermediary banks. These constraints are idiosyncratic and only partly addressed, e.g. through measures of the ECB, which is providing unprecedented amounts of liquidity support in the euro-area countries. A pressing constraint for financial intermediaries is lending capacity, particularly as the economic crisis will lead to substantial downgrades in their existing lending books and corresponding increases in their minimum capital requirements. This leads to a vicious circle of a pro-cyclical shift of remaining lending capacity into "lower-risk" assets, which was a main contributor to the last financial crisis. Therefore, the objective of the operation is to provide liquidity and financing for projects to mid-size and large companies within the context of the COVID-19 pandemic.

In accordance with the Bank's policy to ensure that sub-loans comply with the EU acquis, in particular in the fields of environment and public procurement, the Bank will require the intermediary to take all the requisite measures to ensure that the environment and procurement procedures carried out by the final beneficiaries for the sub-projects that the Bank finances will comply with the relevant EU legislation and the applicable national legislation, provided that it is in conformity with EU rules.

In accordance with the Bank's policy to ensure that sub-loans comply with the EU acquis, in particular in the fields of environment and public procurement, the Bank will require the intermediary to take all the requisite measures to ensure that the environment and procurement procedures carried out by the final beneficiaries for the sub-projects that the Bank finances will comply with the relevant EU legislation and the applicable national legislation, provided that it is in conformity with EU rules.