ANNEX I: TO CALL FOR EXPRESSION OF INTEREST TO SELECT FINANCIAL INTERMEDIARIES UNDER
CYPEF PRSL
-EXPRESSION OF INTEREST-
To:
European Investment Fund
CYPEF PRSL
Attention: GS&M
15, Avenue JF Kennedy
L-2968 Luxembourg
LUXEMBOURG
Expression of Interest under CYPEF PRSL
Applicant submitting the Expression of Interest:
__________, ___________
(company name,
registration number)
Dear Sir or Madam,
Herewith we are submitting our Expression of Interest on behalf of [Applicant] in response to the Call
for Expression of Interest in the framework of the CYPEF PRSL implemented by EIF. Capitalised
expressions utilised herein shall have the meaning attributed to them in the above mentioned Call for
Expression of Interest.
The undersigned duly authorised to represent the [Applicant], by signing this form certifies and
declares that the information contained in this Expression of Interest and its Appendices is complete
and correct in all its elements.
The undersigned duly authorised to represent the [Applicant], by signing this form certifies and
declares to have read the EIF Anti-Fraud Policy and declares not to have made nor to make any offer
of any type whatsoever from which an advantage can be derived under the PRSL and not to have
granted nor to grant, not to have sought nor to seek, not to have attempted nor to attempt to obtain,
and not to have accepted nor to accept, any advantage, financial or in kind, to or from any party
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ANNEX I: TO CALL FOR EXPRESSION OF INTEREST TO SELECT FINANCIAL INTERMEDIARIES UNDER
CYPEF PRSL
whatsoever, constituting an illegal practice or involving corruption, either directly or indirectly, as an
incentive or reward relating to signing of the PRSL.
Yours sincerely,
Signature(s):
Name and position in capitals:
Applicant’s name:
Place:
----------------------------------
Appendices
Appendix 1 Applicant Identification
Appendix 2 Information Requirements
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Stamp of the Applicant (if applicable):
Date (day/month/year):
ANNEX I: TO CALL FOR EXPRESSION OF INTEREST TO SELECT FINANCIAL INTERMEDIARIES UNDER
CYPEF PRSL
Appendix 1 to the Expression of Interest
APPLICANT IDENTIFICATION
INFORMATION REQUIRED
APPLICANT’S
NAME
LEGAL FORM
CONTACT
Title: Mr/Ms/Mrs/other (delete or complete as appropriate)
DETAILS
Surname:
Forename(s):
Position:
Address:
Telephone:
Fax:
Email:
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ANNEX I: TO CALL FOR EXPRESSION OF INTEREST TO SELECT FINANCIAL INTERMEDIARIES UNDER
CYPEF PRSL
Appendix 2 to the Expression of Interest
INFORMATION REQUIREMENTS
The points below list the information needed.
N.B.: All information required below concerning the activity of the applicant institution and its
products must be provided, specifically and in detail, for:
1. Medium- and long-term loans (loan maturity of minimum 2 years and up to 12 years); and
2. SMEs according to the definition of Eligible SMEs presented in Annex II, section “Eligible SMEs”
1. FINANCIAL INTERMEDIARY’S ACTIVITY
1.1 General information
1.1.1 Description of the Applicant (date of establishment, number of employees capital structure and
shareholders, banking group, organisational structure, distribution network, number of branches, etc.)
1.1.2 Financial Intermediary’s legal status, regulatory framework and applicable regulations
1.1.3 Financial Intermediary’s rating and rating agencies’ reports (if applicable)
1.1.4 Description of the different internal business segments of the Financial Intermediary (including
the relevant segments applicable for SMEs)
1.1.5 Market share in SME lending, total assets and deposits
1.2 Financial standing
1.2.1 Key financial figures for the last full 3 years available and YTD data for the current year according
to the table below:
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ANNEX I: TO CALL FOR EXPRESSION OF INTEREST TO SELECT FINANCIAL INTERMEDIARIES UNDER
CYPEF PRSL
EUR‘000
201x
201x+1
201x+2
YTD – current
year
Total Assets
Total Gross Loan Book (amount)
Gross Corporate Loan Book (amount)
Total SME Loan Book
(in % of Gross Corporate Loan Book)
Shareholders’ equity (amount)
Net profit (amount)
Net Interest Income (% of total operating income)
Net Interest Margin (%)
Cost/income (%)
Return on average equity (%)
Return on average assets (%)
Non-performing loans* (% total gross loan book)
Balance sheet provisions (% of non-performing
loans)
Loan Loss provisions (% total gross loan book)
Top 20 exposures (% of regulatory capital)
Core Tier 1 capital ratio (%)
Total Tier 1 capital ratio (%)
Regulatory capital adequacy ratio / Solvency ratio
(%)
*
Definition of non-performing loans to be provided as a footnote to the table
1.2.2 Annual reports (including full set of financial statements with independent auditors report) for
the last three years (to be annexed to the Expression of Interest in electronic version only).
