SME financing: special focus

COPYING AND DISTRIBUTING ARE PROHIBITED WITHOUT PERMISSION OF THE PUBLISHER: CHUNT@EUROMONEY.COM

By:
Published on:

The vexed battle to finance small and medium-sized enterprises (SMEs) continues amid risk aversion, economic weakness, new regulations and banks’ balance-sheet repair. Here is a round-up of Euromoney's recent coverage.

Santander will be the winner from RBS’s Williams & Glyn compromise
October 2017

RBS-glass-logo-580
The UK Treasury’s plan to boost SME banking competition by paying RBS customers to go elsewhere doesn’t make sense if they are simply pushed into the arms of another huge, global player.

Fintech: Incumbents and disruptors all want a piece of iwoca
July 2017
The pioneering fintech lender has grown fast by offering much needed working capital in hours – rather than weeks – to small business customers poorly served by the banks. But now the banks want their share of iwoca.

afe17-logo-196x135
World's best bank for SMEs 2017: Banco Santander
July 2017
Two years into its small and medium-sized enterprise initiative, the bank is working hard at its focused sector offering. It is paying off.

Asia banking: Inside Ant Financial’s nest
May 2017


Ants-globe-illo-600
Alibaba, Alipay, Ant Financial – by now everyone in banking knows the triumvirate of brands that have transformed financial services in China, and the domestic story is only the start. Going global will be Ant Financial’s biggest-ever test, with tougher markets, tighter regulation and a whole new world of risk management. But it is nothing if not ambitious.

Fintech: PrimaryBid transforms equity capital raising for small companies
May 2017
cocoon-butterfly-600
Taking payments off retail investors’ debit cards for new share placings has quickly changed the way AIM-listed companies place new equity and could have implications for bigger deals.

Middle East: Can the crowd fund Gulf SMEs?

May 2017
Beehive and Eureeca are using online crowdfunding to raise debt and equity for small businesses in the Middle East. Becoming regulated will allow them to grow rapidly. In time, they could eat the banks’ lunch, or the banks just might swallow them.

Fintech: The second wave of challenger banks
May 2017
technology-wave-600
The UK has been one of the world’s key testing grounds for new financial technology thanks to London’s status as global financial centre and the UK authorities’ support for new competition to the incumbent banks they had to rescue in the crisis, but the big four banks’ central role as clearing banks has kept truly disruptive innovation away from the profitable core of retail banking, until now.

Middle East: Sawiris’ banking push reaches Europe
May 2017
Naguib-Sawiris-R-600
Telecoms tycoon backs new SME online lender; chairman Péretié sees sector-beating ROE.

SME lending: Small is beautiful for banks and non-banks
April 2017
Lending to small firms in Europe has traditionally been the preserve of the banks; they have the networks and relationships to originate deals for these types of clients, but non-banks now have this business firmly in their sights. And as more banks and funds start to cooperate in this space, the latter can expect to appear more frequently in transactions for Europe’s small and medium-sized enterprises.

Bangladesh's Brac Bank returns to its roots

April 2017
Bangladesh-flag-cards-R-600
A management shake-up and a renewed focus on financing small and medium-sized enterprises have boosted Brac Bank’s performance. But CEO Selim Hussain says he is nowhere near finished when it comes to unleashing the bank’s potential.

Leveraged finance: Why the new barbarians don’t need banks

April 2017
Money-run-600
The European leveraged loan market is in overdrive, offering unprecedented terms to borrowers and pushing leverage to uncomfortable levels. Cash-rich non-banks are breaking out of the mid market and into syndication. But stoking competition for assets exposes their Achilles’ heel: the yields they have promised their own investors.

Seven-bank consortium to deliver trade finance on blockchain this year
February 2017
Some of Europe’s biggest banks have joined behind KBC’s blockchain prototype to help SMEs increase trade across the continent.

Trade finance modernization turns towards blockchain

February 2017
The latest bank offering is to look into how blockchain can be used to benefit small and medium-sized enterprise trade.

ECB holds Popular’s feet to the flames
December 2016


Pedro Larena flames-600
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.


Biometric hand-160x186
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
financial-inclusion-600
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
Tanzania cover-600
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


AfE 2016 logo-196 135

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
tech eye-600
"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
Turkey lira-R-600

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?

