The Italian Credit Guarantee Schemes

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The Italian Credit Guarantee Schemes
CONFIDI
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The Italian law art 13 L. 326/03
CONFIDI are organisation to carry out activity of
collective guarantee of loans. Main
characteristics Provide guarantee using
resources coming partially or totally by SME
members. Purpose Mutual guarantee for
entrepreneurs to promote/improve credit access.
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The CONFIDI
Agenda

• Italian Confidi before the law reform.
• The reform Law 326/2003 art.13
• Subject
• System

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CONFIDI before 2003
The History

• Operate in Italy since 1950
• Spontaneous initiative of team of entrepreneurs
  association
• Aims To support and foster the access of credit
  to the SMEs particularly start up.

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CONFIDI before 2003
The aim of work

• Issue of an aggregate guarantee in favour of
  associates SMEs
• - monetary risk fund
• - suretyship/guarantee fund
• Management of incentive public funds or specific
  public funds to protect the SME by high risks
  (ei. usury)

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CONFIDI before 2003
The Bank Law

• Art 155 Italian Banking law.
• . Subjects that work in the financial sector
• Starting 1991 Confidi were registered in a
  specific section of Italian Exchange Office
  general list

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Number of Confidi in Italy
Fonte UIC
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Italian Guarantee System
Fonte Lorenzo Gai, Prospettive delle garanzie
dei confidi verso le PMI dopo la riforma del
Settore e Basilea 2(Rivista Bancaria, 2005)
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Guarantee market in Europe
ITALY
Fonte EMGA - European Mutual Guarantee
Association
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The Confidi

• Mutual guarantees are very active in Italy
  relying on the partnership with more than 941,000
  micro and small and medium enterprises, they had
  an outstanding guarantee of 11.3 billion on
  31.12.2002, based on their own funds amounting to
  1.4 billion.
• The Confidi have not only granted 6.3 billion
  guarantees to SMEs, but they have also
  increasingly conducted consulting activities and
  delivered financial services to their affiliates.

Guarantees and Mutual Guarantees BEST Report Jan
2005
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Legal Form
The legal forms adopted by the Confidi are
Consortium

• Cooperative company

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Principal characteristics 1

• Voluntary character
• Mutuality
• Associative background and localism (diffusion
  in the territory)
• Equity as guarantee
• Guarantee as service
• Ways of intervention of economic policy

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Principal characteristics 2

• The CONFIDI are born from the association of
  small entrepreneurs, based on co-operation and
  mutuality, in order to overcome huge difficulties
  to access external financing sources .
• They are not based upon a business-policy
  attitude adopted by public authorities

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Principal characteristics 3

• The voluntary aspect of this SME aggregation
  usually implies the existence of a promoter, role
  which was played by their entrepreneurial
  associations.
• The CONFIDI are born as a natural answer to the
  need of placing a further intermediary at the
  centre of the relationship between banks and SMEs

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Sectorial base

• Handcraft
• Commerce

• Industry
• Agriculture

Allows the firms to have an in-depth knowledge
of the characteristics of the values that are
determinant for the good management of a business
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Confidi equity

• The Confidi equity is constituted and
  strengthened from
• contributions by the enterprises members
• contributions by various public and private
  corporate bodies.
• fees paid by members for guarantees and services.

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Modalities of Operations

• Direct Guarantee granted to banks and financial
  intermediaries
• Counter-Guarantee granted to Confidi or received
  by other funds (EIF, NGF)
• Co-Guarantee granted directly to the financing
  subject jointly with Confidi and/or other public
  funds

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The counter guarantee

• NGF (National Guarantee Fund)
• EIF (European Investment Fund)

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National Guarantee Fund
is engaged in releasing guarantees about

• Equity
• Financial restructuration
• Short and long term loans
• Loans to enterprises larger than EIF parameters

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Changes in legal context for the Italian CGO
BASEL II Agreement
New Italian Confidi law
New Italian Company law
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Basel II
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Security
Riskness
Vulnerability
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The new Italian Confidi Law (art. 13 L.326/2003)
The aim of law

• To introduce a systematic regulation
• To encourage the dimensional growth
• To conform the activity of Confidi to the Basel
  II agreement

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Aims of the new law
Law n. 326 del 24/11/2003

• Capital stock gt 100.000,00

• Equity gt 250.000,00

• Limit to underwrite more than 1/5 of equity

• To promote merger among CONFIDI

• To put the CONFIDI under the supervision of
  Italian Central Bank

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The new choose

• The Basel II Agreement and the new Italian law
  about Confidi place the CGO in front of a choice
  for continuing to support SMEs.
• The new Confidi law provides three possible
  typologies of model

• Remaining a traditional Confidi under the art.
  155 of the Italian Banking Law
• Confidi as Financial Intermediary under the
  art. 107 of the Italian Banking Law, in this case
  the CGO could give to SME not only the guarantee
  but others financial services
• Becoming a bank of guarantee.

