The European Investment Bank is providing a USD 40 million loan (some EUR 45 million) to Volkswagen Argentina S.A., a subsidiary of Volkswagen AG, to support investment for the production of gearboxes for passenger cars in its plant located in Cordoba, Argentina.

The project will create around 1000 new jobs in the Province of Cordoba. The investment will help modernise the automotive parts sector and generate exports to supply other VW automobile assembly operations, in particular in Brazil. Full production is to be achieved by early 2002. For the design of the new facilities, European environmental standards have been adopted as a reference. The existing operations have been certified under the ISO 14000 Environmental Management Standards.

The 8-year EIB loan (with 3-years grace period) is capped at LIBOR + 15 basis points. It is guaranteed by a syndicate of banks including BHF-BANK Aktiengesellschaft, ING Bank N.V., Landesbank Hessen-Thüringen Girozentrale, and Norddeutsche Landesbank Girozentrale. Risks of currency non-transfer, expropriation, war and civil disturbance are covered by the European Union (EU) budget guarantee.

The loan is provided in the context of the EU co-operation policy with third countries. In Asia and Latin America (ALA), the EIB may lend up to EUR 2.48 billion during 2000-2006 to support capital investment projects implemented by subsidiaries of EU companies or joint-ventures between EU and ALA firms, or investment that results in environmental improvements or fosters regional integration.

The EIB was set up in 1958 to finance investment furthering EU integration. It lends for regional development, infrastructure, energy, industry and environment. Outside the EU, the Bank contributes to the European development co-operation policy in some 130 countries in Central and Eastern Europe, the Mediterranean region, Africa, the Caribbean and the Pacific, Asia and Latin America.

In 2000, the EIB provided loans totalling some EUR 36 billion. The Bank borrows on the capital markets the funds for its lending. Its bonds have regularly been rated "AAA" by the leading rating agencies. The EIB works on a non-profit basis and can pass on to project promoters the excellent conditions it obtains on the markets. The EIB may finance up to 50 percent of project cost. On average it provides one third of the funding and co-finances investments with other institutions.