At its meeting on 5 June 2000 at the Bank's headquarters in Luxembourg, the Board of Governors of the European Investment Bank (EIB) reviewed the prospects for the Bank reinforcing its contribution to EU policies, especially integration of the candidate countries and development of a"knowledge-based society driven by innovation" in Europe. They observed in particular that the Bank's superlative financial capacity, exemplified by a balance sheet exceeding EUR 201 billion, formed a solid basis, harnessed to the new mandates entrusted to the EIB, on which to convert the EU's objectives within and outside the Union into concrete economic achievements.

Following the meeting, the EIB's President, Philippe MAYSTADT, announced that:"To further the March 2000 Lisbon European Council's guidelines for developing a knowledge-based society driven by innovation, the Board of Governors has approved the "Innovation 2000 Initiative", which groups together the Bank's new actions to promote information networks, human capital formation and intangible corporate investment. Against this background, the Governors also gave the Bank the go-ahead to expand its activities in support of venture capital facilities for SMEs: they authorised mobilisation of a second tranche of EUR 1 billion for such operations, along with reform of the European Investment Fund (EIF) with a view to turning this institution into the EIB Group's specialist venture capital arm. The"Innovation 2000 Initiative" and implementation of the Bank's second "Pre-Accession Facility" for the candidate countries will be the EIB's foremost operational priorities over the period 2000-2002. To this end, the Bank has just taken a series of organisational decisions enabling it to respond to a changing environment and to develop new products tailored ever more closely to its customers' specific needs".

The "Innovation 2000 Initiative"

Under this initiative, the Governors approved a set of operational principles designed to channel EIB financing into the following five areas:

  • human capital formation: by financing the provision of schools, colleges and universities with computing equipment and lending in support of IT training centres;
  • research and development: by co-financing public or private-sector research programmes, corporate investment in R&D, research infrastructure, centres of excellence and measures enabling SMEs to obtain access to research programmes;
  • information and communications technology networks: by financing trans-European broadband and multimedia networks and physical or virtual infrastructure providing local access to such networks, especially in the Union's less advanced regions. The Bank will focus its lending in this field on innovative technology projects such as ADSL, XDSL and UMTS;
  • diffusion of innovation: by financing "online healthcare" services and the use of information technologies to bring Europe's citizens closer to local authorities and public services; by helping to equip companies, especially SMEs, with advanced information technologies;
  • development of SMEs and entrepreneurship: by strengthening venture capital support for the development of innovative SMEs, fostering science parks and company incubators and launching new products tailored to the business needs of very small enterprises.

Support for these new areas of EIB activity will be provided under a dedicated lending programme of EUR 12 to 15 billion over the next three years. More than simply an increase in the Bank's lending volume, this will represent a qualitative reorientation of the EIB's traditional operations towards sectors with high technological value added having a positive impact on the economy. To this end, the Bank will both broaden the range of its financial instruments and reach out to new partners and customers, especially to take account of the extension of its financing operations to include intangible investment.

Venture Capital and reform of the EIF

A key element of the "Innovation 2000 Initiative is the expansion of Bank activity in support of venture capital financing for SMEs. The Governors have increased the reserve set up to hedge the risk attaching to such operations from EUR 1 to 2 billion. Funded from the EIB's operating surpluses, this reserve is already endowed with EUR 1 billion drawn from the profit for 1996, 1997 and 1998. It has now been allocated an additional EUR 500 million from the 1999 surplus, and the balance will be drawn from the profits for the years 2000 to 2002 according to needs.

The Governors have also authorised the reform of the European Investment Fund with a view to turning this institution into the EIB Group's specialist venture capital arm. While maintaining the tripartite nature of the Fund (whose capital is jointly owned by the EIB, the European Commission and some 70 commercial banks), the aim of this reform is to make the EIB the majority shareholder, with a stake of over 50%, and operator of the institution. Concentrating all the EIB Group's venture capital activities (EUR 1.2 billion committed) in the hands of the EIF will substantially enhance the Fund's financial and operational capacity and make it possible to target operations in this highly specialised field more effectively. This new form of relations between the EIB and the EIF will also encourage productive melding of expertise between the Bank and the Fund through the introduction of additional financial instruments to support SMEs and will boost the catalytic effect of the EIB Group's actions within Europe's banking and financial community. The reform approved by the Governors is to be submitted for endorsement to the Annual General Meeting of the EIF due to be held on 19 June 2000 in Luxembourg.

