The European Investment Bank (EIB) is providing its first global loan - line of credit - to private banks in Latin America to support small and medium-size investment in Brazil.

The EIB's USD 60 million (EUR 59 million)(1) global loan goes to Banco ABN AMRO and to Banco BBA Creditanstalt, two Brazilian private banks with large European shareholders.

The two Brazilian banks will on-lend the funds for small and medium scale projects in Brazil being carried out by European Union companies or their subsidiaries, and to joint ventures that involve EU investors. Eligible investment in Brazil includes industry and related services, as well as infrastructure, environment, energy and telecommunications.

Banco ABN AMRO is a fully owned Brazilian subsidiary of ABN AMRO Bank. Banco BBA Creditanstalt is a joint venture between Bank Austria and Brazilian investors. The EIB loan is guaranteed by ABN AMRO Bank NV and by Austria AG. Risks of currency non-transfer, expropriation, war and civil disturbance are covered by the European Union (EU) budget guarantee.

Background: 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 900 million during 1997-99 to support private capital investment projects or, investment that results in environmental improvements or fosters regional integration.

EIB: 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 1998, the EIB provided loans totalling some EUR 29.5 billion, of which EUR 4.4 billion for projects outside the EU. 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.

(1) 1 EUR: 1.98820 BRL, 0.647500 GBP.