    SME finance: Weak loan demand is the real problem, say banks


SMEs unlikely beneficiaries of bank payment obligations – analysts
September 2013
Bank payment obligations (BPO) – touted as an innovative new payment instrument to transform global trade – are more likely to benefit multinational corporations, and more consultation with corporates is needed, say analysts, after the July unveiling of technical rules for the product.

SME and consumer lending: the new battleground in the Philippines
September 2013
While interest rates remain relatively low, business is booming and so is consumer power. Banks hoping to take advantage of this are shifting their energy to the consumer market.

Coeuré: ECB confronts SME financing challenge
August 2013
In an exclusive interview, Benoît Coeuré, member of the executive board of the European Central Bank, discusses the challenges that Europe faces in stimulating financing to small and medium-sized enterprises, including the creation of a truly pan-European and cross-border capital market in the region and how securitization can be used to re-establish funding to these firms.

Venture capitalists: Everyman as entrepreneur
August 2013
Some six million businesses were created in the US in 2012. The country is experiencing a start-up boom. What impact is the wave of entrepreneurs having, and how are the angel investor and venture capital industry adapting?

SME financing: ECB aims to kill two birds with one haircut
July 2013
The ECB’s recent decision to reduce haircuts on funding collateral comprising asset-backed securities should be a boon for the moribund European securitization industry, but its real target is the continent’s small and medium-sized company sector, which has struggled to secure bank support since the financial crisis.

Fundraising for US small companies gets easier
July 2013
In July, the SEC voted four-to-one to implement Title II of the Jobs Act, lifting the ban on general solicitation of private offerings. That means issuers of non-public equity – namely small businesses – can now approach accredited investors directly and more easily raise capital in private markets.

Mobile POS platforms set to revolutionize banks’ SME relationships

July 2013
Mobile point-of-sale technology – which facilitates contactless low-value payments – is gradually taking off in the retail space, thanks to new cost-effective platforms. Transaction bankers need to provide innovative software and sales solutions, targeted to the SME sector, in particular, analysts say.

Awards for Excellence 2013: Best SME finance house
July 2013
Bank of America Merrill Lynch stands out because it provides a level of service to SMEs on an international scale comparable to that traditionally available only to large companies.

Standard & Poor’s targets Europe’s SMEs with mid-market credit product
June 2013
Agency to apply corporate rating experience to smaller firms to stimulate greater investor participation.

ECB's Cœuré: Cross-border risk sharing needed to address SME credit crunch
June 2013
In an exclusive interview with Euromoney, Benoît Cœuré, member of the executive board of the European Central Bank, discusses the challenges that the region faces in stimulating financing to small and medium-sized enterprises and says non-bank investors are a useful spare tyre.

SMEs shift gears as cross-border trade grows
June 2013

The transaction banking demands of small and medium-sized enterprises are diverse and rapidly evolving amid technological innovation and globalization. The line is blurring between SMEs and larger corporates.

The Asian Alliance: a transaction bank’s next top model
June 2013

The rapid growth of intra-regional trade in Asia is encouraging local banks to enter into an alliance to facilitate the cross-border activities of under-banked Asian medium-sized companies, writes Enrico Camerinelli of Aite Group, a financial services research firm.

Disintermediation takes root in Turkey

June 2013
The country’s rapidly growing SMEs urgently need funding avenues other than those provided by the country’s banks. Some new options are beginning to emerge to solve that conundrum.

SME credit crunch: New spirit of cooperation promises accelerated supply chain financing growth

May 2013
Swift and the International Chamber of Commerce's Banking Commission in recent weeks published new legal and technology standards for bank payment obligations, a payment term that allows buyers and suppliers to secure and finance international trade transactions. Will this turbo-charge supply chain financing adoption?

Supply chain finance still viewed with caution among SMEs

May 2013
Supply chain finance has been identified as a powerful tool for financing SMEs but some have expressed concern it can be used as a stick with which powerful corporations can beat their vulnerable suppliers and, in other instances, an inappropriate financing tool for the corporate in question. 