Preparing for integration of the candidate countries

The Governors welcomed the Bank's extensive efforts to prepare for integration of the candidate countries. For a number of years, the EIB has confirmed its position as the leading source of long-term finance in Central and Eastern Europe, where its loans have totalled EUR 11.9 billion since 1990.

The EIB is adding a new dimension to its activity in these countries by implementing, firstly, the European Council's new mandate for the Central and Eastern European Countries totalling EUR 8.7 billion for the period 2000-2007, and secondly, the Governors' decision to renew the "Pre-Accession Facility for an indicative amount of EUR 8.5 billion for the period 2000-2003 in loans from the Bank's own resources to be provided at the EIB's own risk. These funds (EUR 17.2 billion in total) give the Bank further scope to assist transfer of Community regulatory practices to these countries. With a view to maximising the impact of its operations, the EIB intends to enhance its cooperation with the Commission, manager of the ISPA programme, and with the other international financial institutions. In the same spirit, the Bank has set itself the objective of increasing the proportion of its loans geared to environmental protection in the countries of Central and Eastern Europe from 16% to 25% over the next few years.

Against this background, and as a sign of its intention to step up preparations for the candidate countries' accession to the Union, the EIB has decided to regroup its departments responsible for lending operations within a single Directorate General bringing together the candidate countries and the Member States. Through unified operational procedures, this new structure will better accommodate demands on the part of the Bank's partners and customers for similar products in both the present and future Member States. It will also facilitate transfer of know-how between integrated teams in financing projects in the candidate countries and the Union.

New prospects for action in the ACP Countries

The Governors called on the Bank to continue playing a key role in the implementation of Community aid and cooperation policies towards the African, Caribbean and Pacific (ACP) countries. In this regard, they undertook to expedite conclusion of the authorisation procedure currently under way with a view to granting the Bank a new EUR 1.7 billion own resource lending mandate to help put the forthcoming EU-ACP Partnership Agreement into effect. They also approved entrusting the Bank with a mandate to manage the new EUR 2.2 billion "Investment Facility aimed at promoting development of the private sector in the ACP countries with risk capital allocated from the 9th EDF. The EIB is finalising the practical arrangements for implementing these new initiatives with the Member States and the Commission.

1999 Financial Statements

On a proposal from the Board of Directors, the Board of Governors approved the EIB's Annual Report for 1999 and took note of the Audit Committee's report on the Bank's accounts. Totalling EUR 201.1 billion, the EIB's balance sheet registered a 14% net rise at end-1999. Outstanding borrowings amounted to EUR 148.1 billion and outstanding loans and guarantees came to EUR 179.6 billion. These figures have to be viewed in relation to the Governors' decision to increase the EIB's subscribed capital from EUR 62 to 100 billion as from 1 January 1999, raising the statutory ceiling for outstanding Bank loans and guarantees to EUR 250 billion.

The EIB was set up in 1958 to provide long-term finance for capital investment giving concrete expression to the European Union's objectives, especially: regional development; creation of trans-European transport, telecommunications and energy transfer networks; promotion of SMEs; development of health and education infrastructure and services; environmental protection and urban renewal; and security of the Union's energy supply base. The Bank also mounts operations outside the Union in the framework of Community development aid and cooperation policies benefiting more than 160 countries around the world.In 1999, the EIB granted loans totalling EUR 31.8 billion (4 billion of which outside the Union) and tapped EUR 29.3 billion from the capital markets under 120 borrowing operations in 16 currencies.The EIB, whose shareholders are the Member States of the Union, raises its resources on the capital markets (by issuing AAA-rated bonds). The Board of Governors, the Bank's highest decision-making body, is composed of Ministers nominated by each Member State, usually the latter's Finance Minister.

(1) The Bank's Audit Committee is composed of three independent persons appointed by the Board of Governors on the basis of their professional expertise in external auditing. An independent body, the Audit Committee verifies that the operations of the Bank have been conducted in accordance with the Statute and its books kept in a proper manner. It is assisted in this task by the Bank's independent Financial Comptroller and the external auditors (Ernst & Young).