2. SME ACTIVITY
2.1 SME loan portfolio
2.1.1 Description of the SME lending activity (description of the lending products offered to SMEs,
purpose, min. and max. maturity of loans, rate of financing (as % of borrower financing needs), min.
and max. loan amount, repayment features, amortisation profiles etc.)
2.1.2 Volume and number of SME loans outstanding on a yearly basis for the last three completed
financial years and any data available for activity year-to-date, as per the below table:
SME loans outstanding
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YTD current year
201x
201x
201x
ANNEX I: TO CALL FOR EXPRESSION OF INTEREST TO SELECT FINANCIAL INTERMEDIARIES UNDER
CYPEF PRSL
Volume
Number
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ANNEX I: TO CALL FOR EXPRESSION OF INTEREST TO SELECT FINANCIAL INTERMEDIARIES UNDER
CYPEF PRSL
2.1.3 Volume and number of new SME loans disbursed on a yearly basis for the last three completed
financial years and any data available for activity year-to-date, as per the below table:
SME loans outstanding
YTD current year
201x
201x
201x
Volume
Number
2.1.4 Current pricing (including interest rate – split in base rate and margin, fees and other noninterest rate-related payments) and collateral policy for CYPEF PRSL comparable loans (in terms of
target group, maturity, purpose, etc). Information to be provided in the form of the below tables:
Pricing and Collateral requirements
Requested level of Collateral (%) – After haircuts
-
For Investment loans
-
For Working Capital loans
Interest rate (including applicable base rate):
Min
Max
- Base rate
- Margin (bps)
(of which risk-related margin(bps))
2.2. Operating Principles
2.2.1 Credit policy: internal procedures and guidelines
2.2.1.1 Description of the rating models/scoring systems in place
2.2.1.2 Description of the key inputs and their respective weight in the rating output
2.2.1.3 Description of the collateral requirements including personal guarantees (type, valuation,
haircuts, etc.)
2.2.1.4 Loan approval procedures (description of the process, authorities, limits, rejection rates)
2.2.1.5 Dunning procedure and monitoring (monitoring of payment dates, frequency of contact with
the client, early warning system, etc.)
2.2.1.6 Recovery procedures (steps taken, departments involved, indication whether recovery process
is dealt with in-house or is outsourced, length of recovery procedures).
2.2.2 Risk management: methods utilised for loss forecasting, provisioning and credit risk
management at portfolio level
3. SME DATA AND PERFORMANCE
All information required below shall be provided specifically with respect to SMEs (to the extent the
information is available, otherwise by internal segment – e.g. small business, corporates etc)
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ANNEX I: TO CALL FOR EXPRESSION OF INTEREST TO SELECT FINANCIAL INTERMEDIARIES UNDER
CYPEF PRSL
3.1. Performance track record:
3.1.1. If rating models are used for the SME activity, please provide (for each model in use):
a) the rating master scale with the respective minimum, maximum and median
probability of default (“PD”) per rating class.
b) 1-year, 2-year and 3-year rating migration table over the last 3-years.
