EIB Group moves to scale up economic response to COVID-19 crisis

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Extraordinary Board of Directors discussed the EIB Group’s proposed response to economic effects of COVID-19 crisis: a €25 billion pan-European guarantee fund to support up to €200 billion for the European economy
The Board also approved key elements of an emergency measure package announced in March

The Board of Directors of the European Investment Bank (EIB) today discussed the creation of a €25 billion guarantee fund to enable the EIB Group to scale up its support for companies in all 27 EU Member States by an additional up to €200 billion. This comes on top of an immediate support package of up to €40 billion announced in March. The Board prepared the proposal for the guarantee fund for discussion by the Eurogroup on the 7^th of April 2020.

“We need a pan-European response to the pandemic. We need this response to be ambitious and we need it fast,” said EIB President Werner Hoyer. ”Companies throughout the European Union need massive support. They need more credit lines, bridge loans and working capital to overcome this unprecedented challenge. With the backing of the Member States, the EIB Group’s coronavirus response would support financing of up to1.5% of Europe’s GDP to face this unprecedented crisis, complementing the extraordinary efforts made by the Member States.”

The pan-European guarantee fund would serve as a protective shield for European firms facing liquidity shortages. It could be set up with contributions provided by the Member States and be open to participation by other EU institutions. Building on the EIB Group’s existing guarantee programmes and proximity to the market, the funds could be deployed within a very short time. The scheme would be implemented by the EIB and the European Investment Fund (EIF), which form the EIB Group, in close partnership with national promotional banks, the European Commission and other financial partners. It would create a level playing field for small and medium-sized companies in all Member States.

The deployment of funds through the EIB Group would ensure that every Member States benefits from the EIB’s AAA rating. The guarantee fund would complement and enhance national packages as.EU Member States are heavily influenced by what happens to overall EU demand and market confidence, intra-EU trade, and supply chains and financial markets. 40% of the positive impact on growth and employment from EU investments are thanks to cross-border spillovers of investments. This makes the EIB scheme genuinely complementary to national measures. The EIB Group will work closely with experts in national authorities, including central banks, to identify where the needs are most pressing.

President Hoyer added: “The guarantee fund would be an effective, timely and truly European response to an unprecedented crisis. We want to fight the economic impact of COVID-19 now by getting ahead of it and relieving the stress on the real economy rather than dealing with fall-out later on. Sharing the burden across Member States avoids adding more debt to those countries that are hardest hit by the crisis and under the highest health expenditure stress.”

The Board also approved a multi-beneficiary intermediated loan (MBIL) of EUR 5bn covering all EU Member States, as part of its emergency response package which aims to rapidly mobilise financing for SMEs and Midcaps in the coming weeks up to EUR 40bn.

In addition, the EIB Group is using existing financial instruments shared with the European Commission – primarily the InnovFin Infectious Disease Finance Facility – to finance projects that work towards halting the spread of the coronavirus, finding a cure, and developing a vaccine. The EIB Group will also support emergency measures to finance urgent infrastructure improvements and equipment needs in the health sector, using existing framework loans or undisbursed amounts from existing health projects. The EIB Group’s current pipeline of projects in the health sector amounts to around €5 billion.

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Executive Director EUIPO – COVID-19 update

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Monthly technical information for Solvency II Relevant Risk Free Interest Rate Term Structures – end-March 2020

Today, the European Insurance and Occupational Pensions Authority (EIOPA) published technical information on the relevant risk free interest rate term structures (RFR) with reference to the end of March 2020.

RFR information has been calculated on the basis of the updated representative portfolios published on 26 February 2020 and the content of the Technical Documentation published on 1 October 2019 and based on RFR coding released on 8 October 2019.

All the documents are available here. In particular, the updated version of the source code can be accessed under related links.

Background

Technical information relating to risk-free interest rate (RFR) term structures is used for the calculation of the technical provisions for (re)insurance obligations.

