Members access

 

Register

Forgotten password

Home >  EU Funding news >  News

Thursday, February 8, 2007

The EIB Group in 2006: Supporting the modernisation of the European economy

In 2006 the European Investment Bank Group, the banking group promoting European objectives, continued its activities aimed at modernising the economies of the Member States and of the countries close to the Union.
This was the first full year in which the new strategy decided by the EIB’s Governors in June 2005 was implemented: a qualitative strategy based on investment and financial innovation.

This strategy consists of:

- strengthening the leverage of the EIB’s operations;
- concentrating its financing within the Union on six European priorities;
- fostering economic convergence between the Union and its partner countries.
In 2006, the European Investment Bank lent a total of EUR 45.8bn for projects promoting the European Union’s policy objectives. Finance for the then EU-25 Member States represented 87% of its activities and amounted to EUR 39.8bn.

The European Investment Fund (EIF) – the EIB Group’s specialised venture capital arm and SME guarantee provider – invested EUR 688m in venture capital funds, bringing its aggregate portfolio to EUR 3.8bn, and provided a total of EUR 2.2bn in guarantees for SME loan portfolios of banks and financial institutions.

To fund its activities, the EIB raised an aggregate amount of EUR 48bn on the international capital markets through 303 bond issues in 24 currencies.

The key strategic and action points can be summarised as follows:

1. Strengthening the leverage of the EIB’s operations

Within an enlarged Union of 27 Member States, the EIB Group is committed to being an economic development agent and partner, mobilising financial resources to:

support the economic modernisation of the new Member States; maintain a high level of investment in public services ; contribute to the technological competitiveness of the Union and the development of its SMEs; meet the challenges facing the European energy sector and tackle climate change; foster cooperation with specialised national and international institutions.
A few examples will serve to illustrate this proactive approach taken by the EIB Group.

First, the Group has strengthened its procedures for cooperation with the European Commission, by launching three new joint initiatives to enable the Member States to make better use of the European Structural Funds – the amount of which has been significantly increased to EUR 308bn for the period 2007-2013. It will thus be possible to allocate part of the Structural Funds for financial engineering purposes in areas providing support for SMEs and micro-enterprises (JEREMIE) or for urban social development (JESSICA). The third initiative (JASPERS) – financed by the Commission, the EIB Group and the EBRD – offers free technical assistance with identifying and implementing infrastructure projects in the new Member States that are eligible for financing by the Structural Funds. Several projects have already been pinpointed under these facilities. It should be stressed that this technical assistance does not entail any obligation to seek cofinancing from the EIB or EBRD.

Similarly, the EIB and the Commission have combined forces to accelerate implementation of the ambitious transport and energy TENs (trans-European networks) programme by establishing a structured finance facility and a TENs guarantee fund to facilitate the financing of projects with a high risk profile. These two financial instruments will act as a catalyst in attracting up to EUR 20bn of additional public or private finance in support of TENs.

To underpin the innovation and R&D effort within the Union, the EIB and the Commission are establishing a new EUR 1bn “Research Facility”, cofinanced by the Bank and the 7th R&D Framework Programme. Here too, this financial instrument will enable more risks to be taken and private capital to be mobilised for projects that are important for the Union’s industrial competitiveness. Requested by the December 2005 European Council, it could leverage up to EUR 10bn of additional funds over the period 2007-2013.

At the same time, the EIF is set to give a fresh boost to support for SMEs with an increase in capital – now under preparation – and by making a further EUR 1.1bn available under the 2007-2013 “Competitiveness and Innovation” Framework Programme for deploying innovative financial products, particularly for SME start-ups.

Finally, there has been a substantial increase in EIB cooperation with other institutions, involving both the exchange of expertise and the sharing of financial products, as witnessed by the progress made in 2006 with promoting the Kyoto objectives (establishment of two carbon funds – one with the World Bank and the other with the EBRD), the operational links forged with the EBRD is support of eastern Europe and numerous joint operations mounted with national development institutions.

2. Six priorities within the Union

Within the European Union, the EIB Group’s ambition is now not so much to increase the volume of its financing as to contribute effectively, through a more selective choice of projects, to achieving the Union’s objectives and to mobilise funds from other sources for such projects.

This goal – set by the Board of Governors – of giving priority to the quality rather than the quantity of projects explains the slight fall in the volume of lending in 2006 (EUR 39.8bn against EUR 42bn in 2005). At the same time, the fluid political situation in a number of new Member States meant that it was not possible to implement certain projects at the pace envisaged (EIB activity in those countries amounted to EUR 5bn in 2006 compared to EUR 5.8bn in 2005).

Overall, the EIB Group calculates that its lending in 2006 supported total investment in excess of EUR 120bn, two thirds of which in the Union’s least favoured areas . With a more stable volume of activity and modest growth in staff numbers, the EIB Group is concentrating on more complex projects and more innovative financial products. In so doing it is committed to supporting all 27 Member States, even though in relative terms priority will be given to the 12 new Member States.

