The European Investment Bank lent EUR 36.8 billion in 2001 for capital investment supporting European Union policy objectives, of which EUR 31.2 billion for projects within the EU Member States. In the Accession Countries, EIB advanced EUR 2.7 billion for investment underpinning preparations for enlargement. EIB also confirmed its influential role in promoting growth and stability in the Mediterranean region, providing EUR 1.4 billion for projects supporting the modernisation of economies in the European Mediterranean Partnership Countries and EUR 320 million for investment in the reconstruction of the Balkans. Under the framework of the EU's development and co-operation policies, EIB lent EUR 520 million in the African, Caribbean and Pacific (ACP) Countries, EUR 150 million in South Africa, EUR 178 million in Asia and EUR 365 million in Latin America. The EIB Group's venture capital arm, the European Investment Fund (EIF), invested EUR 800 million in venture capital operations and advanced up to EUR 960 million for SME guarantees.
To finance its lending, the Bank raised EUR 32.3 billion on capital markets through 148 transactions in 13 currencies.
On 31 December 2001, EIB's balance sheet stood at EUR 209.4 billion. Outstanding borrowings totalled EUR 176 billion and outstanding loans amounted to EUR 221 billion.
Supporting EU policies
During the year, EIB Group ensured its operations dovetailed with the policy initiatives of the European Councils, in particular those of Stockholm (March) and Ghent (October) that called on the Bank to continue strengthening its activities to develop an information and knowledge-based European economy. In line with this, the Group developed activities to support innovation, high-technology and human capital investment through its "Innovation 2000 Initiative" (i2i), launched in response to the Lisbon Council (March 2000).
At the same time, EIB reinforced its co-ordination with the European Commission to further operational synergies in implementing EU policies, signing a Joint Memorandum to boost research and technological innovation, as well as joining forces to promote Europe's film and audio-visual industries. The two institutions also co-operated in furthering regional development, Trans-European Networks, environment, entrepreneurship amongst innovative small and medium-sized enterprises (SMEs), education and health, and in the enlargement and Euro-Med Partnership processes.
Under its "i2i" programme, EIB is to lend up to EUR 12-15 billion over the years 2000-2003. EIB Group contributed to this objective through its long-term loans and the strengthened capacity of the European Investment Fund to support investment helping to reinforce the capital base of innovative SMEs. EIF's operations also continued to be actively supported by the European Commission, a major EIF shareholder, particularly in developing facilities for SME guarantees.
Lending highlights in 2001 (1)
Europe's less advanced regions
Regional development continued to be EIB's lending priority with aggregate EUR 22.2 billion in both the EU Member States and the Accession Countries. Within the European Union, EUR 14.5 billion (i.e. 70%) of individual loans and an estimated EUR 5 billion under global loan allocations (for SMEs and smaller public investment projects) were directed towards projects in assisted areas. In the Accession Countries, a future area of the Union's regional policy, the Bank provided EUR 2.7 billion.
Within the Union, the Cohesion Countries (Spain, Greece, Ireland and Portugal) attracted EUR 7 billion of individual loans, while EUR 1.8 billion were advanced for projects in the Eastern Länder of Germany and over EUR 1 billion for Italy's Mezzogiorno. Noteworthy was the Bank's first participation in the Community Support Framework Programme (2000-2006) for investment in the Basilicata Region of Italy.
Innovation and human capital
EIB financing in support of Europe's information and knowledge-based economy amounted to EUR 5 billion in 2001. Since May 2000, EIB has approved EUR 9.1 billion for "i2i" investment in research and development, information and communications technology networks, dissemination of innovation, the development of entrepreneurship among innovative SMEs, and human capital formation. Financing for human capital, i.e. investment in education and health infrastructure, totalled EUR 1.4 billion and EUR 0.7 billion respectively. EIB launched its first human capital oriented operations in the Accession Countries - in Lodz, Poland, and Nicosia, Cyprus.
The European Investment Fund boosted its venture capital operations in 2001, despite difficult market conditions. 57 operations were concluded for EUR 800 million in all EU countries (first operations in Greece and Portugal) and in 5 Accession Countries. The EIF's investment strategy is to concentrate on hi-tech and early stage funds. Its overall venture capital portfolio totals EUR 2.2 billion. The EIF is now the main investor in the early stage market in Europe, representing a segment where risks are highest, the resources scarce and the strategic needs of the EU most evident. SME guarantees, which, through their important leverage effect allow banks and financial intermediaries to extend their lending activity to more SMEs, represented EUR 960 million under 39 operations in 2001. The total guarantee portfolio now represents EUR 3.3 billion and covers nearly 100 000 SMEs.
