(Traduzione italiana)

On Tuesday 02 June 2015 I attended a conference on Capital Markets Union (CMU) and SMEs. Maximising the Capital Market opportunity for SMEs and Start-ups – this was the name of the event – was arranged by ACCA together with Barclays (in association with EGIAN and UEAPME) and gave me some clarifications about the issue.

Why should we have a CMU?

Niall Bohan, Head of Unit for Capital Markets Union in Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA), explains that the 75% of funds in Europe come from banks. He affirms that the dependence on bank lending needs to be addressed with a CMU, which would decrease the effects of another financial crisis. Why? As Peter Ujvari, Chair of the Global Forum on Corporate Reporting at ACCA, has previously affirmed, persistent market failures have enhanced the impact of the financial crisis on the SMEs’ access to finance and are the reason why the European Union needs a CMU.

But what would the CMU involve?

Bohan summarised the six main themes of the CMU: first, helping banks to manage the balance sheets through securitisation (that is the process of taking an illiquid asset, or group of assets, and through financial engineering, transforming them into a security); second, giving companies different options through the funding cycle; third, improving access to public markets; fourth, increasing institutional capacity to take exposure to equity; fifth, improving the disclosure and transparency of retail investors; sixth, solving other issues such as insolvency law and tax barriers.

And what about the SMEs?

Karen Wilson, Senior Fellow at Bruegel, remarks that risk capital is only applicable to high-growth oriented firms that means a small part – i.e. 6% – of SMEs, but she agrees that a CMU implies more efficient and integrated markets, which are complementary to the banking sector and increase the access to finance for SMEs and start-ups.

Anthony Carey, Focus Group Leader of Listed Company audit Market at the European Group of International Accounting Networks and Associations (EGIAN), agrees with Wilson: “Some companies will largely rely on bank finance, while others will rely on equity markets. We have to make sure that all sorts of funding are available for all the firms”.

However, according to Gerhard Huemer, Director of the Economic Policy at the European Association of Craft, Small and Medium-sized Enterprises (UEAPME), as the SMEs are so different, they also have different funding needs. Although Huemer has no doubt that the capital market in Europe is underdeveloped and must be improved, he believes that the EU should not create a CMU only because the bank lending does not work properly: “This would be a wrong approach”. Therefore, he suggests – as first step – to solve the banking sector problems, which still exist.

So, what can we conclude from all of this?

The European Commission (EC) wants a Capital Markets Union, for having an industry less dependent on bank lending; increasing the number of high-tech companies in the EU; and enhancing the EU competitiveness in medium- and long-term.
As a result, we should suppose that SMEs – which are 99,8% of the companies in EU – support this initiative. However, Huemer – i.e. the only one in the conference who represents SMEs – was the one who criticised more the CMU at the event. Why? Because high-tech companies are a small percentage of SMEs and UEAPME logically needs to think to all the companies that it represents.

If you are interested in:

SME Performance Review 2013/2014:

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