Multi-year fund established
In the 2014 budget bill, the French government added a mechanism designed to provide a long-term and comprehensive solution to the problem of the most sensitive structured loans subscribed by local governments.
This mechanism includes the creation of a new “multi-year support fund” of €1.5 billion over 15 years maximum (€100 million per year.
The establishment of this support fund will make it possible to speed up the transformation of these loans into fixed-rate loans.
How does the multi-year fund work?
- Eligible customers: local governments and groups holding the most sensitive loans,
- Use of assistance received by local governments: refinancing of a portion of the Prepayment Penalty (preferred option) or, initially and for a limited time, financing a portion of the interest on the corresponding loan,
- Waiver by fund beneficiaries of pending or future attempts to seek redress through litigation,
- Management of the fund provided by the French government and a steering and monitoring committee comprising representatives of the central and local governments and qualified specialists,
- Contributions to the fund will be made in equal measure by the banks on the one hand and the French government on the other. Through Caffil, its wholly owned subsidiary, Société de Financement Local has committed to make a €10 million annual contribution to the fund over 15 years.
A fund of €100 million for public hospitals is also being considered.