EU Federation for the Factoring and Commercial Finance Industry

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EUF Newsletter Summer 2022

EUF Newsletter 2022 Summer Page 01

Highlights include:

  • Welcome Fausto Galmarini EUF Chair Factoring
  • In or out of the shadows? Magdalena Wessel, Chairwoman of the Legal Committee
  • Strong recovery of Factoring after Pandemic decrease – 2021 EU figures Magdalena Ciechomska-Barczak, Chairwoman of the Economics and Statistics Committee
  • Toward a relevant and proportionate prudential regulation for Factoring: Where are we now? Diego Tavecchia, Chairman of the PRC Committee
  • Sustainability in the value chain, sustainability in the financing industry Magdalena Wessel, Chairwoman of the Legal Committee

Press Release: Strong recovery of factoring after pandemic decrease– 2021 figures

 After the global pandemic it was difficult to project when and how the market would recover the lost volumes following the dramatic decline in GDP. But if we look at the data collated by the EUF Economic and Statistic Committee for 2021 we can ascertain the strong performance of the factoring market with a turn over growth of 12% compared to the previous year. The overall volume reached 2,0 trillion € comparing to 1,8 trillion € in 2020 and 23% of it is made by international factoring. The European factoring market is the most developed in the world, accounting two thirds of the worldwide turn over and these figures show how factoring is appreciated by the businesses as an important financial support also in times of crisis.

Such volume, even higher than the level reached in 2019, indicates a brilliant recovery after the dramatic decrease of 2020 caused by pandemic. Despite the last years’ drop, the compound average growth rate of the European factoring turnover in the past 6 years equals 6,2%.

According to the information received from the EUF members and partners, return on the growth path was possible thanks to the rebound of the European economy, inflation (especially in the second half of the year), surging prices of raw materials, shipping costs, energy etc. and, far broader among the businesses, perception of factoring as a widely accepted working capital financing product, particularly important in times of uncertainty as Factors can offer coverage on debtors by means of non recourse assignments.  

The main part of the European turnover was done by the EUF members with 94,3%, and according to some EUF estimations, the majority of turnover is done by Banks or financial intermediaries owned by Banks with over 95%.

France, United Kingdom, Germany, Italy and Spain are always the top five countries but United Kingdom returned, after a year of being no.3, at vice leader’s position of the European factoring market.

The speed of recovery and the dynamic trend after post covid crisis was not the same in the EUF members and partners countries. In fact four EUF member countries had a turn over growth higher than 20% (Czech Republic 28%, Poland 26%, Greece and Belgium 22%) and, on the other side, two EUF member countries had a growth lower than 10% (Spain 9%, Croatia 8%).

Thank to the increase of factoring turnover, in 2021 the GDP penetration ratio was higher than the last year (11,4% comparing to 10,6% in 2020). It’s important to underline that the growth of factoring turnover was much higher (over 2 times) than the European GDP increase (in the EUF members and partners countries it was about 5,4% in 2021).

Mr Fausto Galmarini, Chairman of the EUF, noted: "The global pandemic shook the world in 2020 and continues to affect all the countries. However, the data collated by the EUF shows the resilience of our industry that could recover the volumes lost in 2020 and in some areas even exceed the turn over reached in the pre-pandemic period. This news gives hope to our industry and once again shows how factoring can support the real economy effectively also in difficult times of crisis. We have more than 264.000 active clients and at the end of 2021 the estimated amount of funds made available was over 274 bn euro (12% higher than in 2020), secured by receivables valued at 354 bn euro (increase by 12% y/y) and 6% higher than in pre pandemic 2019”.

In conclusion, data collected by the EU Federation for Factoring and Commercial Finance for 2021 confirm that the trend of factoring turnover is only partially correlated to the European macro-economic scenario: as noted above, in 2021 the volume growth was much higher than the increase of GDP and inflation together.

It indicates that factoring is more often perceived by the entrepreneurs as a reliable source of funding which provides, apart from an immediate payment, also additional values such as debtor rating and debtor risk coverage (in case of non-recourse factoring), which are appreciated by the clients especially in times of uncertainty.

