The InvestEU Programme
The InvestEU Programme is the European Commission's funding programme to support the European economy and policy objectives. It helps to mobilize private investments for the EU's policy priorities, such as the green and digital transition, innovation and social investments and skills. InvestEU is expected to mobilise a significant amount of private and public funding in 2021-2027.
The programme is a continuation of the European Investment Programme, which operated in 2015-2020, and of the European Fund for Strategic investments (EFSI), which operated within the framework of the programme. In Finland the SME Initiative was implemented under it and it was to improve access to financing for growth companies.
The InvestEU Fund aims to mobilise more than 372 billion euros of public and private investment through an EU budget guarantee of 26.2 billion euros that backs the investment of implementing partners such as the European Investment Bank (EIB) Group and other financial institutions.
Under the InvestEU Programme, financial instruments can be implemented in different countries through two compartments. In the EU compartment, the implementing partner offers financing instruments that promote investments and support the EU's policy objectives. In the Member State compartment, financial products are targeted at the territory of a particular country.
Sustainability Guarantee in Finland
Finland implements the InvestEU Programme through a Member State compartment. Finland's Member State compartment implements a loan guarantee programme to accelerate climate and environmentally sustainable investments. The Programme introduces the Sustainability Guarantee of the European Investment Fund (EIF), which is intermediated to the Finnish market through financial institutions.
Two per cent (2 %) of the funding from the European Regional Development Fund (ERDF) from the EU Programme Innovation and Skills in Finland 2021-2027 has been allocated to the InvestEU Programme Member State compartment. This has been seen as a good opportunity to introduce an appropriate alternative for implementing financial instruments in the EU Programme Innovation and skills in Finland 2021-2027.
In addition to the ERDF contribution, the Ministry of Economic Affairs and Employment of Finland and the Ministry of the Environment jointly finance the programme. The State of Finland funds the Member State compartment by a total of EUR 100 million. Part of the risk is borne by the European Investment Bank Group (EIB) and the intermediary financial institutions. The aim is to achieve a 7-fold leverage effect, which means that the programme would enable EUR 700 million in total loans to SMEs and housing companies.
In total, the funding under the EU Compartment and the Member State Compartment aim at a total lending portfolio of around EUR 1 billion in the European Investment Funds Sustainability Guarantee product in Finland.
Rakennerahastot.fi press release on 7.6.2024.
The introduction of the Sustainability Guarantee under the InvestEU Programme will make it easier for SMEs to obtain total financing for climate - and environmental-friendly investments and for housing associations to invest in the introduction of renewable energy.
This is a mechanism in which the EIB Group provides Finnish banks with a guarantee when granting loans for environmentally sustainable investments and green transition solutions.
Banks, on the other hand, grant loans to companies whose business activities are closely linked to the promotion of climate and environmental perspectives and investments that promote the green transition. Investments can be related to climate change mitigation and adaptation, circular economy, improvement of water resources and prevention of environmental pollution, protection and restoration of biodiversity, and sustainable investments in agriculture and forestry.
Possible targets include the construction of vehicle charging infrastructure and companies purchases of electric cars. Loans can also be granted to housing associations for investments in renewable energy, such as geothermal or solar energy, and other solutions that improve the energy efficiency of buildings.
The sustainability guarantee enables more favourable loan terms. In line with their own lending policy, intermediary banks can offer, for example, longer loan periods, lower interest rates or lower collateral requirements. The guarantee will facilitate access to financing and enable lending for riskier investments.
The Sustainability Guarantee does not include State aid and does not generate de minimis aid.
At the end of Finland's call for applications, state aid: https://www.eif.org/InvestEU/guarantee-products-member-states-compartment/info-note-finland.pdf
Aktia
Danske Bank
Finnvera
Nordea
Oma Savings bank
OP Group
POP Bank
Ålandsbanken
Read more about InvestEU on the EIF website: https://www.eif.org/InvestEU/index.htm
A tool for viewing and assessing investment eligibility for the sustainability guarantee:
https://sustainabilityguarantee.eif.org/
InvestEU Portal: https://ec.europa.eu/investeuportal/desktop/fi/index.html
InvestEU Programme – legislative texts and summaries of information: https://commission.europa.eu/publications/investeu-programme-legal-texts-and-factsheets_fi
Contribution Agreement (CA)
The conclusion of a Contribution Agreement is a precondition for the use of the Member State Compartment of the InvestEU Programme in a Member State. The financing Contribution Agreement between the State of Finland and the European Commission was signed on 5.9.2022. The Contribution Agreement and its terms and conditions are based on Article 10 of the InvestEU Regulation EU 2021/523, which determines the terms and conditions of financing and the payments between the Member State and the European Commission. The Contribution Agreement shall specify the amount of the contribution to be used and the financing rate as well as the amount of the contingent liability to be incurred, which shall be covered by the amount agreed in the Member State's Guarantee agreement (back-to-back guarantee).
Back-to-back guarantee
The Back-to-back guarantee is based on Article 10 of the InvestEU Regulation EU 2021/523. Under the Back-to-back guarantee, the Member State covers the amount of its contingent liability by providing a back-to-back guarantee for its financing. If the losses exceeded the cash share of the entity agreed on in the financing share agreement, a central government guarantee would be used up to a certain amount in euros. The guarantee liability shall remain in effect as long as the financing and investment operations of the Member State compartment concerned are ongoing. The use of the Back-to-back guarantee is agreed in the Contribution Agreement.
Guarantee Agreement between the European Commission and the implementing partner
Since the signing of the Contribution Agreement between the Finnish Government and the European Commission, the European Commission has concluded a guarantee agreement with the implementing partner. The implementation partner of Finland's sustainability guarantee is the European Investment Bank Group (EIB) and the European Investment Fund.
Agreements between the implementing partner and the Programme implementers
The EIB Group negotiates the terms and conditions and concludes agreements with Finnish financial institutions.
https://www.eif.org/InvestEU/guarantee_products_calls/index.htm
Agreement between the recipient of the guarantee and a financial institution or bank
In line with their own lending policy, financial institutions and banks grant loans to beneficiaries, which may include SMEs and housing companies.
On national funding:
In the section for each Member State, the guarantee is financed by Member State funds to cover any credit losses arising from investments. Finland's funding will be limited to EUR 100 million and the unused portion will be returned to Finland.
Preparation and decision-making stages of the InvestEU funding package in Finland:
- As part of the decision on regional funding for EU Regional and Structural policy for 2021-2027, the Ministerial Committee on Economic Policy outlined a total of EUR 31.6 million of the European Regional Development Fund (ERDF) and its national counterpart funding in the InvestEU programme on 22.3.2021.
- In connection with the consideration of the second supplementary budget for 2022, the Government decided in May that the InvestEU Member State compartment would be expanded from the previously decided EUR 50 million to EUR 100 million. In accordance with the second supplementary budget for 2022, funding from the Ministry of Economic Affairs and Employment and the Ministry of the Environment was allocated to the InvestEU Programme so that the total funding of the planned financial instrument, including its guarantee liabilities, totals EUR 100 million.
- The distribution of funding contributions related to the funding as a whole was specified in the negotiations of the Ministry of Economic Affairs and Employment of Finland and the Ministry of the Environment with the EU Commission and the European Investment Fund during 2022. The Cabinet Committee on Economic Policy discussed the package and approved the funding on 30.8.2022.
- The final share of total funding of EUR 100 million was approved in the fourth supplementary budget for 2022.
Share of ERDF funding allocated to the Member State Compartment of the InvestEU Programme in the Partnership Agreement for the EU Programme Innovation and Skills in Finland 2021-2027.