The EIB Group has participated in an ABS issuance by Banco Santander totalling around €360 million.
€110 million of the investment will be channelled into energy efficiency projects like the construction of nearly zero-emissions buildings.
The transaction allows to promote projects related with climate action and environmental sustainability while promoting also cohesion among regions in Spain.
Madrid, 3th August 2023.
The EIB Group — made up of the European Investment Bank (EIB) and European Investment Fund (EIF) — has invested in senior and mezzanine tranches of a new asset-backed securities (ABS) issuance worth €360 million with Banco Santander. This investment, made in the Santander Consumo 5 securitisation fund of consumer loans issued by Banco Santander, will support working capital and liquidity needs, and address the investment constraints of Spanish small and medium-sized enterprises (SMEs), small mid-caps and mid-caps. The deal will enable Banco Santander to free capital and direct up to €990 million (or almost the triple of the EIB Group’s investment) into the real economy, including up to €300 million for green projects.
The EIB’s investment commitment under the transaction totals around €330 million, alongside €30 million committed by the EIF. The EIB Group’s total investment is executed through a single securitisation with a structure designed to achieve optimal efficiency.
Approximately €250 million of the notes purchased target SMEs and mid-caps, facilitating access to finance and promoting private sector investment. The transaction will address working capital and liquidity needs, supporting these firms’ economic recovery while helping them overcome investment constraints due to circumstances like the pandemic, the war in Ukraine, persistent inflationary pressures, high energy prices and rising interest rates.
The ABS securitisation transaction also has a significant green component: Around €110 million of the EIB Group’s investment will go to finance environment and climate action projects based on energy efficiency activities, such as the construction of nearly zero-emissions buildings by real estate developers, or the installation of solar photovoltaic equipment in residential buildings. Thus, Banco Santander will be able to commit up to €300 million for green projects.
The transaction supports the national and European targets for energy efficiency and renewable energy and helps reduce carbon emissions. This focus on energy efficiency is aligned with the EIB Group’s cross-cutting objective of climate change mitigation, and with REPowerEU, the European Union’s plan to reduce dependency from fossil fuel imports and increase Europe’s energy independence.
It is estimated that more than a third of the final beneficiaries of this agreement will be based in cohesion regions, where per capita income is less than the EU average. The operation will thus promote equitable growth and convergence between EU regions, which is one of the key aims of the EIB’s lending activities.
“We are pleased to join forces with a longstanding partner like Banco Santander to support SMEs and mid-caps as they navigate the challenging current environment, with issues like high energy prices and inflation,” stated EIB Vice-President Ricardo Mourinho Félix. “This agreement is aligned with our climate action and environmental sustainability objectives and accelerates green transformation for both companies and private individuals.”
“This transaction reflects our ongoing commitment to supporting economic growth and access to finance for businesses in Spain. We are determined to mobilise our expertise and proven financial instruments in co-operation with Banco Santander because these investments are expected to bring long-term benefits – for the people and the planet,” said EIF Chief Executive Marjut Falkstedt.
The agreement follows a previous one signed months ago between the EIB Group and Banco Santander, to finance energy efficiency projects for buildings developed in Spain by homeowner associations and individuals, as well as by SMEs and mid-caps. That transaction was a synthetic RMBS securitisation under which the EIB and EIF provided guarantees of up to €105 million on the upper mezzanine tranche with Santander expected to originate €141 million in funding for energy efficiency projects.