Turnover 2021

Photographs - EU Factoring Summit 2022, Rome

 

A close up to the utilization of new technologies   Factoring in Italy An Update D

  Opening of the Summit   The Digital Finance Agenda of The EU Commission   Panel_Discussion_on_the_Definition_of_Default_Regulations_2.jpg

 Panel Discussion on the Definition of Default Regulations   Presentation on digitisation   The Digital Finance Agenda of The EU Commission 2

Welcome to Rome 2 D   What kept us awake at night in 2021 D   The Factoring Industry in Europe in 2021 preliminary Statistics and Figures D

Presentation from the Gold Sponsor D   Factoring in Italy An Update 2 D   Late Payment Directive an update D

Non Banking Lending and new Financial Players in the EU D    

 

 

EUF and FCI host successful Summit in Rome

EUF and FCI co-hosted successfully the 7th Annual EU Factoring Summit this past week in Rome, Italy. Ms Françoise Palle Guillabert opened the summit, where she congratulated Mr Fausto Galmarini for being elected as the new EUF Chairman, then spoke about the work EUF has done tirelessly during these challenging times to monitor, review and seek appropriate business support. Mr Giovanni Sabatini, General Manager of ABI, the Italian Banking Association, welcomed attendees both online and in-person to Rome. Mr Sabatini reflected on the impact of the banking industry over the past two years, not only from the perspective of Covid-19 but also the Ukrainian Crisis including the latest developments and challenges faced.

Mr Sabatini stated: “In this difficult scenario (Covid 19), Italian banks were able to strengthen their resiliency, increase their capital and liquidity buffers, improve their asset quality and their efficiency, and prepare for the digital transformations. Today, capital banks have the capitalisation levels in line with the European averages with a CET of 1 ratio, around 15.2%, liquidity ratio well above average requirements, improved operational efficiency and an NPL ratio of proficiency standing at 2%.

Next, Ms Magdalena Barczak, EUF’s Chairman of the Economic and Statistics Committee presented “The Factoring Industry in Europe in 2021” with preliminary Statistics and Figures. Afterwords, Mr Fausto Galmarini, Chairman of Assifact Italy presented an update on Factoring in Italy. He highlighted that in 2021 the turnover reached the amount of 250,6 billion euro (+10% y/y), 79% non recourse, thanks to the strong recovery of the Italian economy since the fall 2020. In the worst period of the pandemic, factoring transactions were more resilient than banks’ invoice discounting and other self-liquidating transactions. Furthermore, he showed that 31.626 Italian enterprises are utilising factoring, 64% of which are SMEs, with overall advances of 51 billion euro. In closing he reflected on the Ukrainian crisis and its negative effect on the real economy, due to the lack of raw materials and high cost of energy, and on the new definition of default introduced by the E.B.A.that has a significant impact on factoring business considering the late payment as a default.

After a coffee break, Mr Pietro Penza, Partner and Head of Risk Consulting & Financial Services at PWC Italy presented on “Non-Banking Lending and new Financial Players in the EU”. Attendees learned from his valuable insights as he touched on the definition of non-bank lending, bank lending in Europe, the case of Italy and the new players & regulations in Europe especially relating to fintechs and big-tech.

The delegates also heard from the European Commission, where Ms Antonella Correra, Senior Policy Officer, shared information and updates on the Late Payment Directive. She dove into the steps to improving payment performance in the EU including1. Study: Building responsible payment culture, 2. EU Observatory payments in commercial transactions, and 3. Pilot project: ADR/Mediation to solve payment disputes. Participants got the chance to pose questions to Ms Correra, where she eloquently answered some hard-hitting questions from the audience.

Delegates then heard from EUF’s Mr Diego Tavecchia, Chairman of the PRC Committee and Ms Magdalena Wessel, Chairman of the Legal Committee, where they discussed “What kept us awake at night in 2021” with Reports from both committees, focussing on inter alia developments in the areas of supervisory harmonisation, late payments and default as well as the EU-wide implementation of Basel III including credit insurance as credit risk mitigation techniques.

Finally, the afternoon plenary ended with a short presentation from the Gold Sponsor, CODIX, where Mr Laurent Tabouelle shared information on the CODIX system and what it can do for its users.

Day 2 started with a presentation from Mr Louis-Marie Durand, Director at Euralia, where he discussed The Digital Finance Agenda of The EU Commission, focussing on two main points; Understanding the EU political and regulatory agenda in digital finance and whether the EU framework is still adapted to upcoming challenges, highlighting an upcoming EU legislative proposal for factoring. Following this, attendees got a Presentation on Digitisation: Technology and Fintech developments in Norway from Mr Eskil Myrmo, BRA Bank. Mr Myrmo shared valuable insights into the region and its developments, highlighting Digitalisation, Credit risk, Data, API’s and ERP systems.

