GNOSIS 1/2012
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The Central Guarantee Fundbetween opportunity and risks |
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Claudia BUGNO |
George A. Akerlof, 2009 Economic crisis and crisis of the creditor the function of the Guarantee and the role of the Central Fund. The chain effects generated by the international crisis have not been slow to affect the fabric of the businesses and, in particular, those of smaller dimensions which, as is known, constitute the motor of the economy: a motor which must not stop, otherwise, it risks blocking the entire national machinery. The emergency is determined also by the growing need for credit, accompanied by a greater caution on the part of the banks to grant financing and by an increase of the costs of credit access, but also by a shrinkage in demand on the part of the businesses. In this way, a worrying vicious circle has begun: credit crunch – repricing of the credit – reduction of the demand (or passive credit crunch) – less financing – less investments – less growth. We are witnessing the occurrence of a phenomenon typical of all the profound crises: the moment in which the existence of businesses, workers, families, States and entire economies are too severely tested, the two conditions necessary for survival also fail, namely, trust and the social capital. Eroding the fiduciary bases, the society itself experiences tensions and growing fragmentation. At the same time as the social capital crumbles, that relational capital which constitutes the circulatory apparatus of the community fragments and disperses, and the economic capital itself loses meaning. It is in these dynamics that the credit assumes a role which goes far beyond the pure monetary value, representing a substantial value that is linked to the vitality of the entire Italian System.
As already shown by certain European Countries in the 70’s, the public guarantee represents a less costly instrument, with equal effectiveness, of the contributions of interest rate subsidies or other interventions which involve strong public outlays. However, the awareness of its strategic function goes far beyond this: to confer a public guarantee such as that of the Central Fund means to extend to the credit market a necessary and urgent message of openness, i.e.
the volume of accepted applications has grown strongly since 2008, passing from nearly 14,000 operations recorded in that year to the 24,600 of 2009, up to nearly 50,000 in 2010. The positive trend was confirmed in 2011, with 55,209 accepted applications, for a volume of financing equal to 8.4 billion Euros and a guaranteed amount equal to 4.4 billion Euros; the range of the Fund is national, with a rather homogenous distribution of the impact: on the basis of the data of 2011, the 46.4% of the total of the accepted applications concerned the North, followed by the South (34.7%), but also by the Center where the businesses demonstrated a greater interest growth (+42.8% compared to 2010);
Starting from these premises, from 2012, the commitment of the Central Fund further increases. On the one side, as defined by the “Save Italy” Decree, its range of action will widen through interventions such as the restructuring of the coverage percentages, the elimination of the commissions for certain categories of business, the reduction of the minimum percentages of the Fund reserve, the raising of the maximum amount guaranteed for certain sectors, the possibility of guaranteeing also investment portfolios etc. On the other side, it will experience a new enhancement, thanks to the full implementation of the inter-ministerial Decree, which allows for the linking of the resources of the State to those of other protagonists on the territories (Regions, Sace, Simest, Chamber of Commerce, banks, trust companies etc.,) bringing additional resources which, in their turn, can be transformed into new oxygen for the SMEs. Therefore, the volumes of activity in the final balance and the programmed volumes make the Fund an instrument of particular importance in the national credit panorama. In parallel, however, it allows one to touch very closely certain critical issues of the context within which the Country System works. The governance of the Central Guarantee Fund: from the State to the territories It is easy to visualize the guarantee of the Fund as an infrastructure – a bridge between the State and the entrepreneurs. However, the relationship between the State and the businesses is not direct: those that are direct interlocutors with the companies are the financial operators (trust companies, banks, regional funds and leasing societies), acting as mediators in the disbursement of the credit supported by the Fund guarantee. It should not be forgotten that also the stakeholders come into play and the different subjects present within the management Committee of the Fund, together with those protagonists on the territories: the Regions, the Associations representing the interests, but not only, there is also the Chamber of Commerce etc.. Not least important – on the technical-operative level – a banking operator is provided to support the management Committee in carrying out all the preparatory stage of the paperwork. Considered from the point of view of this structured framework, the Fund constitutes an interesting example of “governance of complex systems” and collaboration between public and private. Its model of organization, management and control is designed to act as “the guarantee of the guarantee of the State” and as protector of the SMEs, consistent with the mission of the instrument. The average time of management of the application for credit access, which is around thirty days from the arrival of the preliminary enquiry until the decision of the Committee, demonstrates that the organizational design is streamline and functions well. As a counter to the strong “simplified” connotation, moments of control are foreseen by the management Committee and the Ministry of Economic Development, in their respective areas of competence. A key point in this operational and control scheme is given by the parameters of access to the guarantee provided by the operating procedures: these predefined criteria allow for rapid execution of the phases of pre-selection of the majority of the applications presented (96.6% in 2011), leaving only the more complicated cases to a longer preliminary investigation. Moreover, in recent years, the Management Committee has chosen to further refine its ability to monitor operations, instituting an ad hoc Observatory and requiring from its Manager analyses centered