In line with the Solvency II Directive, EIOPA publishes technical information relating to RFR term structures on a monthly basis via a dedicated section on EIOPA’s Website also containing the release calendar for 2020, the RFR Technical Documentation, the RFR coding and Frequently Asked Questions.

With this publication, EIOPA ensures consistent calculation of technical provisions across Europe.

ESMA publishes guidance on performance fees in UCITS and certain AIFs

The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has published today its final guidance on performance fees in investment funds – applicable to Undertakings for the Collective Investment in Transferable Securities (UCITS) and certain types of Alternative Investment Funds (AIFs).

The guidelines provide comprehensive guidance to fund managers when designing performance fee models for the funds they manage, including the assessment of the consistency between the performance fee model and the fund’s investment objective, policy and strategy, particularly when the fund is managed in reference to a benchmark.

ESMA’s guidelines aim at harmonising the way fund managers charge performance fees to retail investors, as well as the circumstances in which performance fees can be paid. The common requirements will allow convergence in how NCAs supervise performance fees models and disclosure across the European Union (EU). The guidelines are applicable to both UCITS and certain types of AIFs, in order to ensure a level playing field and a consistent level of protection to retail investors.

Ensuring greater supervisory convergence regarding performance fees in funds marketed to retail investors is an integral part of ESMA’s broader efforts on the cost of retail investment products.

Next steps

The Guidelines will now be translated into the official EU languages and subsequently published on ESMA’s website. They will become applicable two months after the publication of the translations.

Article – MEPs call for solidarity and measures to prevent Covid19 crisis in refugee camps

As Europe grapples with the challenges of the coronavirus crisis, concern is also growing over the living conditions of asylum-seekers in camps on the Greek islands.

The situation at the Greek-Turkish border escalated at the beginning of March when Turkey opened its borders to asylum seekers and refugees by breaking the 2016 migration pact with the EU.

In a virtual meeting, the civil liberties committee discussed the current border situation and the need to avoid this humanitarian crisis turning into a public health issue with the Greek government. Representatives from the European Commission, Frontex and the EU’s Fundamental Rights Agency joined MEPs in stressing the importance of solidarity and the unity of the European Union to help mitigate the growing crisis.

Measures in place

Together with member states and EU agencies, the Commission has set up an emergency contingency plan, regularly monitors the situation and has adopted new measures.

Two rapid border interventions were launched, additional border guards have been deployed and Greece activated the Civil Protection Mechanism, resulting in more than 90,000 items of assistance to the camps being giving to Greece by EU countries.

All migrants arriving in the hotspots undergo a mandatory health check. Newly arrived and rescued people are kept in separate areas until their medical screening has been completed.

The Commission has allocated a budget of €350 million in continued support for Greece, where most of the refugees and migrants arrive, €50 million of which will be for medical care.

After receiving a health check, 1,600 unaccompanied minors currently staying in the hotspots on the islands will be relocated to other EU countries:, namelyGermany, France, Portugal, Finland, Lithuania, Croatia, Ireland and Luxembourg. Some will be travelling to Luxembourg next week.

With the support of the International Organization for Migration and Frontex, a voluntary scheme has been set up to encourage people to go back to their home countries.

More support needed

Notis Mitarachi, the Greek Minister for Migration and Asylum, said that many special measures had been taken to prevent a Covid-19 outbreak in the camps on the islands, but that more support was needed.

MEPs called for more support, accommodation facilities and medical equipment, extending relocations to families, extending existing asylum deadlines and considering doing interviews virtually.

The Commission has proposed an additional budget of €350 million for the construction of new camps on the mainland in Greece and new apartments, which will require approval from Parliament.

Margaritis Schinas, Commission Vice-President for Promoting the European way of life, said it was imortant to stick to our values and respect fundamental human rights and EU law. He added that the EU should also continue its work on the New Pact on Migration and Asylum, set to be presented in the coming months.