The European Investment Bank is pleased to announce the opening today of its new office in Berlin, which will chiefly be responsible for:
- supporting expansion of the EIB's financing operations, particularly in Berlin and the new Länder;
- further strengthening relations with investors and partner banks;
- maintaining contacts with the Federal Government and Länder Governments;
- keeping abreast of debates in Germany on lending issues, such as those currently under way on new techniques for financing public infrastructure;
- representing the Bank at the economic forums frequently hosted in Berlin, which bring together representatives from Central and Eastern Europe.
Strong commitment to Berlin and the new Länder
Since 1990, the European Investment Bank has increased the annual volume of its lending in Germany sixfold, to reach 5.5 billion euro(1) in 1999, making this country the leading recipient of EIB funds, with some 18% of the Bank's aggregate financing. German unification was a determining factor behind this surge in the EIB's activity. The new Länder all qualify in full as Objective 1 assisted areas under the EU's regional development policy. The Bank has therefore been particularly concerned to contribute towards modernising infrastructure and underpinning economic transition in these regions. Of the EUR 30.7 billion advanced in Germany as a whole between 1990 and the end of April 2000, about half was deployed in the new Länder. The funds have gone towards upgrading energy infrastructure and the telecommunications sector, establishing new industrial and service-sector enterprises, promoting small and medium-sized firms and, more recently, improving urban infrastructure as well as modernising hospitals and educational facilities. Whilst at the outset the main focus was on building up new production capacity and infrastructure, this has now shifted towards enhancing the quality of services and educational facilities, thereby boosting the attractions of the new Länder, for investors too.
In recent years, Berlin has become a particular focal point for the EIB. Since 1990, a total of some EUR 4 billion has been channelled into 18 major infrastructure projects, including modernisation of gas, district heating and water supply facilities, construction work in the Potsdamer Platz, expansion of Berlin's exhibition halls and upgrading of hospitals in east Berlin. This firm commitment to Berlin is set to continue in the future.
In its operations in Germany, the European Investment Bank has long been working closely and successfully with the country's banking sector, both private and public. The vast majority of major investment projects are financed jointly with German and international partner institutions. In the case of smaller schemes undertaken by local or regional authorities and SMEs, the EIB provides financing by means of global loans, essentially lines of credit, made available to its partner banks. These institutions then onlend the proceeds in the form of smaller sub-loans on their own responsibility and their own conditions on the basis of criteria agreed with the EIB. At the moment, the EIB is working together with 27 intermediary institutions in Germany.
As in other European countries, public-private partnerships to build, operate and finance infrastructure have become increasingly important in Germany. With the trend towards a"slimmed-down" State sector, such arrangements are likely to become more widespread and it is precisely here that the EIB can bring its Europe-wide experience into play. In Germany it has so far participated in a range of different financing techniques, notably for Jena teaching hospital, colleges in Thüringen and road tunnels under the River Warnow in Rostock and the Elbe in Hamburg. Further projects are currently at the appraisal stage.
Since the end of 1997, the European Investment Bank has been active in the venture capital sector and has indeed rapidly become one of the leading sources of such finance in Europe. It participates in venture capital funds up to a maximum of 50% of the fund's volume, provided that the fund is run by a professional management team, i.e. it must have a track record in selecting appropriate enterprises and furnishing them with active support and sound advice. Experience goes to show that just injecting equity is not sufficient - this needs to go hand in hand with consultancy services. The EIB has to date invested some EUR 1 billion throughout Europe in venture capital funds or has approved such financing. In Germany alone, EUR 104 million has been channelled into five different funds and contracts for a further five participations amounting to EUR 100 million in all are due to be signed shortly.
EIB operations in Central and Eastern Europe are particularly important for Berlin and the new Länder
The European Investment Bank has become the largest foreign lender for infrastructural modernisation projects in the Central and Eastern European countries. In this region, it works closely with the European Commission, EIB loan finance frequently being combined with grant aid from the Commission under its PHARE and ISPA Programmes, so as to offer particularly attractive funding conditions, especially for transport and environmental schemes. All 10 candidates for EU membership have access to EIB loans; the Bank does not differentiate between countries likely to join in the first wave and those which will be able to come into the EU at a later stage. Since 1990, the EIB has deployed more than EUR 11 billion in Central and Eastern Europe, with the annual figure now reaching about EUR 2.5 billion for economic modernisation, support for SMEs and expansion of energy supply and telecommunications networks. About half of this funding is directed into road and rail schemes and air transport. The aim is in particular to link the Central and Eastern European countries more effectively into Europe's internal market, thereby fostering these countries' participation in labour sharing in Europe, helping to narrow the gap in the level of economic development and bring them closer to EU accession. Consequently, the major transport corridors which already cross the EU are to be extended eastwards, thereby forming transcontinental transport corridors.
From Berlin a major transport route will link up with Helsinki via Warsaw and the Baltic States. Another will run from Berlin through Dresden-Prague-Bratislava and across the Balkans to Istanbul. Berlin will also be connected via Wroclaw-Katowice-Lvov to Kiev. The European Investment Bank is helping to finance virtually all the sections currently under construction, as is also the case with regard to expansion of Trans-European Networks within the European Union.
(1) EUR 1 = DEM 1.95583; 0.613400 GBP.