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Access the EIB loans

we had the pleasure to interview M. Henry Marty - Gauquié, Director of the Group Communication, in charge of the management of the Bank's institutional and operational image. Lire_La_Suite

we had the pleasure to interview M. Henry Marty - Gauquié, Director of the Group Communication, in charge of the management of the Bank's institutional and operational image.

How could you describe the EIB activities and its goals in a few words?
The EIB, a lending organism :
The EIB is the financial institution of the EU, it supports public or private investments through banking contributions, which follow the Union's objectives.
It allocates loans in all economic sectors : it is a reimbursable aid through a banking aspect.
The action of the Bank consists of the financing of projects and not of programmes, which is to be distinguished from the typical characteristics of the Commission.

The different kinds of loans :
This is a very concrete approach triggering an individual evaluation for each investment.
The evaluation follows several steps : environmental, economic, technical and financial ones… The quality of the project is an essential condition to check that our action corresponds to our mission and that the project is viable.

To access the Bank's financing, a size criteria has to be distinguished :
· Direct loans when the projects need an investment superior or equal to 50 million euros.
· Intermediary loans for investments of less than 25 millions euros : the borrower acts through a specialised financial institution and not directly through the EIB.

The EIB operates everywhere in the world :
· Within the European Union : the main activity of the EIB is to promote the regional development as it allocates 70% of its loans to the purpose of it. It collaborates with the Commission and the Structural Funds.
· Outside the Union, the EIB operates in 4 areas : ACP countries, Mediterranean countries, Latin America and Asia, the CEEC

What are the specificities of the EIB actions outside the EU ?

Regionalised priority objectives :
- ACP : development assistance (partnership with the EU in the framework of the Cotonou agreement)
- Euro-Med Area: trade liberalisation and development of the private sector (as well as the co-enterprises between local and European operators) to achieve a Customs Union (process of Barcelona)
- CEEC : preparation to the accession of the candidate countries
- Latin America - Asia : development of projects of common interest for the EU and the recipient countries.

Depending on the regions, the finance have different aspects :
For instance, we use
· Subsidised loans and capital venture in the ACP area with help of the European Development Fund (EDF) managed by the Commission.
· Long term loans allocated to candidate countries, in cooperation with the ISPA (Instrument for Structural Policies for Pre-Accession)
· Long term loans and capital venture for the Euro-Med area with a financial management under mandate of the budgetary funds of the Union,
· Loans for the large projects in Latin America and Asia
Then it depends on the project which requires a financing.

All these regions are linked to the Union through international agreements or a formal partnership. In order to avoid the political risk often corresponding to the establishment of the Bank in these countries, the EIB takes advantage of a global guarantee from the EU, which constitutes a security for potential investors.

You were talking about a cooperation between the EIB and the Commission : what kind of relationship is it ?
The EIB and the Commission : common objectives
We are pursuing the same kinds of goals, but with different means. The Commission has the Community budget at its disposal and grants subsidies. The EIB lends at the best market rates and collects its financial resources on the capital markets. The financed structures must be able to incur a debt.

The EIB, actions in the framework of the Structural Funds
The EIB is associated to the planning of the Structural Funds and is also in charge of the technical expertise for the evaluation of certain kinds of investments financed by the Structural Funds and the Mechanism for the European Economic Area (EEA)
It can make some joint financing offers to the subsidies allocated in the framework of the Structural Funds for large projects. But there can also be a parallel action : for instance, a structure will borrow money to the EIB for a special project and at the same time collect a support from the Structural Funds for the training of its labour force.

So there is a " market-sharing " between the Commission and the EIB, in order to ensure a better synergism of the Community Funds, and above all to avoid the risk for a structure to be indebted when the project is not financially viable.

A very significant cooperation agreement was signed with the Commissioner Mr. Barnier in January 2000 for the collaboration of the EIB and the ERDF (European Regional Development Fund) and the ISPA (Instrument for Structural Policies for Pre-Accession)

How can a SME or a little local authority be the beneficiary of EIB
funds ?

For the financing of small investors (less than 25 million euros), the EIB operates in the framework of " global loans " : in practice, they are credit lines open to financial intermediaries that use them in the frame of criteria we defined. The intermediaries are commercial banks (for the long-term financing of SMEs or local authorities), or special investment funds (capital venture for innovative SMEs). In 2000, around 27 000 SMEs and 10 000 local authorities could be the indirect beneficiaries of EIB funds. This mechanism has proven its efficiency : the global loans have been existing since the end of the 60s.

