The European Investment Bank, the European Union's financing institution, is investing £20 million in a network of ten venture capital funds established by Midland Bank. The finance will be invested for up to ten years to provide equity and quasi-equity to small regionally based enterprises in England and Wales in the Midland Enterprise Funds and a new innovation fund. The agreement was signed in London today by EIB President and Chairman, Sir Brian Unwin KCB and Executive Director of Midland Bank, David Baker.

Commenting on the investment Sir Brian Unwin said: "Our top priority as the European Union's long-term financing institution is to support balanced development and sound investment that will create jobs. We are doing this with Midland Bank by the provision of development capital in the crucial innovative small company sector. Small and medium sized enterprises, particularly in the fast expanding technology areas, are vital for economic growth and jobs. This financing falls under the new EIB venture capital window within our Amsterdam Special Action Programme set up in response to a request from the Amsterdam Summit a year ago."

The finance is going to support nine Midland Enterprise Funds with a nation-wide network supporting firms at the small end of the market with competitive products or services and the potential for sustainable growth. The tenth fund, which will invest in innovative technology based businesses, is currently being established. It will operate from Oxford and Cambridge, working closely with the two universities and Imperial College, London. The EIB will be committing up to £20 million over the next three years to these funds, in which Midland Bank is the cornerstone investor, on a fully risk sharing basis.

The European Investment Bank, the European Union's long-term lending institution, finances capital investment furthering EU integration, in particular: regional development; trans-European networks in transport, telecoms and energy; industrial competitiveness and integration; SMEs; environmental protection; and energy security. It also operates outside the EU within the framework of the EU's co-operation external policy. Owned by the Member States, the EIB raises its funds on capital markets (AAA issuer). Sir Brian Unwin is the first British President of the institution and assumed office in 1993. In 1997, the EIB lent over ECU 26 billion, of which some £3 billion in the UK, and borrowed ECU 23 billion on capital markets.

The EIB's Amsterdam programme (ASAP) was set up following the European Council's resolution on growth and employment at Amsterdam in June 1997 that called on the EIB to step up lending for investment to help job-creation. The ASAP includes a special window to provide risk capital for high-growth SMEs; new lending for education, health and urban renewal; and expansion of financing for trans-European networks and other major infrastructure schemes. The EIB may draw up to ECU 1 billion from its reserves over the next three years to cover risk capital financing under the SME Window.

The conversion rates used by the EIB for statistical purposes during the current quarter are those obtaining on 30/09/1998: 1 ECU = 0.69 GBP, 0.79 IEP.