SME financing: special focus

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The vexed battle to finance small and medium-sized enterprises (SMEs) continues in the eurozone and UK amid risk aversion, economic weakness, new regulations and banks’ balance-sheet repair. Project Merlin, Funding for Lending, Agency for Business Lending (ABL) and Breedon Report recommendations all aim to increase financing for SMEs. Here is a round-up of Euromoney's recent coverage.

ECB holds Popular’s feet to the flames
December 2016

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Ironically, as Popular’s core franchise is small and medium-sized enterprises, it is at the forefront of the very segment much healthier banks are falling over themselves to expand into because of the record low margins in mortgages and corporate lending. Popular is particularly strong among the smaller SMEs, which in Spain make up the bulk of SME banking.

Non-bank providers not gaining ground in corporate FX, says study
October 2016
While non-bank providers such as hedge funds and technology companies have taken significant market share in retail FX, they have not got a foothold in corporate FX business.

Banks should look beyond the fintech threat to modernize
October 2016
Banks are very concerned about how emerging fintech firms will take a slice of their business, according to Misys’ white paper 'Digitization in corporate banking – new rails for revenue growth'. SME lending was considered under threat by 68% of banks, with 61% believing supply chain finance was being pressured by the new entrants.

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Financial inclusion: Biometric banking and the $600 billion opportunity
September 2016
An extraordinary revolution is taking place in digital banking in India. Driven by the state, it is anchored on a billion-strong biometric database to finally bring financial inclusion to a country that needs it more than any other. Banks may face a binary outcome: be quick or be dead.

Emerging Europe: EBRD keeps its appetite for risk
September 2016
"In most of the EBRD region, banking is still a bricks-and-mortar business," says Nick Tesseyman, the EBRD’s head of financial institutions. "You can’t reach SMEs unless you have a branch network."

How financial inclusion will change the face of banking
September 2016
Technology is finally bringing banking services to the unbanked in both developing and developed markets. While technology companies are driving this transformational shift, it looks increasingly likely that traditional banks will ultimately be service providers. They have everything to gain if they can form partnerships and create a long-term strategy.

Financial inclusion: Fintech & fraud – microfinance faces balancing act in Africa
September 2016
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When microfinance banks in Africa speak of the rise of new technology, they usually focus on its potential and, perhaps disingenuously, play down the risks. They say the spread of mobile phones and internet access enables small loans to reach Africa’s rural poor more efficiently than ever before. But while international microfinancier Finca is aware of these opportunities, it knows from painful experience in Uganda that new technology opens up new vulnerabilities too.

Bank collaboration with P2P platforms rising
September 2016
Banks are beginning to work more closely with peer-to-peer (P2P) lenders, which at first looked like a threat, to find mutually beneficial ways to serve small corporate borrowers.

Nationalism: Could digital technology offer hope for a new era of financial interconnectivity?
September 2016
In 2010, The World Bank estimated there were around 125 million small and medium-sized enterprises in the world. By 2013 some 25 million of these were active on Facebook. Today Facebook reports 50 million SME users. In the US, the share of exports by large multinational corporations dropped from 84% in 1977 to 50% in 2013. Among SMEs that export, the smallest – those with fewer than 50 employees – are gaining share the fastest, McKinsey finds.

Soft costs matter too: how the benefits of peer-to-peer FX stack up for smaller clients
August 2016
Small corporates and not-for-profit organizations are increasingly looking at peer-to-peer FX as a way to lower costs. Euromoney speaks to four customers who have taken their business away from banks.

Tech innovation bridges growing SME inequality
July 2016
The sharp divergence in availability of financing for SMEs is increasing, according to new data from Misys. With growing inequality, technology is being leveraged to try to bridge the gap.

Awards for Excellence 2016

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World's best bank for SMEs

North America's best bank for SMEs

Western Europe's best bank for SMEs

Africa's best bank for SMEs

Asia's best bank for SMEs

CEE's best bank for SMEs

Latin America's best bank for SMEs

Middle East's best bank for SMEs

Funding Circle to launch marketplace lending ABS in Europe
April 2016
Deutsche Bank mandated for Reg-S sterling deal.

Fintech 2016: The fintech revolution gathers momentum
April 2016
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"While SMEs have historically had to rely on the big banks for any sort of financial service, genuine innovation and technological development from the fintech sector has given rise to a wide range of truly compelling alternatives."

Fintech 2016: Finpoint connects small firms to many lenders
April 2016
While credit conditions appear to be easing for medium-size borrowers, small companies face big hurdles in securing finance. Finpoint aims to help them over.

Tesco late payments: a case of old-fashioned bargaining power?
February 2016
Tesco recently made headlines after being found to have deliberately delayed payments to its suppliers. In a statement released in response to the findings, Tesco said the company had undertaken a review of its practices and made changes, including creating a dedicated supplier helpline to address issues within 48 hours, and introducing 14-day payment terms for UK-based SMEs.