The late morning plenary session started with a Panel Discussion on the Definition of Default Regulations where panellists Ms Françoise Palle-Guillabert, Ms Gaia Cioci, Senior Director at CRIF in Italy, Mr Vitor Graça, Secretary General at ALF in Portugal and moderator Mr Diego Tavecchia discussed the implications and actions of the new regulations. Following this, Mr Pablo Mansilla, Legal Adviser at the Spanish Factoring Association shared a close-up of the utilisation of new technologies in the Supply Chain Finance Sector and highlighted the association's work. Participants then heard from Ms Magdalena Wessel, Chairwoman of the Legal Committee, and she shared insights from the EUF Legal Study. Finally, the day ended with a Q&A session and the closing remarks by FCI Chairwoman Ms Daniela Bonzanini. She thanked all participants & sponsors and then spoke about the highlights over the past two days and the new 5-year plan of the FCI Executive Committee.

Ms Bonzanini stated: “The conference updated us on many important changes in the European factoring industry. I was pleased to see another strong year of growth for the EU factoring market, growing 10% YOY, back to a growth after 2020 decrease. Since we last met physically in 2019 in Portugal, a lot has changed. Digitalization has become central due to the lock-downs. Today as you could hear earlier, the EU Commission has a digital finance agenda, new developments are done for trade finance in this field. We can feel that the virus accelerated the change that was already in the initiative from 2019 for the EU and now that the situation is getting better, digitalisation will remain in the centre of many projects into the future.

Following feedback from the attendees, this was one of the best events in the history of the EU Factoring Summit. The audience found the content highly insightful and valuable and thought the networking was plentiful. EUF and FCI would like to thank all who participated in this year’s event and look forward to seeing you at the next one; and to those who did not attend, do make sure you join us next time.

Press Release: Fausto Galmarini elected as Chairman of the EU Federation

Rome, 4 April 2022

Fausto Galmarini elected as Chairman of the EU Federation, the European Association of Factoring

Mr. Fausto Galmarini, Chairman of Assifact, the Italian Association for Factoring, has been elected as Chairman of the EUF following a vote by the EUF’s Executive Committee which met on 4 April 2022 in Rome. His mandate takes effect immediately for a period of 2 years.  

Galmarini has been working in the banking and credit sector in Italy assuming various managerial responsibilities. He has been active in the factoring Industry for more than 20 years and is currently the Head of Institutional Relations at Banca Sistema SpA, Italy. Previously, Mr. Galmarini was Vice-Chairman of EUF since 2018.

At the same meeting, the EUF Executive Committee also re-elected Magdalena Wessel of DFV (Germany) as a Vice Chair, and elected Ignacio Pla Vidal of AEF (Spain) as a Vice Chair further cementing and strengthening a highly knowledgeable and experienced leadership team for the Organisation.

Mr. Galmarini stated “First of all I want to thank all the members of the EUF Council for their trust. By taking on this new role, I commit to sharing my 20 years of experience in the interest of all the associates, working with enthusiasm for the success of factoring all over Europe. I am truly honoured and proud for the appointment as Chairman of the European Federation for Factoring that I will represent, in light of the support that our associates have always given and continue to give to the real economy, supporting the businesses in the optimization and management of working capital even in difficult moments like the current health emergency and risks of escalation of the conflict between Russia and Ukraine.

Our sector, in Europe, has seen a growth in turnover of 11% in 2021, reaching the remarkable figure of 2 thousand billion euros which represents 2/3 of the factoring achieved worldwide. The importance of our activity is confirmed by the penetration index in the European GDP which exceeds 12%, the number of clients (over 265,000) and the amount of advances granted at the end of 2021 equal to 275 billion euros.

Providing financial support to the clients is our task and we will continue to do it with skill and adequate attention to the technological developments that will allow an improvement of the services we can offer.  We hope in the due attention of the Authorities so that they recognize in the regulatory framework the risk management capacity that we have always demonstrated by maintaining the credit risk at a low level even in the negative cyclical phases of the economy.”.

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