The EIB Group, composed of the European Investment Bank (EIB) and European Investment Fund (EIF), announced that it has participated in a strategic investment in senior and mezzanine tranches of a new asset-backed securities (ABS) issuance by Banco Santander.
The issuance is valued at approximately €360M.
This investment, made in the Santander Consumo 5 securitisation fund of consumer loans issued by Banco Santander, is aimed at supporting the working capital and liquidity needs of Spanish small and medium-sized enterprises (SMEs) as well as small and medium-sized mid-caps.
“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,” states 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,” adds Mourinho Felix.
Unlocks €990M in capital
The deal offers a significant boost to Banco Santander, enabling them to release capital and channel up to €990M (almost three times the EIB Group’s investment) into the real economy, with a special focus on financing up to €300M worth of green projects.
The EIB’s financial commitment in this transaction amounts to approximately €330M, with an additional €30M contribution from the EIF.
This collective investment is executed through a streamlined securitisation process designed to achieve maximum efficiency and impact.
Targeted towards SMEs and mid-caps
Approximately €250M of the notes acquired through this transaction are specifically targeted towards SMEs and mid-caps, facilitating access to finance and encouraging private sector investments.
The capital injection aims to address working capital and liquidity requirements of these businesses, supporting their economic recovery and helping them overcome investment constraints arising from various challenges such as the pandemic, the war in Ukraine, inflationary pressures, high energy costs, and rising interest rates.
The ABS securitisation transaction demonstrates a significant commitment to environmental sustainability.
Out of the EIB Group‘s investment, approximately €110M will be allocated to finance environment and climate action projects centred around energy efficiency activities.
These projects encompass the construction of nearly zero-emissions buildings by real estate developers and the installation of solar photovoltaic equipment in residential buildings.
This green financing initiative empowers Banco Santander to allocate up to €300 million towards furthering green projects, contributing to the fulfilment of national and European targets for energy efficiency and renewable energy.
The focus on energy efficiency aligns with the EIB Group’s overarching objective of climate change mitigation and resonates with REPowerEU, the European Union’s strategic plan to reduce reliance on fossil fuel imports and enhance Europe’s energy independence.
Furthermore, the transaction plays a vital role in promoting equitable growth and convergence between EU regions. It is projected that over a third of the beneficiaries of this agreement will belong to cohesion regions characterised by a per capita income below the EU average.
By directing resources to these regions, the operation aims to foster balanced development and cohesion across European regions, a key priority in the EIB’s lending activities.
“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 cooperation with Banco Santander because these investments are expected to bring long-term benefits – for the people and the planet,” says EIF Chief Executive Marjut Falkstedt.
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