EIB Group and Banco Santander collaborate on a significant €360 million investment, focusing on green projects and sustainable initiatives
The EIB Group, consisting of the European Investment Bank (EIB) and the European Investment Fund (EIF), has recently invested €360 million in a new asset-backed securities (ABS) issuance alongside Banco Santander. This investment is focused on the senior and mezzanine tranches of the Santander Consumo 5 securitisation fund, which involves consumer loans issued by Banco Santander. The allocation includes the potential for up to €300 million investment to be directed towards green projects.
The primary purpose of this investment is to provide support for working capital and liquidity requirements while addressing the investment limitations faced by Spanish small and medium-sized enterprises (SMEs), small mid-caps, and mid-caps. By participating in this deal, Banco Santander gains the advantage of releasing capital, allowing them to channel up to €990 million (nearly triple the EIB Group’s investment) into the real economy.
The ABS securitisation transaction includes a substantial green component, with approximately €110 million of the EIB Group’s investment earmarked for financing environment and climate action projects. These projects are focused on energy efficiency initiatives, such as the construction of nearly zero-emissions buildings by real estate developers and the installation of solar photovoltaic equipment in residential buildings. As a result, Banco Santander will have the opportunity to allocate up to €300 million towards green projects.
This transaction not only contributes to meeting national and European targets for energy efficiency and renewable energy but also plays a crucial role in reducing carbon emissions. The emphasis on energy efficiency also aligns with the EIB Group’s objective of climate change mitigation. Further, it complements REPowerEU, the European Union’s strategy to decrease reliance on fossil fuel imports and enhance Europe’s energy self-sufficiency.
The EIB commits around €330 million to a transaction, with an additional €30 million contributed by the EIF. This investment aims to bolster small and medium-sized enterprises (SMEs) and mid-caps, addressing economic challenges such as the pandemic, inflation, high energy prices, and the war in Ukraine. Of the total investment, approximately €250 million is directed towards supporting SMEs and mid-caps, facilitating access to finance and promoting private sector investment. This funding will aid these businesses in their economic recovery and overcome investment constraints. Over a third of the beneficiaries are expected to be located in cohesion regions with lower per capita income, promoting equitable growth and convergence between EU regions—an essential objective of the EIB’s lending activities.
“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,” stated 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.”
“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,” said EIF Chief Executive Marjut Falkstedt.
The recently signed agreement builds upon a previous one between the EIB Group and Banco Santander. The earlier deal focused on financing energy efficiency projects for buildings developed in Spain by homeowner associations, individuals, SMEs, and mid-caps. It involved a synthetic RMBS securitisation, where the EIB and EIF provided guarantees of up to €105 million on the upper mezzanine tranche, while Santander originated €141 million in funding for energy efficiency projects. Earlier, EIB and Banco Santander also signed an agreement worth €300 Million to foster the use of renewable energy in Brazil.