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INTERCONFIDI NORDEST
Co-operative Company
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About us
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About us
Consortium of collective guarantees on credit
Assisting SMEs access to financing

• Primary activity collective guarantees to
  promote the granting of credit, both short and
  medium-long term, with suitable provisions
• Secondary activity counter-guarantee
  interventions related to guarantees granted by
  supporting CGO
• Advisory services to companies in choosing credit
  opportunities

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Connected services
ICNE assistance to SMEs in order to
GE.FI. Financial management service

• Planning investments, budgetary advisory
•  Business plan and management checks

• Company evaluation
• Treasury management
• Interest risks hedging

FACILITIES

• Information and support about the access to
  European, National and Regional facilities

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The history

• March 1974 The Confidi Padova Consortium was
  born with the initiative of several enterprises
  belonging to the Associazione degli Industriali
  della Provincia di Padova (Association of
  Entrepreneurs of the Province of Padova), thus
  taking part in the first initiatives for
  mutualistic guarantees in the industrial sector
  of Italy.
• July 1996 Merger with Veneto Fidi
• August 1998 Merger of Confidi Padova and Api
  Confidi
• October 1999 Throughout an extraordinary
  meeting the Consortiums secondary purpose was
  achieved (ability to counter-guarantee other
  Confidi). The new companys name became

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The history

• April 1999 The Consortium undersigns a
  counter-guarantee contract with the European
  Investment Fund (E.I.F.) based on the measure
  Growth and Employment Initiative S.M.E.
  Guarantee Facility.
• Confidi Padova is the first guarantee entity in
  Italy and the second in Europe to obtain the
  E.I.F. Counter-guarantee.

The contract with the E.I.F. anticipated up to a
50 reinsurance of security holdings of 68.8
Million Euros increased to 150 million Euros in
July of 2000 to go toward material and immaterial
investments lasting from 3 to 10 years.
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EIF ALL.GAR.
July 2003
ICNE in the EIF Counter guarantee agreement, has
acted in the name and on behalf of the members of
Temporary Association of Enterprise All.Gar. a
joint venture formed by 7 main Confidi situated
in the Italian industrial area
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EIF ALL.GAR. Counter Guarantee

• The Maximum Portfolio Volume

920.000.000

• The availability period

1 July 2003 - 31 December 2006

• Counter guarantee rate

50
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International Projects
November 2000 Interconfidi Nordest stipulated an
agreement between The Buenos Airess Guarantee
Fund and The Development Institute of Buenos
Airess Ministry Production
1999-2000 Interconfidi Nordest participated in
I.R.B.I. project Italian Romanian Business
Interfaces (Interconfidi Nordest Romanian
Credit Fund) (L. 26 February 1992, n. 212)
2003-2006 ICNE is a project partner in GO
Network - INTERREG III B Program 2000-2006. The
project aims to develop a network between the
Credit Guarantee Organisations in the CADSES area
to facilitate the access of credit for the SMEs
with lack of collateral and to create a project
pilot in a CADSES country.
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International Projects
2004 Feasibility study to create a new Romanian
guarantee scheme based on the private and mutual
concept.
2004-2007 ICNE has coached GO Network II
project - The project aims to develop a network
between the Credit Guarantee Organisations in the
MEDOCC the area to facilitate the access of
credit for the SMEs with lack of collateral and
to create a project pilot in one MEDOCC country.
2005 Entrepreneurial innovation networking the
players and users Identification and analysis
of sectors specificities relevant to innovation
financing
Mobilise finance, investors, incubators and
investing enterprises in the sector to contribute
to the activities of the network and bring their
expertise and knowledge of the market and the
specific needs of the sector
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Value
Certified statement by Reconta Ernst Young
Certification ISO 90012000 since 1999
Fitch Rating since 2001
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Organisation chart
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Main figures
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Equity
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Balance sheet data Data in Euro
2004
2005
Stock of Guarantees provided
263.599.588
18,7
15,6
304.780.324
Stock of guarantee Received
9,8
124.263.905
35,4
168.191.267
Equity
30.722.584
10,5
79,4
27.815.055
Guarantees Fees
20,3
4.203.720
45,1
3.493.208
Member
11,0
1.950
-0,2
1.757
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Stock Data in Million of Euro
Provided
2003
2004
2005
2002
2001
Received
2003
2004
2005
2001
2002
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Number of members
10,98
7,38
-0,17
12,49
10,05
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Stock and gross loss
Data in Euro Stock Gross Loss
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ICNEThe new project
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The possible chooses
New Confidi law
New market needs
Interconfidi Nordest Scpa
To remain a Consortium
To become a Guarantee Bank
To become a Financial Intermediary
Under Italian Central Bank Supervision
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The Choose
Co-operative Company
Co-operative Guarantee Bank
Acknowledgement of the ICNE guarantee abroad
Obtaining authorization by the Italian Central
Bank
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Banca di Garanzia
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Banca di Garanzia
Guarantee Bank
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Banca di Garanzia
Guarantee Bank
Banco de Garantia
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Banca di Garanzia
Guarantee Bank
Banco de Garantia
Burghschaftsbank
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Banca di Garanzia
Guarantee Bank
Banco de Garantia
Burghschaftsbank
Garantia Banka
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Banca di Garanzia
Guarantee Bank
Banco de Garantia
Burghschaftsbank
Garantia Banka
Banque de Garantie
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Banca di Garanzia
Guarantee Bank
Banco de Garantia
Burghschaftsbank
Garantia Banka
Banque de Garantie
Daman Banki
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Banca di Garanzia
Guarantee Bank
Banco de Garantia
Burghschaftsbank
Garantia Banka
Banque de Garantie
Daman Banki
????
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Co-operative Guarantee Bank
A new role toward
More access to credit
SME
Better dialogue with banks to understand the
assessment criteria
Less Provisioning
BANK
More operation
Equal and acknowledged relation
Guarantee value
Small CGO
Point of reference
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Thank you!