EIB President Philippe Maystadt says that the Bank is ready to limit growth of its lending in the Member countries in order to give more room for activities outside the Union.
Maystadt was speaking at the EIB Board of Governors' annual meeting in Luxembourg today.
"The foundation of the strategy of the EIB Group is clear: the EIB has to be a "policy-driven" public bank with the mission to contribute to the policy objectives of the European Union as laid down in the Bank's Statutes and in decisions of the European Council. Therefore, the Bank is to focus more on the quality of its lending activity where its value added can clearly be demonstrated.
The EIB's Corporate Operational Plan covering the period 2001-2003 specifies that, in 2001 already, the volume of lending in the Union should not exceed the EUR 30 billion level reached last year. This will leave adequate room for other areas, in particular, in the Accession Countries and the Mediterranean and at a later stage the ACP countries, Asia and Latin America."
Philippe Maystadt says that this strategy has to be seen against the background of a rapidly changing economic and political environment, of calls for greater accountability and transparency from various stakeholders, of greater emphasis on environment and social issues as well as of discussions on the proper role of international financial institutions.
"This implies an increased focus on the real priorities of the Bank; we must concentrate on the most important core activities, while limiting our activity in other areas. Key sectors will be Trans-European Networks, environment, small and medium-sized enterprises, Innovation 2000 Initiative (i2i) areas such as high technology and human capital, and other projects clearly contributing to regional development, especially in the more depressed regions."
Outside the Union, priority areas are the Accession Countries and the Mediterranean cooperation including a new EUR 1 billion Mediterranean Partnership Facility, activities in Turkey with regard to the inclusion of Turkey in the Bank's Pre-Accession Facility and a EUR 450 million Special Action Programme as well as the Bank's participation in the EU Northern Dimension initiative within the framework of a EUR 100 million lending mandate for environmental investments in Russia in close cooperation with other International Financial Institutions.
"To strengthen the policy lending activity, we believe that the Bank should develop a closer and deeper relationship with the Commission, to become in particular a full partner in its programming activities. Sound progress has already been achieved with regular contacts in the fields of regional development, environment and climate change but also important i2i areas like research, telecoms and the audio-visual sector", Philippe Maystadt told the Board of Governors.
Capital increase required
New missions given to the Bank (in particular i2i and an increased effort towards preparation for enlargement) will require consideration of a further capital increase.The statutory limit on loans outstanding could be reached in 2003.
"This is the result of the new missions and mandates given to the Bank, but also due to a strong level of activity in the "traditional" core activity areas, such as regional development and TENs," Philippe Maystadt said.
"To avoid a significant disruption of the lending activities of the Bank, proposals for a capital increase would have to be considered at the next Board of Governors' meeting in June 2002."
The EIB Board of Governors approved in 1998 an increase in the Bank's capital to EUR 100 billion from EUR 62 billion. The increase took effect on 1 January 1999. The paid in capital was set at 6% of the subscribed capital and was met from the Bank's reserves.
EIB activity last year was marked by setting up and starting to implement the Innovation 2000 Initiative (i2i - focusing on the hightech sector and human capital) and by the constitution of the EIB Group following the reform of the European Investment Fund (EIF).
Activities overall progressed strongly with total lending amounting to EUR 36 billion, of which EUR 30.6 billion within the Member States.
WITHIN THE EUROPEAN UNION
Within the European Union, 73% of individual loans went to projects located in regional development areas with over 50% towards Objective 1 regions, fitting with the EIB's core mission, the promotion of economic and social cohesion within the Union.
Direct lending into health and education throughout the Union more than doubled at EUR 1.2 billion. Another important feature last year was the substantial increase in finance for SMEs, with over EUR 6.2 billion advanced, a 44% increase over 1999 mainly coming from global loan activity (EUR 5.7 billion) evidencing the close co-operation with the banking sectors in the Union. The implementation of i2i started rapidly in the Member States with already EUR 1.7 billion advanced in 2000. A special effort was also made to increase the share of projects safeguarding the natural and urban environment, which received over EUR 8.4 billion of loans in 2000 (+35%).
OUTSIDE THE EUROPEAN UNION
A similar effort concerning the environment was made in the candidate countries of Central and Eastern Europe where environmental projects amounted to almost a quarter of total EUR 2.9 billion lending.
In the other regions, there was strong activity in the Mediterranean region (with EUR 1.2 billion of loans) and Asia and Latin America (EUR 532 million). Activity in the ACP and South Africa also progressed with EUR 540 million of loans. In spite of difficult circumstances in the Balkans, the Bank is making good progress in fulfilling its remit under the Stability Pact for South Eastern Europe with financing completed on 10 (out of 11) Quick-Start projects for which the Bank is responsible.
BORROWINGS
The Bank raised last year EUR 29.0 billion through 149 issues in 10 currencies. The share of the three major currencies of borrowings (EUR, GBP and USD) remained stable at over 90% of total borrowings. Due to favourable market conditions, there was however a significant increase in GBP issues (representing nearly 50% of total borrowings before swaps) with lower proportions for USD and EUR. The euro remained as main currency of disbursement.
BALANCE SHEET AND PROFIT AND LOSS ACCOUNT
The Board of Governors unanimously approved the Bank's 2000 Annual Report and balance sheet, which at the end of the year stood at EUR 219.2 billion, an increase of 9% compared to 1999. Total loans and guarantees outstanding amounted to EUR 200 billion compared to the statutory ceiling of EUR 250 billion.
The European Investment Bank (EIB) provides 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.The European Investment Fund (EIF) is the specialist venture capital arm within the EIB Group.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.