Press release

Italy: new resources from the EIB-EIF and CDP for natural disasters and social projects

Luxembourg, 29 November 2017

New financial resources for the Italian economy are on their way, thanks to three agreements signed today in Luxembourg between the European Investment Bank Group (EIB and EIF) and Cassa depositi e prestiti (CDP) at the annual strategy meeting between the two institutions now under way in Luxembourg.

  • €530 million for families and SMEs for losses caused by natural disasters
  • €100 million from the Social Impact Italia Programme for social economy projects
  • Framework agreement about the extension of the partnership between CDP and EIF to support SMEs with innovative tools

Statement by Dario Scannapieco Vicepresident EIB, Chairman EIF

"Italy is showing itself to be the country where collaboration between the EIB group and the national promotion institution, CDP, has the most effectiveness within the EU in terms of tools and new finances mobilized for the real economy. Such collaboration is increasingly important with the economy currently showing the first significant signs of recovery of GDP and overall employment."

Statement by Fabio Gallia, CDP Chief Executive Officer

“CDP reaffirms its commitment to impact finance with the launch of the Social Impact Italia Programme, a new tool capable of supporting key market players through capital for social innovation. The agreement, coupled with new measures for families and SMEs and made possible by the established partnership with the EIB and the EIF, will catalyze further European resources for the Italian economic system.”


Statement by Pier Luigi Gilibert, EIF Chief Executive Officer

“With the agreements between EIF and CDP signed today, the portfolio of instruments available to smaller Italian companies is becoming increasingly more plentiful. The growth of tools has accelerated decisively with the Investment Plan for Europe, in which it has been affirmed the EIF’s role as the EU's financial leverage for SMEs, with an ever-growing volume of activity."
 

Natural disasters
This agreement involves a loan of €530 million from the EIB to CDP, of which the first tranche of €230 million was signed today. The resources will be channelled into a €1.5 billion fund that CDP has set up to support reconstruction after the losses suffered by households and businesses as a result of 40 natural disasters (floods, landslides, etc.) in the last four years in 16 Italian regions.

The financing will take the form of a tax credit, a mechanism that has already been used with success in the case of the earthquakes in Abruzzo, Emilia-Romagna and Central Italy.* The fund has a twofold advantage: on the one hand, it makes resources immediately available to local communities; on the other hand, it enables the state to distribute the burden of reconstruction over time.

Social Impact Italia Programme for the social economy
The collaboration between the European Investment Fund (EIF – EIB Group) has been strengthened further with the launch of the new Social Impact Italia Programme, which will have a total of €100 million co-financed equally by the EIF and CDP. The platform seeks to develop the Italian inclusive finance market in support of social entrepreneurship. Acting as a patient and impact investor, Social Impact Italia will invest in the social sector both by directly financing specialised financial intermediaries (including microcredit) and indirectly by subscribing the units of investment funds active in the sector.

Partnership between the EIF and CDP for new financial products serving SMEs
The framework agreement signed today between EIB and CDP consolidates and expands the partnership between the two institutions, further enriching the range of tools available to Italian and European SMEs. Since 2015, as part of the “Juncker Plan”, CDP and the EIF have launched a number of joint initiatives in the areas of equity, securitisation, guarantees and, more recently, financial products that efficiently use the Structural Funds and promote access to credit through channels that are alternative and complementary to traditional sources of funds, such as debt financing.
 

* The tax credit mechanism
The CDP plafond, partially financed by EIB with agreement for the line of credit signed today, is based on the tax credit mechanism and has a twofold advantage: on the one hand, it makes resources immediately available to families and businesses of the communities hurt by natural disasters. On the other hand, it enables the state to distribute the burden of reconstruction over time, taking advantage of favourable conditions in terms of interest rates from the EIB.
Specifically, the structure of the operation involves a number of steps:

  • the EIB finances the funding that CDP, under an agreement already signed with the Italian Banking Association (ABI), makes available to banks operating in the affected areas;
  • Families/private individuals and SMEs apply to the competent authorities to certify the losses they have incurred and the amounts involved. They then submit the document certifying the need for the reconstruction work and the associated amount to their bank;
  • On the basis of the certified damages, a tax credit is granted to the injured party (families, businesses) and ceded to the bank in order to reimburse the subsidized loans;
  • The bank receives the amount indicated from CDP and makes progress payments directly to the professionals and firms hired to design and execute the works;
  • The bank, on the basis of the tax credit of the injured party, is then reimbursed over the duration of the loans by the state.
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