on topics of particular importance. In this logic of public-private intervention, the Fund is designed to be attractive to the operators, incentivizing the use, on their part, to the benefit of the businesses. The strong points of its attractiveness, which distinguishes it from the other instruments in the field of the Italian guarantee, can be synthesized as follows: - from 2009, the Fund has been under the guarantee of the State (as lender of last resort) which implies, according to the Basle Agreement, “credit risk mitigation” on the direct guarantees and on the first demand counter-guarantee granted by the Fund. In particular, the mechanism of the zero weighting is applied to such guarantee, which eliminates the absorption of capital for the funders on the share of financing guaranteed, i.e. the financial operator can lower the minimum capital of the reserve, in relation to the riskiness of the loans. For example, a bank, on a funding of 100,000 Euros covered to 50% by the direct guarantee, will not have to make reserves on the 50% of the funding. Therefore, instead of reserving 8,000 Euros (the standard percentage of reserve is 8%); it will reserve 4,000, thereby having a saving of capital which determines a release of important resources, especially, if considered on large volumes; - the operators do not have to request further guarantees from the businesses for the disbursement of the funding: the SMEs guaranteed by the Fund can have access to the credit without having to present real collateral and the data collected last year shows that this occurred in the majority of the cases (99.6% in 2011). -- furthermore, certain facilitations are provided (which will be expanded soon) – with the implementation of the “Save Italy” Decree – concerning reductions of the commissions (to their becoming eventually completely free of charge). In particular, the businesses that enjoy facilitations at the moment are: those of prevalently female participation (from the beginning of the operation, almost 25,000 accepted applications); the start-ups (over 25% of the total of the applications in 2011, 86.6% presented by trusts authorized to certify the creditworthiness); those located in some particular geographical areas;
-- in short, with the Fund, a lever effect is determined which means that with 1 Euro of its endowment, 19 Euros of funding are activated and circa 11 Euros of guarantee. Currently, some re-modulations of the percentages of the reserves are being studied, which would allow raising the multiplier on the funded, allowing, with 1 euro endowment of the Fund, to activate 24.4 Euros of funding. In 2011, starting from these mechanisms, 198 banks have operated with the Fund, as well as 116 trust companies and other regional funds (among which 39 trusts authorized to certify the creditworthiness, which in 2011 presented 52.3% of the applications accepted by the Fund) and 13 leasing and factoring societies, through direct guarantee or counter-guarantee. As in the preceding year, the operation was concentrated in the hands of few operators: around two thirds of the total operations was responsible to the first 15 operators of the Fund, a third of the total to a single operator (Eurofidi) trusts authorized to certify the creditworthiness). If, as demonstrated, operating with the Fund creates an advantage for the financial operators, at the same time , it highlights the priority theme of their social responsibility and also leads our attention to certain potential indirect risks, which will be looked at in more detail in the following paragraphs. The social responsibility of the operators between public and private To speak of the social responsibility of the operators, with reference to a public instrument like the Fund is, today, unavoidable. It does not mean, however, to enter into the merit of their private functions, perhaps putting the regulations of the market in doubt. It is, instead, a question of trying to identify the spaces that are still available to release new resources, further highlighting the discretionary weight of the financial operators who interact with the Central Guarantee Fund. The discretion of the operators is already in evidence at the scouting level of the businesses: in fact, on the basis of the mechanisms of operation of the Fund, the first contact with the SMEs is made by the operators. It is they who can better interpret this role, thanks to the capillary diffusion at national level and, therefore, to proximity with the SMEs and their needs. Furthermore, the leading function of the operators is dictated by their task of preparing the dossiers necessary to present the applications and access them to the preparatory phase. Within the range of the action described, the operators have considerable possibility of acting on response times to the requirements of the businesses, to increase or delay the expectation of credit, to give a more, or less, rigid interpretation, personalized, tailored to the businesses, to gain a better understanding of the entrepreneurial project and its value for the area of location, etc. In a period of scare public resources, of dramatic needs of the companies, of strong tension within the spectrum of the financial operators, these issues come to the attention of the Central Fund as key points to the success of its project. Therefore, a double reflection is created: the necessity, on the one hand, to consolidate the different instruments of control and monitoring, also in the “zero” phase of the guarantee – in other words - the time and place where the dossier originates; the need, on the other hand, to rekindle at “peripheral” level, relationships with the SMEs, bringing back to the centre the protagonist of the different processes: the entrepreneur, as client or as citizen, that is, “the person”, the protagonist of the future of the Country. Competitiveness of the guarantee market: the pricing A second variable which the Fund notes as a critical factor strictly correlated to the previous, concerns the subject of the pricing of the guarantee. As has already been mentioned, the International context has also led to an increase in the cost of the credit. The last data of the Banca d’Italia has confirmed that the steady growth of interest rates for loans to non-financial corporations continues that at January 2012, they reached 4.05%. Although aware of these constraints, it is possible to intuitively understand that the Fund will, however, make a further step of effectiveness also on the pricing. All efforts, to this end, must be directed to the motif of transparency. In general, the contribution that the guarantees can offer