Closure performance data on the 2007-2013 financial engineering instruments

Published on 13 November 2017

The European Commission has recently published its final 'Summary of data on the progress made in financing and implementing financial engineering instruments reported by the managing authorities' from the 2007-2013 programming period. This data reflects the state of play at closure of 2007-2013 operational programmes (up to end of March 2017) co-financed by the European Regional Development Fund (ERDF) and the European Social Fund (ESF).

Information in the new Summary presents a positive picture of the implementation of financial engineering instruments (FEIs) which, as noted by the new Summary: "performed well overall in terms of disbursement rates, amounts devoted to management costs and fees, performance both in terms of leverage and revolving amounts, and in terms of final recipients supported and jobs created."

More than 1 000 FEIs were implemented in 25 Member States during the 2007-2013 period, through a broad range of financial intermediaries. These included commercial banks, guarantee funds, venture capital funds, and government agencies that contributed as fund managers. National promotional institutions and the European Investment Bank Group also contributed as managers of holding funds and specific funds. 

Other Summary data highlights that more than EUR 16 billion of programme resources (EU + other funding) were paid into FEIs by managing authorities. This represents an almost tenfold increase compared to the 2000-2006 period. Some 95% of the 2007-2013 contributions to FEIs covered by the Summary came from the ERDF (representing 5.4% of the programming period's total ERDF allocations) and 5% from the ESF. Figures from around 850 FEIs that reported management costs and fees show that such accumulated costs and fees accounted for 6.7% of total contributions to those FEIs concerned, or around 1.26% per annum on average.

Positive trends

The amounts allocated to FEIs for 2007-2013 were almost fully absorbed. In total 93% of the allocations to FEIs were reported as disbursed to final recipients; a large increase compared to the 75% reported at the end of 2015. The strongest increase can be observed in the urban development and energy efficiency sectors. In the latter, absorption has increased from 50% in 2015 to 95% at closure; underlining the case that FEIs do work successfully also in thematic areas and sectors other than support for small and medium-sized enterprises (SMEs).

Two of the main 'selling points' of FEIs have been their revolving characteristics and the ability to attract additional public and private investment. The Summary indicates that "managing authorities estimated an amount of nearly EUR 8.5 billion of EU resources returned for subsequent reinvestment in the programme areas" – and this was already within the programming period, and it can be expected that returns will continue to flow beyond this. Whilst managing authorities were not obliged to provide information on leverage, the Summary reports cases where FEIs mobilised additional resources up to 20 times the EU contribution to those instruments.

FEIs are therefore shown in the Summary to make a difference in the real economy, and this is illustrated by the more than 310 000 final recipients that benefitted from the 2007-2013 financial instruments. These were 220 000 SMEs (more than half of them micro-enterprises) and almost 90 000 individuals.

Average loan sizes were around EUR 45 000 (including microfinance), whilst the average for guarantees was around EUR 16 000, and equity participations tended to be just more than EUR 400 000 on average. Slightly over 170 000 jobs were created as result of this support from the 2007-2013 ERDF and ESF financial engineering instruments.

More detailed statistics and analysis are available in the Summary which can be downloaded and shared from the fi-compass website's resource library.