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AECM European Mutual Guarantee
Association

• Founded in 1992
• Open, democratic, independant Association.
• Partner of the European Commission.
• Aiming to
• Represent the interests of the members
• Consolidate the economic role of M.G.S.
• Promote harmonization of their legal framework
• Foment exchange of information in favour of SMEs.

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AECM MEMBERS Some data 31.12.2003
in 1.000.000

• 29 active schemes in 15 countries
• Own Funds 3.845
• SMEs beneficiaries 2 Mln
• Outstanding commitments 38.210
• Leverage Cap / commitments 9x
• Guarantees granted in 2001 14.970

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AECM

• Definition of European Credit Guarantee Schemes

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AECM Common features of European CGOs (Douette,
Pombo)

• The European guarantee activity is based on a
  broad national consensus between authorities, SME
  lenders and borrowers.
• It is exercised by specialised institutions .
  CGOs are a part of the financial industry,
  subject to legal regulation and financial
  supervision which creates the conditions of their
  sustainability and trust with lending partners.
• Working in a global economy, respecting
  competition and market rules, CGOs propose a
  better access to credit for sustainable projects
  of viable SMEs in the private sector.

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AECM Common features of European CGOs (Douette,
Pombo)

• Guarantee schemes are formed of a mix of private
  and / or public initiatives and tend to involve
  entrepreneurs directly or indirectly in the
  shareholding, decision and management
  (mutuality).
• Public support provides equity and protection in
  order to reach higher leverage and efficiency.
• A special feature is the existence of national
  counter-guarantees and of a platform of
  supra-national counter-guarantee organised and
  funded by the EU Commission and managed by the
  European Investment Fund.

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AECM GUARANTEE SCHEMES A COMPLEX
LANDSCAPE

• GUARANTEE FUNDS
• Initiative taken by Public Authorities (State,
  Region..)
• Mainly public shareholding
• Directory Board elected with public prevalence
• Mission of SME support.
• Solvency responsibility with public umbrella.
• Administration or Ltd Cy
• Other goals subsidies..

• MUTUAL GUARANTEES
• Initiative from SMEs and representative
  organisation
• Mainly private shareholding
• Directory Board composed of SMEs, bankers,
• Mutuality principles
• Self protected solvency, with public support
• Coop. Ltd Cy or Ltd Cy.
• Other missions no

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AECM

• Roles of credit Guarantee Schemes

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AECMCGOs a triangular relationship
Businesses or Entrepreneurial circles
Credit Institutions banks, leasers
C.G.S.
Mutual Guar. Soc or Guarantee Fund
State -legal environment -support policies
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AECM Role of CGOs inputs to SMEs

• Boosting entrepreneurship (start-ups,
  take-over)
• Support to businesses with unpredictable
  track records (rapid growth, innovation)
• Compensation of a lack of collaterals
  (insufficient or pledged for previous credit
  transactions)
• Focus in credit assessment on qualitative and
  personal elements and on field information
  Access to longer term credits, to better credit
  terms
• Providing advice and coaching.

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AECM Role of CGOs inputs to banks

• Set-up confident relations with SME sector by
  familiarizing with business risks, their language
• Develop SME loans portfolio to a new pool of
  
• smaller businesses
• Partial outsourcing of the credit risk to a
  solid
• and well managed partner
• Reduce their capital requirement on SME
  loans
• portfolio and increase their assets leverage.

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AECM Role of CGOs authorities

• 1. Prudential environment legal supervision
• 2. Modalities of public supports
• -Public equity as shareholder or contribution
  to
• risk funds as donor or protector of solvency.
• -Counter-guarantees (loss sharing)
• -Subsidy of the guarantee premium
• -Occasional advantages
• 3. Other missions for CGOs SME subsidies

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AECM New Challenges for CGOs

• Improve risk management individual (SME
  monitoring) and portfolio (rating,risk
  provisions)
• Diclosures and corporate governance
• Productivity co-operation with lenders
• Risk sharing, upwards and downwards.
• Marketing and a possible differentiation of
  products according to market targets
  (micro-credits, innovation, equity guarantee)

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AECM External challenges for CGOs

• EIF a permanent well endowed European tool
• Structural Funds more involvement in G.S.
• Basel 2 reach a financial strength ensuring
  their recognition as mitigators
• European Competition rules flexible frame
  allowing a good PPP.
• Strong contracts with banks

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EUROPEAN MUTUAL GUARANTEE ASSOCIATION

• President H-H. Strombeck, Neuss, Germany.
• Secretary General André Douette
• 40, Rue Washington, BE 1050 Brussels.
• info_at_aecm.be www.aecm.be
• THANK YOU FOR THE ATTENTION !