The public banks of the Generalitat and the State ally to finance housing and strategic projects

BarcelonaThe Catalan Institute of Finance (ICF), the public investment bank of the Generalitat, has sealed an alliance with the Official Credit Institute (ICO), of the Spanish government, to channel the financing of housing and strategic business projects. The objective is to boost in Catalonia the resources of the public-private fund España Crece intended to provide continuity to the Next Generation European funds linked to the post-pandemic recovery plan –whose application period ended last August– and also the lines intended for companies.

This agreement, the first of its kind between the ICO and an autonomous public bank, will allow the Generalitat's body to act as an intermediary for the ICO's financing lines in Catalonia, which today are channeled only through private banks. It also establishes a stable framework for collaboration, strategic projects will be co-financed, and sources of financing will be diversified, according to the sources consulted.

The agreement will allow for obtaining "more financing to transform and promote innovative projects in Catalonia", through the resources of the España Crece fund, which plans to finance about 60 billion and mobilize about 120 billion euros throughout Spain. Within the framework of the agreement, the ICO will offer the credit lines and provide funds, while the ICF will analyze the viability of the projects and assume the risks of non-payment. The Catalan body previously took a step as a public bank by assigning personnel to directly assist individuals within the financing plan for the down payment for housing for young people up to 35 years old.

The objective of the agreement with the ICO is to increase the allocation of resources to finance strategic projects in Catalonia, which, in general, corresponds to around 20% of all ICO funding. Sources from this organization consider that a step of this kind "should be the common norm in a compound state: dialogue and cooperation between institutions."

Thanks to this agreement, it will be possible to boost projects of the Catalan government, such as the 50,000 Plan to expand the stock of protected housing and projects in areas such as the environment, renewable energies, and research and innovation. These are projects that generally require long-term financing, more than the five or seven years that private banks cover.

"It is about joining forces for those projects that private banking does not usually reach," explain sources familiar with the agreement. The ICO group, which also has an agreement with Avalis –a reciprocal guarantee society of the Generalitat (part of the ICF group)–, granted more than 10 billion euros in financing to companies last year. From January 1st of last year to the present, the ICO mediation lines in Catalonia have channeled 424 million euros in 1,418 operations.

A few weeks ago, the ICO signed a framework collaboration agreement with the Basque Institute of Finance (IVF) to strengthen the financing of business and strategic projects that contribute to the economic and social development of the Basque Country, but it does not reach the level of participation as a mediator of ICO resources, as has been done with the ICF, according to the consulted sources.