3.1.2. Please provide for each year of origination of SME loans:
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a)
Aggregate initial principal amount of Transactions granted in each year
b)
Aggregate number of Transactions granted in each year
c)
Aggregate defaulted amount for each year following origination, i.e. aggregate
outstanding principal amount at the time of default for the Transactions belonging
to the same vintage (i.e. granted during the same year) that defaulted in each year
after their origination date, as presented indicatively in the table below:
ANNEX I: TO CALL FOR EXPRESSION OF INTEREST TO SELECT FINANCIAL INTERMEDIARIES UNDER
CYPEF PRSL
VINTAGE ANALYSIS TABLE1:
Defaults occurred within 1, 2, 3, …
years (by currency)
Originated
Year of
Transaction
origination
volume
(by currency)
Originated
Transactions
1
2
3
4
5
6
Cumulative
Weighted
Weighted
defaults (sum)
Average
Average
(by currency)
Maturity
Life
(number)
….
2009
2010
2011
2012
2013
2014 ytd
3.2. Average recovery rate: the average amount recovered to date on the defaulted Transactions for
at least 5 years, on aggregate basis and split by currency, product, risk categories, as relevant.
3.3 Static pool vintage analysis of defaulted loans (if available), as presented indicatively in the table
below:
Recoveries occurred after 0, 1, 2 … years after default
(by currency)
year of
default
Defaulted loans
(by currency)
0-1 yrs
1-2 yrs
2-3 yrs
3-4 yrs
4-5 yrs
5-6 yrs
Cumulative Recoveries
(by currency)
….
2009
2010
2011
2012
2013
2014 ytd
1
Vintages are created by reference to all selected Transactions originated during the same year.
Default definition: the default definition used must be in line with the Applicant internal procedures (e.g. a loan is regarded
as defaulted if either it becomes more than X days past due or it has been written-off (other default criteria can also be
used)). The default definition used must be specified.
Defaulted amounts: The aggregate of the outstanding principal amount of all SME Transactions that defaulted in each year
following their origination date is tracked separately for each vintage. The vintage analysis table is thus produced by
recording in each cell - for each vintage line - the total outstanding amount at the time of default for transactions that have
defaulted in the year of the relevant column (1, 2, 3, …). For instance, if the Time to default [Time to default = default date origination date, expressed in number of months] is comprised between 0-12 months, i.e. transactions defaulted within the first
year of their life, the respective defaulted amount is to be shown in the column corresponding to year 1; if the time to default is
comprised between 13-24 months, the respective defaulted amount is to be shown in the column corresponding to year 2, etc.
Cumulative defaults: the last column of the table contains the sum of all the defaults shown in the previous columns. It indicates
the cumulative defaults occurred for a given vintage during the observation period. Such amount divided by the corresponding
originated volume gives the cumulative default rate for the vintage
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ANNEX I: TO CALL FOR EXPRESSION OF INTEREST TO SELECT FINANCIAL INTERMEDIARIES UNDER
CYPEF PRSL
3.4 Average time lags between the granting of the SME Transaction, the payment default by the
borrower and the Transaction being written off (end of recovery period)
3.5 Details (including historic evolution) on loan restructurings, including percentage of loan book that
has been restructured and percentage of restructured loans that have subsequently fallen into default.
4. CYPEF PRSL
4.1 Implementation Strategy
4.1.1 Absorption capacity and time required for full disbursement to eligible SMEs of the amount
requested, expected timing of launch of the product in the market following the signature of the
Operational Agreement, regional and national CYPEF PRSL promotional and publicity plan, procedure
for application selection and loan allocation, etc. Financial intermediaries in their expression of interest
are required to address the following items:
I.
Timing required to build up the CYPEF PRSL portfolio taking into account necessary preimplementation actions (adoption of IT systems, development of contracts, etc.) and the
indicative eligibility criteria presented in Annex II - forecasts to be provided on a quarterly
basis);
II.
Describe internal organisation set-up (and roles) for the implementation of the CYPEF
PRSL portfolio, including the potential identification of a dedicated project team (or unit)
and/or internal incentivisation mechanisms;
III.
Provide information with regards to overlapping programmes (e.g. JEREMIE, Progress, etc)
implemented in parallel and strategy envisaged to differentiate between them so as to
achieve timely deployment of the CYPEF funds;
IV.
Describe prior/proven experience with the deployment of other similar EU/EIB/EIF
products;
V.
Describe other measure intended to be undertaken so as to facilitate timely deployment of
the CYPEF funds;
VI.