to the reduction of the pricing is considerable and increases further with the guarantee of the Central Fund, thanks to the characteristics already illustrated (the mechanism of the zero weighting and the lower capital absorption). In this regard, more open and timely information on the rates applied by the operators would help improve the competitiveness of the guarantee market and release resources in favour of the SMEs. The rapid implementation of the “Save Italy” Decree would strengthen the policy on transparency, requiring the operators to transmit to the Management Committee the details of the rates applied on the operations managed with the Fund. Earning decimals on the percentages of the interest rates charged is an action of responsibility from which the Fund cannot be exempted and, in this sense, the possibility of crosschecking forms of monitoring is considered, to stimulate even more honest behaviour also in this problematic issue. The possible critical aspects and the potential risks a view which extends from the Fund to the Country The topic just discussed leads to the last aspect to which it seems appropriate to draw attention: the high value of credit to eliminate the usurer risk and the risk of falling back into the manifold forms of misuse connected with the loan phenomenon. Among the costs of the crisis, these risks have grown dramatically in recent years and even more in recent months, also in territories of strong economic development, causing an over-indebtedness among families and SMEs (especially micro and small). Recourse to “informal” models of loans seems to have become the only way out for some businesses, perhaps after having tried all other possibilities, some of which not very sustainable (delays in payments, funding provided by supplier companies or clients ….). By law, the rate of interest offered (in the legal credit operations) should never exceed the threshold rate fixed by the Ministry of Economy and Finance, periodically calculated on the basis of the average rates for each type of operation. It is necessary, therefore, to unite all efforts to make healthy resources rapidly available to the businesses, to stem the multiple and increasingly sophisticated (often, almost clean) forms of “usury” that are prospering on the fragility of the Italian productive sector. The full vision of this risk gives the idea of the multiplication of the responsibility that the credit and guarantee agents have today: apart from the “physiological” risk of business closures, there is the risk of the impoverishment of the Italian entrepreneurial assets, the work of agents that operate in an uncontrolled manner and, at times, also as formally legalized entities, and this will lead to devastating results for the future of our Country. Usury and, in particular, as the Ministry of the Interior confirms, that which is managed by criminal groups, generates consequences which threaten even more the possibility of development and welfare of a vast community. Finally, alongside the issue of usury, it is opportune to recall another two risks which are exacerbated in the recessionary phase within the credit system. In the first place, it is necessary to pay attention to eventual attempts to unload the costs of “sufferings” and default of businesses onto the resources of public interest, perhaps through fragmented operations, of small dimensions, but with an overall volume of high impact and a corresponding subtraction of resources from the “healthy” businesses. In other words, having the shrewdness to provide oneself with all the antibodies which are able to exclude the likelihood of crimes of “economic criminality”, and that is, that behaviour that is committed within legitimate economic activities. In the second place, there should be continual monitoring of the activities of Mafiosi groups and organizations that are all too ready to hook onto the “ordinary” credit system for the purpose of covering dubious or illegal operations. The recent Report on organized crime of the European Parliament (October 2011) notes that the criminal organizations are concentrating their attention also on the distraction of the public funds and that recycling remains, between the legal and illegal, one of the most insidious channels of contamination. The data of the Italian Ministry of the Interior indicates that this occurs also on the National territory, with a conspicuous ability of the Mafioso type organizations to infiltrate the economic-financial fabric by means of the dense network of operators. The aware of the threat represented by such phenomena makes it vitally necessary to be able to count on mechanisms of structured control and prevention. Therefore, the credit ambit, at various levels, demonstrates the potential presence of critical issues and risks which, from the viewpoint of the Central Fund must, as a priority, be kept constantly monitored to favour efficiency and effectiveness in conferring the State guarantee. These are risks that recall the importance of being able to depend on security systems which constitute real instrument panels of control able to follow the progress of the operations and the impact on the businesses. Conclusion 113.1 billion Euros of existing loans and 7.4 billion guaranteed: this was the picture of the exposure of the Fund at the end of 2011. They are figures that will increase in the course of 2012, thanks to the new financial availability and to the various reforms which will be fully implemented in the coming months. To steer towards positive trends and to dispel the effects of disruptive forces, the real and urgent challenge will be to relaunch a national synergy, based on concrete commitments orientated to the collective good. Protecting the security in these areas means contributing to ensure the development of a Country Legend 1 Graph of Applications accepted by the Guarantee Fund starting from 2000 – Observatory of the Management Committee of the Fund 2 Graph of Applications accepted by the Guarantee Fund by Region, year 2011 –Observatory of the Management Committee of the Fund 3 Graph Central Guarantee Fund by SMEs. The impact on the businesses by economic sector (% applications accepted – year 2011) – Observatory of the Management Committee of the Fund 4 Graph Central Guarantee Fund by SMEs. The impact on the businesses by size of business (% applications accepted – year 2011) – Observatory of the Management Committee of the Fund 5Graph Central Guarantee Fund by SMEs. The first 15 operators (n. applications accepted – year 2011) – Observatory of the Management Committee of the Fund
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