Basel III: BIO Deutschland Is Lobbying for Easier Credit for Innovative SMEs

The increase of capital reserves to be held by banks and savings banks planned under Basel III will place a disproportional burden on loans to small and medium-sized enterprises (SMEs). BIO Deutschland and other associations (including BVMW – the German Association of Small and Medium-sized Businesses, BITMi – the German Association of IT SMEs, and VIU – the Association of Innovative Companies) therefore contacted the financial policy spokespersons of the parliamentary groups in the Bundestag.

Small and medium-sized enterprises are the stabilising element of the German economy. To date, the success story of such companies has been based on the possibility of acquiring sufficient outside capital from a solid banking system. The increase of the capital reserves to be held by banks and savings banks will mean that loans to SMEs will become scarcer and more expensive and will have to be backed up by higher collateral. This was shown in a scientific study commissioned by the BVMW and conducted by the Humboldt-Universität Berlin and the University of Wuppertal in September 2011. One of the study’s findings was that the credit volume will decrease by 2.74 per cent as a result of the introduction of Basel III, which means that a reduction of two per cent in the overall economic performance by German SMEs is to be expected.

It would be possible to alleviate this situation by reducing the risk weighting for loans to SMEs. This could be applied within the European Union and would not contravene the Basel regulations. Furthermore, it would not cost state budgets even a single euro and it would stabilise the system as a whole.

There is broad political support from politicians from all parties for the suggestion to reduce the additional burden to SMEs in this way. EU Commissioner Antonio Tajani has already announced the support of the EU Commission.