The six European priorities on which EIB lending focuses are:

economic and social cohesion, which in 2006 accounted for nearly two thirds of the financial assistance provided (EUR 26.7bn). With the reorientation of EU cohesion policy for the period 2007-2013, the EIB will in future also focus its cohesion financing operations on the “convergence regions”. In order to ensure that more rapid and effective use is made of the Structural Funds, the EIB has pressed ahead with launching the JASPERS and JESSICA initiatives;
a competitive and innovative European economy , thanks to additional funding for research and innovation. In 2006 the EIB lent nearly EUR 11bn for projects relating to research, innovation, education and information technologies. For these sectors in particular, the EIB, in consultation with the Commission, agrees to take on higher financial risks through new joint products;
efficient and easily accessible trans-European transport and energy networks (TENs) are being developed, in particular thanks to EIB finance. In 2006 the Bank pumped EUR 8.4bn into this objective (EUR 7.6bn within the Union and EUR 738m for extensions in neigbouring countries). In addition to standard very long-term finance, the EIB is developing with the Commission new financial instruments also designed to support riskier TENs projects;
support for small and medium-sized enterprises was confirmed in 2006 with a record level of bank credit lines of EUR 5.8bn as well as a record volume of guarantees (EUR 2bn) and venture capital operations (EUR 688m). This policy of support for SMEs will receive a further boost in 2007 (see briefing note on support for SMEs);
the "climate change” dimension of environmental protection but also that of conserving natural resources and improving the quality of life in urban areas . This priority objective of sustainable urban development directly accounts for more than a third of the EUR 10.9bn worth of EIB lending for the environment. The bulk of operations is carried out within the Union but the EIB, in tandem with the Commission, is also extending its activities throughout the Mediterranean and launching, with the EBRD and the World Bank respectively, two carbon funds to help achieve the Kyoto objectives;
the objectives of efficiency, diversification and security in the energy sector are now supported as such by the EIB, which in 2007 made this its sixth priority. Within the Union, the EIB made more than EUR 3bn available in 2006 and is committed to providing over EUR 4bn a year in future, of which EUR 600m to EUR 800m will be for renewable energy (EUR 463m in 2006).
3. Three fields of cooperation with non-EU countries in a drive for convergence and with respect for the partners’ identities

In a globalised economy, characterised by the emergence of new players and ever-increasing political and social tensions, the European Union stands out like a beacon, its values of solidarity and respect for other peoples’ cultures and identities being perceived as a moderating influence that is essential in the quest for more peaceful international relations.

Acknowledging the importance of the EIB’s contribution to implementing the financial aspects of the Union’s aid and cooperation policies towards its partner countries, the December 2006 European Council increased the Bank’s possibilities for action outside the Union over the period 2007-2013 by more than a third (to EUR 27.8bn). Three fields of action with specific objectives have been identified:

preparing for the accession of the future Member States, which will receive EUR 8.7bn in loans guaranteed by the Union. The EUR 10.2bn in loans over the period 2000-2006 helped the 12 new Member States to prepare for joining the EU, in particular by speeding up their links with the Union and improving their public services . In 2006, including loans to Bulgaria and Romania, the EIB provided finance totalling EUR 3.2bn to the enlargement countries

the process of convergence with the Union’s neighbours, which, with a total of EUR 12.4bn in loans guaranteed by the Union, represents the EIB’s biggest mandate ever. This figure can be broken down (indicative amounts) into EUR 8.7bn for the nine Mediterranean partner countries, i.e. nearly double the amount provided for the ‘Barcelona Partnership’ countries (excluding Turkey the 2000-2006 figure was EUR 4.6bn, of which EUR 1.4bn in 2006 alone), and EUR 3.7bn for Russia and the eastern neighbours (posing a very real new challenge for a region in which the EIB lent only EUR 85m over the period 2000-2006). To rise to the challenge of this increase in operations, where the emphasis is first and foremost on extending the TENs and supporting the private sector, new institutions have had to be created. For the Mediterranean, the partner countries will be fully involved in a reinforced FEMIP; and for Russia and the eastern neighbours, an operational agreement has been signed with the EBRD;

cooperation with other continents is taking place in line with European policy in order to take account of the other financial players. With regard to sub-Saharan Africa and the Caribbean and Pacific States, the EIB lent EUR 825m in 2006, with priority being given to support for SMEs and energy projects. This economic input will be maintained over the period 2007-2013, with a lending capacity of nearly EUR 4bn. A major effort has been decided in favour of operations in Latin America and to a lesser extent Asia, with the ceiling for the periods in question being increased from EUR 2.5bn to EUR 3.8bn – for the first time the ceiling is subdivided (indicative figures) into EUR 2.8bn for Latin America and EUR 1bn for Asia. These increased possibilities will make enable the Bank to continue supporting private European initiatives in these countries as well as projects that help to protect the environment or promote European energy security.

Source  European Investment Bank

linked programmes:

Also read:

Look for a grant Go Recherche avancée