By and for local authorities
AFL is a public development finance institution that provides tailored financing to French local governments to help them achieve their public policy objectives.
Created in 2013 by and for local governments, and with a recognized credit quality, AFL raises resources in a variety of currencies on the capital markets, passed on to finance local governments’ capital expenditures at low cost.
More than 40% of these expenditures contribute to the United Nations Sustainable Development Goals.
Who is AFL ?
Authorized by the Banking Separation and Regulation Act of July 26, 2013, AFL was created on December 17, 2013.
It was authorized as a specialized credit institution on January 12, 2015 and regulated by the Autorité de Contrôle Prudentiel et de Résolution.
It obtained the approval of the Autorité des Marchés Financiers for its EMTN program on March 6, 2015, which is renewed annually since then.
It was recognized as a public development credit institution by the Supervisory Board of the Autorité de contrôle prudentiel et de résolution (ACPR) on March 11, 2021.
What are the missions ?
AFL's unique mandate is to provide loans at attractive rates to French local authorities that wholly own AFL. It raises funds at the lowest cost on the markets, by pooling volumes and thanks to a solid financial structure.
Its objective is to eventually represent a 25% market share of the financing needs of French local authorities.
Overview of the French local authority areas of expertise:
Regions
Economic development
Public transport
High schools
Departments
Social care
Roads
Secondary schools
Groupings of municipalities
Contributions to investments in public transport
Sanitation
Waste management
Power grid connections
Planning permissions etc.
Local public entities
Managing public services on behalf of local authorities in fields such as fire prevention, social care etc.
Municipalities
General duties at local level (mainly in the areas of housing, environment, primary schools etc.).
Credit characteristics
AFL does not distribute green, social or sustainable loans. As public shareholders, we chose to adopt a unique and simple offering that enables us to optimise the funding costs of our investments.
AFL regularly issues sustainable bonds designed to refinance the investments made by our regional authorities supporting the United Nations’ Sustainable Development Goals (SDGs). Channelling the budgets of local authority members has put he spotlight on three major investment areas (social services, energy and environmental transition, sustainable infrastructure) that fall under the responsibility of local governments.
Risks management and compliance, at the heart of AFL
AFL intends to conduct its lending activities to French local governments within a prudent mindset aligned with the practices of its sister entities in Northern Europe. Nevertheless, risk taking is inherent to banking. AFL has set limits to its financial strategy and risk appetite that provide safeguards for its activities.
AFL governance
The AFL Group’s governance is based on a two-level structure, ensuring a separation of powers between the lending institution and its parent company with the aim of:
– Preventing the risk of conflicts of interest within local authorities, which are both shareholders and borrowers;
– Ensuring the accountability of all stakeholders through control mechanisms;
– Ensuring a very close relationship between strategic decisions and operational management.
Focus on CSR governance
Corporate responsibility is deeply rooted in our bank’s DNA and as such, CSR considerations are embedded within our decision-making process. Consequently, all governing bodies are involved in the governance of CSR issues as part of their duties.
A strong commitment to society
AFL’s strategy in terms of responsibility and climate
AFL is committed to working alongside us, the local authorities, to lead the energy and social transitions that are coming and that are necessary.
To this end, it finances our investments at the best possible cost and deploys a responsible banking model that takes into account long-term issues, listens to our stakeholders and is fully aware of the challenges related to the climate and the planet’s shared and limited resources.
Our member local authorities
AFL’s shareholders include various regions, departments, metropolitan areas, municipalities and trade unions of all sizes, both in metropolitan France and in the French overseas territories.
