EBA calls for evidence on SME lending and the SME supporting factor
31 July 2015
The European Banking Authority (EBA) launched today a call for evidence on small and medium enterprises (SMEs) and the SME supporting factor (SF). Through this paper, which is the basis for a preliminary discussion, the EBA is inviting its stakeholders to provide their input and evidence aimed at supporting the ongoing analysis on bank lending to SMEs and the impact of the SME SF. The final document, which will inform the European Commission's own report on the impact of own funds requirements on lending to SMEs, is expected to be published in the first quarter of 2016. The consultation runs until 1 October 2015.
Small and medium enterprises (SMEs) are key players in the EU economy in terms of their share in employment and value added. Nevertheless, they remain largely reliant on bank-related lending to finance their activities. In the context of this dependence on bank lending, and given the increased regulatory burden following the financial crisis, a capital reduction factor for loans to SMEs – the so-called SME supporting factor (SF) - was introduced in the Capital Requirements Regulation (CRR) to allow credit institutions to enhance lending to this particular group of companies.
In the context of this capital reduction, the EBA has the mandate to report to the European Commission on: a) an analysis of the evolution of the lending trends and conditions for SMEs; (b) an analysis of effective riskiness of EU SMEs over a full economic cycle; and (c) the consistency of own funds requirements laid down in the CRR for credit risk on exposures to SMEs with the outcomes of the aforementioned analyses.
This call for evidence aims to initiate a discussion on the key issues to be addressed in the final report and is accompanied by a set of questions aimed at collecting evidence and views from the industry and other stakeholders to further support the analysis in the report as well as at raising any potential objections to the current analysis.
Comments/evidence to these consultations can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments/evidence is 1 October 2015.
All contributions received will be published following the close of the consultation, unless requested otherwise. A public hearing will then take place at the EBA premises on 4 September at 10:00 am UK time.