AECM - European Association of Guarantee Institutions
European guarantee banks and institutions, organised within AECM, do not operate in classical bank lending within the meaning of the directive 2008/48/EC. Furthermore, the vast majority of our members are not credit institutions according to article 4 paragraph 1 CRR. Their business activities consist of the granting of guarantees in favour of small and medium-sized enterprises as part of a promotional mission.
The draft guidelines include detailed rules on movable and immovable collateral that are inappropriate for the valuation of financial guarantees. As we understand, the latter are not concerned by the guidelines.
We kindly request you to state expressively that financial guarantees are not in the scope of these guidelines.
If the guidelines were also to be applied to guarantees, this would have – due to the complexity of the provisions set out in the guidelines - a very restrictive effect on lending and in particular on promotional SME loans, which are often depending on the involvement of guarantee institutions.
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The draft guidelines are in our opinion not appropriate for small institutions, as the principle of proportionality has not sufficiently been taken into account. The principle is expressively mentioned in paragraph 12 of the draft. However, it is insufficiently applied throughout the guidelines.
The criteria of systemic relevance, the size of the institution, the risk content of transactions and the complexity of the banking business are not taken into account in the draft guidelines. This, however, would be necessary in order to ensure a proportional implementation of the latter.
One concrete example for the clear lack of proportionality is found in the provisions for the creditworthiness assessment laid out in paragraph 126. The use of the phrase at least" barely allows for a proportional analysis. We strongly advocate clarifying the wording and adapting it to the existing specific types of European credit institutions. It should allow for a simplified analysis to be carried out by small non-complex institutions.
Moreover, the sensitivity analyses of potential borrowers and market related events as required in paragraphs 145 and 146 of the draft guidelines are inappropriate for lending to small and medium-sized enterprises.
If the requirements of the draft guidelines (inter alia in sections 5.1.3 and 5.2.5 in conjunction with Annex 2) were to be implemented by lenders, this would have a significant impact on the credit financing of the real economy. Since the term "professionals" covers all non-consumers, the corresponding requirements would also apply to loans for small traders, freelancers and self-employed craftsmen and others.
The implementation of these EBA guidelines on corporate clients would lead to more extensive information and / or documentation requirements, bureaucratic consultations and longer processing times for loan applications. In addition, it would result in a price increase, since the banks would have to hand the increased analysis and processing costs on to the customers. This would affect mainly SMEs’ access to finance and widen the existing SME finance gap, i.e. the insufficient supply of external financing to SMEs due to market failure .
That is why AECM advocates a comprehensive and clear proportional approach, especially to the creditworthiness assessment as well as the sensitivity analysis, allowing for simplified provisions for SME lending."