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Potential additional publicity actions to those described in Annex 2.
ANNEX I: TO CALL FOR EXPRESSION OF INTEREST TO SELECT FINANCIAL INTERMEDIARIES UNDER
CYPEF PRSL
4.1.2 Lending criteria, proposed pricing (including the proposed minimum and maximum pricing) to
be applied on the portion of the SME loan funded by the Applicant and proposed collateral
requirements on the entire SME loan. Information to be provided in the form of the below tables:
Pricing and Collateral requirements
Requested level of Collateral (%) – After haircuts - on the
entire SME loan
-
For Investment loans
-
For Working Capital loans
Interest rate (including applicable base rate) charged on the
portion of the SME loan funded by the Applicant:
Min
Max
- Base rate
- Margin (bps)
(of which risk-related margin(bps))
Note: Applicants may charge fees in line with their standard pricing policy but not higher.
4.1.3 Information on the Applicant’s reporting mechanisms, monitoring procedures, controls and IT
system to be applied for the implementation of the CYPEF PRSL.
4.2 Characteristics of envisaged CYPEF PRSL Portfolio:
4.2.1 Expected % breakdown of industry sectors in the PRSL Portfolio
4.2.2 Expected concentration on start-up entities and micro-enterprises in the PRSL Portfolio
4.2.3 Expected breakdown of the PRSL Portfolio by region
4.2.4 Expected breakdown of the PRSL Portfolio by risk category, e.g. internal scoring/ rating/ PD/
expected loss and by internal segment.
4.2.5 Expected breakdown of the PRSL Portfolio by collateral coverage, i.e. secured versus unsecured.
Security refers only to tangible collateral;
4.2.5 Expected split between working capital and investment loans; expected average loan amount
separately for working capital and investment loans;
4.2.6 Expected weighted average maturity (WAM) and weighted average life (WAL) for the PRSL
Portfolio including details of the calculation (grace periods, amortisation profiles (incl. concentration
of bullet or balloon loans, if applicable) etc. for investment loans and working capital loans separately).
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ANNEX I: TO CALL FOR EXPRESSION OF INTEREST TO SELECT FINANCIAL INTERMEDIARIES UNDER
CYPEF PRSL
At the stage of due diligence, the following additional information is to be provided:
Performance track record:
If rating models are used for the SME activity, please provide (for each model in use):
The latest back-testing information on the PD model evidencing the actual versus modelled PD and
evolution of the explanatory power of such model (e.g. Gini score) over the last 3 years.
The latest back-testing information on the LGD model evidencing the actual versus modelled LGD.
Highlight any qualitative factors that have affected, and/or could affect going forward, the model’s
explanatory power.
Counterparty risk
1. Information to assess the counter-party risk
(i)
Review of most recent full year and YTD results and forecasts for the year end. Strategic
objectives for the medium-term;
(ii)
Discuss effects of credit crunch on liquidity, funding mix and opportunities, usage of
Eurosystem liquidity lines (volumes, levels and available buffers);
(iii)
Review if applicable of derivatives and off-balance sheet transactions;
(iv)
Capital adequacy ratios details and projections;
(v)
Exposure to sovereign and corporate bonds. Details of bond portfolio;
(vi)
Corporate structure, governance and policies including a description of the governing
bodies and committees, members of the management and members of the board, recent
personnel statistics and current recruitment policy.
2. Information on Total loan portfolio
2.1 Loan portfolio concentration: 20 largest exposures per client group (amount, % of total
outstanding loan amount and % of total regulatory capital);
2.2 Non-performing loans (% on total outstanding loan amount and on regulatory capital, % covered
by collateral) as of the end of each financial year and year to date data for the current year for the
past 3 years both in terms of number of loans and outstanding amount;
2.3 Restructured loans (amount, % of total outstanding loan amount), if not included in the nonperforming loans;
2.4 Details on the 20 largest positions of non-performing loans (amounts, and as % of total
outstanding loan amount and % of total regulatory capital) year to date.
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ANNEX I: TO CALL FOR EXPRESSION OF INTEREST TO SELECT FINANCIAL INTERMEDIARIES UNDER
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