Progress on the European Investment Bank's growth and job creation package was reported on by EIB President Sir Brian Unwin to the Extraordinary European Council on Employment in Luxembourg today. The Bank's "Amsterdam Special Action Programme" (ASAP), was drawn up in response to the European Council Amsterdam meeting in June that called on the EIB to step up action to support job creating investment.
The EIB action plan covers the financing of investment in the education and health sectors, innovative and growth-oriented small and medium-sized enterprises (SME's), together with the extension of lending for urban renewal, other environmental projects as well as increasing its activities for major infrastructure networks.
The Bank estimates that over the next three years (1997-2000) the Amsterdam Special Action Programme could generate up to some extra ECU 10 billion of financing.
A "special window" will support new instruments to help finance technology related and high growth SME's. Backed by up to 1 billion ECU from the surpluses of the Bank over the next 3 years, the window will operate in close co-operation with the banking and financial community, and provides for new financing schemes under which SME's can benefit from risk-sharing or subordinate finance and venture capital facilities.
A co-operation and management agreement for the newly created "European Technology Facility" (ETF) under which the Bank is providing up to ECU 125 million for investment in venture capital funds with special focus on technology oriented SME's, has been signed today between the EIB and the EIF.
Sir Brian Unwin said: "We consider that our action programme provides a very effective and rapid response to the Amsterdam Summit's Resolution on Growth and Employment.",
Its implementation is well under way and we will increase its momentum. There are already some 40 ASAP projects in the pipeline in almost all EU member countries. The Board of Directors has approved health, education and urban environment operations totalling ECU 1.3 billion. Since the summer we have signed finance contracts for some ECU 440 million for health and education projects in Belgium, France, The Netherlands and Spain. The first risk-sharing global loan has been approved for an operation in Italy and others are under way."
"In the field of TEN's, where the Bank has committed over ECU 35 billion in the Union over the last 5 years, we are increasing our financing there where it shows positive benefits and we are giving particular priority to public private partnerships and private finance initiatives. Over the last months, the Board of Directors has approved over ECU 3.6 billion of new financing for such infrastructure", he said.
The Amsterdam Special Action Programme (ASAP), a pro-active response to the Resolution of the Heads of State or Government on Growth and Employment adopted at the European Council meeting in Amsterdam (June 1997), contains a number of novel features, in particular that of the assumption of risks by the EIB in favour of innovative SMEs, guaranteed by means of the Bank's operating surpluses to the tune of ECU 1 billion up until the year 2000. The principal features of the programme, which had already occupied the minds of the Bank's managing bodies for a number of months, are as follows:
1. A special SME window
This window has been set up to provide, from EIB resources, high-technology or growth-oriented SMEs with risk-sharing instruments, subordinated loans or venture capital assistance. It involves first of all a number of "risk-sharing global loans", arranged by the EIB in close co-operation with its partners from the European banking community. In some cases these tailor-made global loans may also lead to venture capital being provided for specialist banking subsidiaries. With a reserve of some ECU 800 million drawn from the ECU 1 billion earmarked for ASAP, risk-sharing global loans and venture capital injections are expected to make funds of between ECU 5 and 8 billion available for innovative SMEs.At the same time, a new "European Technology Facility" (ETF) has recently been created by the EIB jointly with the European Investment Fund (EIF) in order to provide venture and equity capital to support projects carried out by growth-oriented and high-technology SMEs. The ETF has been allocated ECU 125 million by the EIB and is being administered by the EIF under a Bank fiduciary and management agreement. The ETF will acquire holdings in funds or venture capital companies which specialise in providing equity for SMEs in their start-up phase or undergoing expansion; the anticipated leverage effect is expected to be of the order of ECU 500 to 800 million of quasi-capital for SMEs. The ETF's ECU 125 million will augment the ECU 75 million of venture capital operations already arranged by the EIF since June 1996. This means that a total of ECU 200 million in venture capital is being allocated by the two institutions in favour of innovative SMEs, i.e. a volume whose critical mass is in line with the requirements of Europe's economy which, in 1996, invested some $500 million (ECU 430 million) in the form of venture capital.
2. Education, health, urban renewal and the environment
Expansion of EIB operations in the fields of education, health, urban renewal and environmental protection has been approved by the Governors. The Bank has started to examine major projects targeting education and health in Germany, Spain and Greece, and global loans are being arranged in favour of this type of investment in Belgium, France and the Netherlands. At the same time, existing global loans in favour of infrastructure projects are being extended to cover health and education. The Bank is also fine-tuning its lending procedures for urban renewal and environmental protection schemes (in these areas it provides finance worth ECU 4 to 6 billion a year), in respect of which some 20 projects are in the final stages of negotiation in Germany (notably in Berlin), France, Spain, the Netherlands and Italy.
3. TENs: a fresh impetus
A fresh impetus has been given to financing trans-European networks (TENs) and other large-scale infrastructure projects: the Bank, which participates in the high-level Working Group chaired by Mr Neil Kinnock (Member of the European Commission) on financing TENs, will extend certain aspects of its "Special TENs window” through, inter alia, particularly long grace and repayment periods, "custom-made” financing, earlier participation in project preparation and increased support for Public-Private Partnerships (PPPs). In recent months, the EIB's Board of Directors has approved loans totalling over ECU 3.6 billion for TENs, including several PPPs, in Germany, the United Kingdom, Belgium and Italy. Where certain major infrastructure and environmental projects are concerned, the Bank will, in specific cases, be able to consider raising the amount of its loans above the normal ceiling of 50% of project cost and provide its support earlier by financing feasibility studies.