Objectives :
· Increase the volume of operational money
· Improve the financial environment by reducing the interest rates
· Allow the intermediary banks to offer diversified financial products : middle to long-term loans (5 to 10 years), capital venture, counter guaranties

Advantages :
It allows the creation of a leverage effect and facilitated access conditions to credit opportunities.

When the EIB operates through financial intermediaries, what is its monitoring right on the fund management and the implementation of the project ?

The EIB operates in the framework of partnership and financing agreements with some 180 banks or credit institutions that play the role of intermediaries.
These agreements are made on a basis of qualitative and quantitative criteria for the allocation of loans : localisation of the structures, kind of SMEs, sector of activity…
The intermediary institution commits itself to follow these criteria.

The monitoring procedures and the role of the EIB are different depending on the kind of credit institution.
· When the intermediary institutions are long linked partners, the EIB operates an ex-post monitoring, i.e. it controls the merits of the loan allocation after its acceptance. So there is confidence building.
· When the EIB and the credit institution have just started their relationships, the intermediary bank has to make some proposals to the EIB before acceptance of the file.

In both cases, it is essential to highlight that this is not the EIB that makes the final decision concerning the loan allocation but the credit institution in charge of the file : so there is a real delegation corresponding to precise criteria.

The project coordinators can find all information on the web sites of the EIB and the EIF, which display general information on the kinds of lending or other financial tools, with the up-dated list of all intermediaries in each member country or third country of the Union :

Could you describe a project, which collected funds this year ?

Framework :
Recently, we allocated a loan of 200 million euros to a common subsidiary of Fiat and Peugeot, SEVELNORD. This plant was created in order to build, since 1989, monospace automobiles for both groups in Valenciennes-Hordain (France).

The loan covers the Research and Development stage, the prototyping, the tests and the bringing in of the new monospace generation of both groups, and which marketing should start by the end of 2002.

Objectives :
· Allow the company to better satisfy the European and international competition,
· Finance the creation of activities in an area of regional development or structural conversion. It has allowed the holding of 4500 jobs and the creation of 150 to 200 new ones.

There was a cooperation with the European Commission as SEVELNORD collected a subsidy of 8 million euros allocated by the ESF (European Social Fund) for the training of its labour force to new technologies.

What is the administrative procedure of the EIB for the management of a loan request ?
Cycle of an individual project (caution, it only concerns direct loans for large projects !):
· Informal contacts between the project coordinator and the European Investment Bank by email, fax, phone or mail
· Meeting with the operators for a first instruction
· The managing committee is informed of the lending request and if it agrees, it will start the examination.
· Start of the instruction :
- Analysis of the financial aspects of the promoter, the borrower and the guarantor (the promotor and the borrower can be different)
- Technical instruction : implementation of the technologies, material risks, placing of a contract…
- Economic instruction: is an investment justified by a market? What are the possibilities of extension for the structure ? Could it hinder the competition regulations?
- Environmental instruction: what are the impacts of the investment on the environment? What are the measures for environmental protection, respect or lead time of the standards? Setup of an environmental management plan for the project in the construction and then operation stage….
· Lending procedure: the Board of Directors makes the final decision for the loan allocation
· Project management during the operation stage

For a global loan with a well-known intermediary, the delay between the request and the loan allocation runs between 3 to 6 months. For a large industrial project, the procedure is a bit longer and depends on the preparation of the project by the promotor; the instruction can last 6 months to one year.

What are the next objectives and priorities for the EIB in the future?

In June 2001, the President of the EIB, Mr. Maystadt, disclosed to the Board of Governors his will to stabilise the volume of business of the EIB within the EU currently amounting to 30 to 31 billion Euros.

For the intra-Community area, the EIB strategy is to realise more qualitative actions:
· In the framework of the Initiative 2000 Innovation programme, support the sectors with high leverage effect (education, health, technological networks, ICT, Research and Development..)
· Develop activities of capital venture in favour of the SMEs
· Mechanism of formal finance: adapt the exposure to risk and the guarantees depending on the projects; facilitate the creation of projects carried out by public -private partnerships (for instance: highways with notional ticket gate in Portugal, private hospital in Spain, universities in Italy, workers' housing in Great-Britain and in Eastern Germany….).

For the extra-Community area, the EIB will increase the volume of business:
· In the CEEC and countries in pre-accession,
· In the Euro-Med area (in the frame of the Barcelona process).

Speech collected by Christelle Mazza

Contact the EIB :
Head office EIB :
100, boulevard Konrad Adenauer
L - 2950 Luxembourg
Tel.: +352 43 79 1 - Fax: +352 43 77 04

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