EIB Group and ABN AMRO Seal Synthetic Securitisation Deal for Dutch SMEs

The agreement involves a risk-sharing mechanism between ABN AMRO and the EIB Group, structured around a portfolio of existing loans to Dutch businesses.

The European Investment Bank (EIB) Group, comprising both the European Investment Fund (EIF) and the European Investment Bank, has partnered with ABN AMRO in a pioneering synthetic securitisation transaction. This landmark agreement, which marks the largest securitisation deal in EIB Group history, will unlock over €1.2 billion in fresh financing for Dutch businesses, specifically targeting small and medium-sized enterprises (SMEs) and Mid-Caps. This funding deal is expected to significantly enhance access to capital, enabling the businesses to thrive, grow, and contribute to the Dutch economy.

Supporting Economic Growth and Sustainability Goals

The agreement involves a risk-sharing mechanism between ABN AMRO and the EIB Group, structured around a portfolio of existing loans to Dutch businesses. This innovative financing structure helps mitigate ABN AMRO's credit risk exposure, freeing up capital for new lending. In total, more than €1.2 billion will be made available for new loans to Dutch businesses, with a portion of this financing designated specifically for environmental sustainability projects, in line with the ongoing EU Green Deal and broader climate action goals.

The goal is clear: to drive the economic growth of SMEs, foster job creation, and facilitate the transition to a low-carbon economy by financing climate-friendly initiatives. The strategic partnership between the EIB Group and ABN AMRO ensures that businesses can access favorable loan terms, allowing them to invest in projects aimed at achieving sustainability and climate neutrality.

ABN AMRO’s Chief Commercial Officer for Corporate Banking, Dan Dorner, expressed strong support for the deal, stating: “We are delighted to once again offer EIB financing to our clients. This agreement will provide Dutch SMEs and Mid-Caps with competitive financing conditions, reinforcing their growth and helping them navigate the transition towards a sustainable future.”

A Historic Partnership with Impact

Robert de Groot, Vice-President of the EIB Group, highlighted the significance of this deal, emphasizing that it represents the first-ever synthetic securitisation agreement between the EIB Group and ABN AMRO. "This transaction is not only the largest of its kind in EIB Group history but also marks a new chapter in our longstanding collaboration with ABN AMRO," he said. "This partnership will significantly enhance financing access for SMEs and Mid-Caps in the Netherlands, driving much-needed economic growth and job creation."

The focus of the transaction is to increase capital availability for innovative companies that drive the Dutch and European economy. Dutch SMEs and Mid-Caps are at the core of job creation, innovation, and economic development, making access to finance crucial for their survival and growth.

A Novel Structure to Facilitate Lending

Under the framework of the deal, the EIB Group's guarantee structure reduces ABN AMRO's risk exposure, freeing up significant capital for reinvestment in new loans. With the EIB’s backing, ABN AMRO can extend loan discounts to Dutch borrowers under specific terms, subject to lending conditions being met.

One of the key aspects of the synthetic securitisation is its environmental sustainability focus. At least 30% of the financing will be allocated to projects aligned with climate action and environmental sustainability criteria. This ensures that both ABN AMRO and the EIB Group actively contribute to the EU’s broader environmental objectives, particularly in advancing the transition to a low-carbon economy.

The synthetic securitisation involves three main tranches: the senior tranche of €835 million, the mezzanine tranche of €150 million, and the junior tranche, which ABN AMRO retains in its entirety. The EIF has provided protection for both the mezzanine and senior tranches, with the EIF’s exposure being counter-guaranteed by the EIB. This structure offers both risk mitigation and the flexibility necessary for ABN AMRO to fund new lending.

Key Transaction Features

• Synthetic Excess Spread: Designed to protect the parties involved by ensuring profitability despite market fluctuations.

• Three-Year Revolving Period: During this period, ABN AMRO can continue to offer financing, adjusting terms based on market and client needs.

• Pro-Rata Amortisation: The transaction is structured so that the senior and mezzanine tranches amortize proportionally, subject to performance triggers, ensuring that the portfolio performs according to the established targets.

A Strong Foundation for Future Growth

This deal marks an important milestone in the relationship between ABN AMRO and the EIB Group, deepening their collaboration in the pursuit of sustainable economic development. With the Netherlands and Europe facing the dual challenges of economic growth and climate change, this agreement is a significant step forward in addressing both.

By leveraging the strengths of both banks, ABN AMRO will be able to provide Dutch businesses with competitive financing options, ultimately supporting the broader EU goal of achieving climate neutrality. The deal is expected to facilitate increased investment in sustainable technologies, renewable energy projects, and innovative green initiatives that will accelerate the transition to a low-carbon economy.

Conclusion

As the largest synthetic securitisation transaction in EIB Group history, this partnership between the EIB Group and ABN AMRO signals a new era of financial support for Dutch SMEs and Mid-Caps. With a clear focus on sustainability and economic growth, the deal will ensure that businesses have the capital they need to thrive, innovate, and contribute to the green transition. This financing will create a lasting impact, driving job creation, boosting the Dutch economy, and supporting Europe's sustainability goals.