The Bank maintained a high level of lending for environment and the quality of life with EUR 6 billion in individual loans and an estimated EUR 2 billion in global loan allocations within the EU, including water and waste water management, solid waste treatment, air pollution reduction, energy savings, renewable energies, urban transport and renewal schemes. It provided also EUR 484 million for environmental projects in Accession Countries. Within the context of the "Northern Dimension Environmental Partnership" and a resolution of the Stockholm European Council, the Bank is to finance, under a new EUR 100 million facility, environmental projects of European interest in the St. Petersburg and Kaliningrad areas in Russia.
Trans-European Networks (TENs)
Strong support for TENs and other infrastructure of European or regional interest totalled EUR 7.2 billion. This brings EIB support for TENs over the last five years to EUR 43.6 billion. Financing in 2001 was marked by a reinforced emphasis on high speed rail links, including two major priority TENs: the link between Amsterdam and the Belgian border, part of the Paris-Köln-Brussels-Amsterdam-London network, and the first phase of "TGV-Est Europe", the high-speed line which will link Strasbourg, Luxembourg and Frankfurt with Paris. Other key features were the support for a growing number of Public Private Partnerships, both in EU and Accession Countries, and the launch of a co-operation scheme between the EIB Group and the European Commission for equity investment in TENs projects.
EIB continued to finance projects in the Accession Countries (including Cyprus and Malta), reaching some EUR 2.7 billion in the year, bringing total lending since 1990 to EUR 16.6 billion. Lending was focused on the preparation of the countries for enlargement. Key importance was attributed, again, to loans in support of the transport and communication infrastructure interlinking the region, and the region with the EU (56 % of total lending). Special emphasis was given to environmental investments (20 %) in order to help the candidate countries to meet the EU's environmental standards. Transport and environmental projects have been co-financed, in a number of cases, with grant money from the EU's ISPA programme. EIB extended its scope of lending to the health and education infrastructure, which requires substantial investment, and financed first projects in the Accession Countries. In addition, EIB was offering strong support to foreign direct investment, which contributes to the transfer of both, know-how and capital, into the region. Attempts to consolidate public budgets and national elections in Poland, Romania and Bulgaria delayed public investment decisions. Therefore, total lending in the candidate countries was somewhat below the record volume achieved in 2000.
Mediterranean Partner Countries
As the foremost multilateral financier in the region, EIB increased its lending in the Mediterranean Partner Countries to EUR 1.4 billion. Priority was given to projects that support the Barcelona Process' objective of promoting economic development in the region. A special focus was on infrastructure schemes, the protection of the environment and SME development, with EUR 330 million committed in favour of SMEs under global loan allocations. EUR 580 million went to schemes in the water, energy and infrastructure sectors improving the environment. The Bank continued to help strengthen the private sector. EIB is also widening its action into the human capital sectors of health and education, where new projects have been identified. During the year, the Bank extended the scope of its activities by establishing a "Mediterranean Partnership Facility" under which it is to lend an additional EUR 1 billion by 2007 for large transport, energy and environmental cross-regional projects.
EIB made a major contribution in committing up to EUR 320 million in 2001 for a number of key investment projects in the sectors of infrastructure and industry in the Western Balkans (Albania, Bosnia-Herzegovina, Croatia, Federal Republic of Yugoslavia and FYROM). Special emphasis is being given to financing cross-border regional projects in transportation and energy under the international-sponsored infrastructure programme. Having played a leading role in the co-ordination and financing of the initial Infrastructure Reconstruction programme launched in 2000, EIB is also to contribute to the new EUR 2.4 billion Regional Infrastructure Package. Its role will in particular relate to the reconstruction and rehabilitation of roads, rail and power infrastructure. In 2001, the Bank also concluded its first global loan agreements with intermediary banks, promoting the modernization of the local financial sector and SME investment.
Borrowing highlights in 2001
To finance its operations, the Bank raised EUR 32.3 billion through 148 transactions in 13 currencies (before swaps) on capital markets. During the year, EIB continued to strongly support the euro, launching EUR 10 billion in 4 benchmark issues, including a new five billion Global (2007). At the end of 2001, the euro benchmark yield curve had an outstanding amount of almost EUR 40 billion. Based on market reactions to its EUR 5 billion issue, the Bank was awarded Euroweek's "Supranational bond issue of the Year 2001".
Resources borrowed before swaps in the three major currencies were: 41% USD, 32% EUR and 21% GBP. The US Dollar was the prime currency of funding, reflecting the favourable borrowing conditions. After swaps, the euro accounted for 67% (generated partly via currency swaps), with GBP at 21% and USD at 8%.
(1) As certain financing operations meet several EU policy objectives, the amounts for the various headings cannot be meaningfully added together. For more lending details see "EIB Group. Lending in 2001".