CRD IV trade finance amendments offer little comfort to SMEs
May 2013
European and Basel forbearance on trade finance regulations will reduce, at the margin, borrowing costs for the larger corporates but for SMEs the challenge of accessing capital will remain undiminished until the banking sector is re-capitalized. Meanwhile, creative financing solutions are afoot.

SMEs: Germany's fourth pillar?
May 2013
The SMEs that dominate the German economy continue to rely heavily on local relationship banks for finance. But the special circumstances of some companies and the eagerness of non-bank lenders to get into the market mean that funding through such instruments as Mittelstand-focused bonds, Schuldscheine and subordinated debt is becoming more prominent.

"If there is one lesson we have learned from recent years it is that you should not depend on the banks" 

-
SMEs: Germany's fourth pillar?



SMEs: Entrepreneurs tackle mezzanine drought head-on
May 2013
It is not only bankers and asset managers figuring out new ways to finance the Mittelstand; so are the companies themselves.

Commerzbank unlocks covered bond market for SMEs
April 2013 
Commerzbank issued a five-year €500 million covered bond backed by SME loans at the end of February – a landmark deal for the market given the atypical structure.

Alternative lenders embrace SMEs as banks retreat
April 2013 
ECB executive board member Benoit Coeure has said that the central bank does not have a "magic wand" that can revive bank lending to small and medium-sized firms in Europe. But there are plenty of others willing to take their place.

UK's retail bond market still out of reach for many SMEs
April 2013 
Regulators hope they can transform the retail bond market into a regular source of funding for mid-caps - and the smaller firms.

Small firms plagued by debt void
April 2013
There are signs that private equity firms are looking closely at the smaller end of the market.

SMEs: UK Government poised to intervene as bank lending falls short
November 2012
“Debt finance for SMEs has never been easy... From 2004 to 2007, there was a hiatus in this trend thanks to easy credit, but the market has now reverted to how it was before – but to an extreme”

The return of Europe's local markets
November 2012
While the international markets are one source of funding for Europe’s corporate sector, and corporate bond issuance is at record levels, for the army of small and medium-sized companies, international markets are simply not an option at this time.

Debt capital markets: Nordic corporates turn away from banks
October 2012
Small-, medium- and large-cap Nordic companies seek to diversify funding and lock in competitive pricing levels and deep local market liquidity.

Bank lending: BoE fuels mortgage, not corporate, lending
October 2012
SME lending remains elusive.

Payments in RMB? No problem, says UK SMEs
October 2012
Small and medium-sized enterprises (SMEs) in the UK are more willing to settle payments with Chinese suppliers in RMB, says money-transfer services provider Western Union Business Solutions.

Could Axa’s Sonepar deal spark life into Europe’s SME funding market?
September 2012
French insurer has big plans for a novel way of providing corporate finance.





July 2013Mobile point-of-sale technology – which facilitates contactless low-value payments – is gradually taking off in the retail space, thanks to new cost-effective platforms. Transaction bankers need to provide innovative software and sales solutions, targeted to the SME sector, in particular, analysts say. June 2013Agency to apply corporate rating experience to smaller firms to stimulate greater investor participation.The rapid growth of intra-regional trade in Asia is encouraging local banks to enter into an alliance to facilitate the cross-border activities of under-banked Asian medium-sized companies, writes Enrico Camerinelli of Aite Group, a financial services research firm. June 2013The country’s rapidly growing SMEs urgently need funding avenues other than those provided by the country’s banks. Some new options are beginning to emerge to solve that conundrum.May 2013Swift and the International Chamber of Commerce's Banking Commission in recent weeks published new legal and technology standards for bank payment obligations, a payment term that allows buyers and suppliers to secure and finance international trade transactions. Will this turbo-charge supply chain financing adoption?May 2013Supply chain finance has been identified as a powerful tool for financing SMEs but some have expressed concern it can be used as a stick with which powerful corporations can beat their vulnerable suppliers and, in other instances, an inappropriate financing tool for the corporate in question. May 2013European and Basel forbearance on trade finance regulations will reduce, at the margin, borrowing costs for the larger corporates but for SMEs the challenge of accessing capital will remain undiminished until the banking sector is re-capitalized. Meanwhile, creative financing solutions are afoot.   It is not only bankers and asset managers figuring out new ways to finance the Mittelstand; so are the companies themselves.