West Africa's BRVM aims for expansion
February 2016
Bourse is working with governments and regulators and is creating an exchange specifically for small to medium-sized enterprises. 

MPS securitization beats bad debt, bail-in rout
February 2016
Italy’s third biggest bank, Monte dei Paschi di Siena (MPS) sold the majority of a €1.6 billion securitized SME lease portfolio in January, just as concern over Italian SME lending was at the sharp end of a renewed bout of volatility in Europe. 

Challengers give SMEs supply chain boost
December 2015
Challenger banks and supply chain finance providers are creating innovative methods to get more funding into the SME market.

Turkey’s banks sweat the small stuff
November 2015
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SME banking has been a top priority for Turkish lenders since the country’s regulator called time on the consumer boom in late 2013. Can the segment keep its cool in the face of rising local economic and political pressures?

Fintech: Investors back new non-bank lender to SMEs
September 2015
Iwoca a game changer, say banks; it will lend at scale to small companies.

Transaction services 2015: SMEs apply for credit cards
June 2015
Commercial cards are moving beyond mere expenses to become another source of funding in the supply chain, especially for the middle market.

Citi's top TS banker eyes SME support
April 2015
Naveed Sultan, global head of treasury and trade solutions (TTS) at Citi, explains the importance of developing SME and MME financing options, as the clout of transaction services to Citi's business strategy grows.

SME financing: AMP teaches banks how to lend to their own customers
March 2015
Micro SMEs still cut off from bank finance; new way to lend against cash flow.

Does Europe need its own private placement market?
March 2015
Private placements have usurped securitization as Europe’s great SME financing hope. The financial markets support EU commissioner Jonathan Hill’s Capital Markets Union initiative to promote it. But the thriving US market will be hard to compete with, let alone replicate. Which leaves two questions: Can the EU build it? And, even if it can, will issuers and investors come?

Financial technology: Snowflake unlocks markets for intangible assets
March 2015
Innovation is held back by the gap between the old financial system, investing and lending primarily against hard assets, and the new knowledge economy that depends on intangible assets. A new type of bank could benefit SMEs seeking to develop innovative products. It could also give investors the chance to redeploy speculative capital more productively. But who is the driving force behind Snowflake?

KfW knowledge transfer 'crucial' to financing of peripheral SMEs
July 2014
Not everyone was blown away by the targeted LTRO and ABS measures announced by Mario Draghi to stimulate lending to Europe’s real economy.

EBRD: supporting SMEs
May 2014
Although the SME sector is frequently cited as a potential growth driver by bankers in emerging Europe, providing funding to smaller firms can be problematic for traditional lenders, particularly in the aftermath of recession and at a time when western European parent banks are under pressure to repair balance sheets.

UK banks to test government guarantees on SME loans
March 2014
Taxpayers to take portion of unexpected losses; guarantees only for new loans to smaller SMEs.

Sepa threatens to induce SME cash-flow squeeze
February 2014
European companies, and particularly small and medium-sized enterprises (SMEs), could yet suffer a cash-flow squeeze from direct debits under the Single Euro Payments Area (Sepa) regulation, despite the European Commission handing companies an extra six months to comply.

SG launches financing platform to support large company supply chains
February 2014
A subsidiary of French banking group Société Générale has launched a new supply chain finance platform designed to enable large companies to provide much-needed financing support to their small and medium-sized suppliers.

Supply chain finance presents an opportunity to SMEs
February 2014
Supply chain finance (SCF) is typically the preserve of large companies with hundreds of suppliers, but signs are emerging this type of short-term financing is beginning to be embraced by small and medium-sized enterprises (SMEs) too.

In the spotlight: Financing European SMEs
January 2014
Small and medium-sized enterprises are meant to be the machine that drives Europe’s growth-free markets to recovery. But each country’s environment for SME funding remains even more disparate than their economies.

    Overview: Banks struggle to find the SME factor

     Austria: bank lending dominates

     France: the rise of the private placement

     Germany: banks still dominate

     Italy: financing gap widens

     Netherlands: minority benefits

     Nordics: a market apart

     Portugal: stymied by stagnation

     Spain: ICO fills the gap

     Switzerland: no credit crunch here

     UK: states woos reluctant borrowers

Domestic monoline wraps SME risk in Finland
January 2014
Monoline wrap for pool of SME risk; firms pay up for five-year tenor.

ECB battles Basel rules in war for SME finance

December 2013
Euromoney investigates whether the need to stimulate European SME financing will finally soften the regulatory treatment of ABS, which has now been deemed by the European Commission the vehicle through which the growth of bank lending can best be achieved. 

     The SME funding challenge

    Chain reaction: Can the need for SME finance set Europe’s securitization market free?