Capital increase to 150 billion in support of EU policies
- Jun 4, 2002
The European Investment Bank's Board of Governors today decided on an increase of the Bank's subscribed capital from EUR 100 to 150 billion. This will enable the Bank to further strengthen its support for EU policies and contribute to the integration of the Accession Countries into the EU. The capital increase will enter into effect on 1 January 2003.
The capital increase was necessary since, in 2003, the EIB's outstanding loans and guarantees will reach the statutory limit of 250 percent of its subscribed capital. With the capital increase to EUR 150 billion, the statutory ceiling will increase to 375 billion; this will allow for an overall growth of the Bank's lending activities in the years 2003 - 2008, moderate growth within today's EU but a stronger lending increase in the Accession Countries.
Capital actually paid-in will be raised from EUR 6 billion to 7.5 billion. The EUR 1.5 billion increase of capital paid-in will be funded through the conversion of the Bank's Additional Reserves. In other words, the EU Member States do not need to pay in new capital and burden taxpayers.
The EIB's President and Chairman of the Board, Philippe Maystadt, outlined to the Governors the Bank's five lending priorities for the next years, which also form an integral part of the Bank's Corporate Operational Plan. These priorities reflect the EIB's statutory remit and the tasks assigned to it by European Council decisions of recent years in support of EU policies.
- The key strategic priority remains regional development and the economic and social cohesion of the European Union. A minimum share of 70% of the Bank's individual loans and 50% of its global loans is targeted at projects in the assisted areas of the European Union. Close cooperation with the Commission will continue to play a key role in achieving these targets and maximising synergies between EIB loans and grant money from the Commission, such as the recent initiatives for co-financing investment programmes in Italian and Spanish regions.
- Support for a knowledge based economy, as decided by the European Council in Lisbon (2000), i.e. for research, technology and innovation, and for the build-up of information and communications technology networks including audiovisual technologies and products. This includes large corporates as well as small enterprises, the latter being supported by EIB's dedicated global loans and also by risk capital through its subsidiary, the European Investment Fund.
- Protection and improvement of the environment: ensuring that its environmental lending accounts for between a quarter and a third of its activity, the Bank aims to promote environmental investments in support of the EU's international commitments on sustainable development and the prevention of climate change.
- Preparation of the Accession Countries for EU membership by financing infrastructure as well as private investment. Particular attention is given to financing foreign direct investment as this contributes best to modernising these countries' economies and enhancing productivity and competitiveness.
- Support for the implementation of Community development aid and cooperation policy in Partner Countries, in the context of the various lending mandates handed down to the Bank by the Council. As decided by the Council in Barcelona (March 2002), the Bank will reinforce its activity in the MED region by establishing a Euro-Mediterranean Investment Facility, which will focus particularly on developing the private sector.
President Maystadt also underlined a number of principles guiding the Bank's activity:
- First: Subsidiarity, meaning that the EIB's operations should contribute to maximising value added by focusing on investment projects located in assisted areas and projects which both have a strategic innovative content and correspond to EU priorities, such as fostering a knowledge-based competitive economy.
- Second: Financial self-sustainability, meaning favourable terms to investors but also the generation of a sufficient surplus to build up reserves in order to make certain that no calls need to be made on shareholders for equity contributions in the future.
- Third: Transparency, meaning that a maximum of information on the Bank's activity is made available to the Bank's stakeholders, i.e. the shareholders, European Parliament, Council, Commission, civil society including NGO's, and the public at large. To this end, the Bank publishes, on its website, its operational strategies (Corporate Operational Plan), policy statements as well as sectoral policies (in particular relating to the environment, sustainable development and climate change). The Bank also discloses project-related information including the list of projects it considers for financing.
The EIB is the European Union's financing institution, founded by the Treaty of Rome in 1958, and owned by the EU Member States. Ministers of finance or economy are the Bank's Governors. The Bank's task is to support EU policies by financing sound investment.
In 2001, lending amounted to EUR 36.8 billion, of which EUR 31.2 billion within the European Union and EUR 5.6 billion outside the EU.
Within the European Union, EUR 19.8 billion were directed towards projects located in regional development areas of which more than half in "Objective 1 regions". Over EUR 5 billion were made available in support of research, development, innovation and human capital (health and education). EUR 7.9 billion went to projects safeguarding the natural and urban environment, i.e. one third of EIB activity.
Outside the European Union, lending in the Accession Countries, mostly for infrastructure projects (transport, telecommunications and environment), reached EUR 2.7 billion. In the Mediterranean region, EIB lending totalled EUR 1.5 billion, much of which in support of infrastructure projects with particular attention paid to safeguarding the environment. In the ACP States and South Africa lending amounted to EUR 670 million, whilst lending in Asia and Latin America stood at EUR 543 million. In the Balkans, the EIB contributed EUR 319 million to the reconstruction of the region within the framework of the Stability Pact.
In addition to "individual" loans for large investment projects, the EIB grants, within and outside the EU, "global loans" to financial intermediaries, who on-lend such financial resources for investments undertaken by SMEs. The Bank's subsidiary, the European Investment Fund, provides further support to SMEs via guarantees (2001: EUR 960 million) and venture capital (EUR 800 million.)
The EIB finances its lending by issuing bonds on the international markets. In 2001, the Bank raised EUR 32.3 billion through 148 issues in 13 currencies. In all major currencies, the Bank's aim is to arrange large and liquid benchmark issues. With a view to stimulating the development of capital markets in the Accession Countries, the Bank also issues bonds in Czech Koruny, Hungarian Forint and Polish Zloty.