PRESS
RELEASE
2005-003-EN
Luxembourg/Brussels, 3 February 2005
Activity of the EIB Group in 2004
In 2004, the European Investment Bank lent a total of EUR 43.2bn
(2003: 42.3bn) for projects furthering the European Union’s
political objectives. Financing in the EU-25 Member States totalled
EUR 39.7bn (of which EUR 3.8bn in the 10 new Member States), and
EUR 3.5bn was made available in non-EU countries.
Lending in the Accession Countries (Bulgaria, Romania) amounted
to EUR 119 million, and in the Western Balkan countries the EIB
assisted development projects to the tune of EUR 461 million.
Lending in support of EU development policy totalled EUR 2.9bn.
Under the Facility for Euro-Mediterranean Investment and Partnership,
loans amounting to EUR 2.2bn were made available. EUR 440 million
went to the Cotonou partners (the African, Caribbean and Pacific
countries), EUR 100 million to South Africa and EUR 233 million
to Asia and Latin America.
In 2004 the European Investment Fund (EIF) – the EIB group’s
specialised venture capital arm and guarantee instrument –
acquired holdings worth EUR 358 million in venture capital funds,
bringing its aggregate portfolio to EUR 2.8bn, and provided a total
of EUR 1.4bn in guarantees for SME portfolios of financial intermediaries.
To fund its lending, the EIB raised an aggregate amount of EUR
50bn on the international capital markets through 282 bond issues
in 15 currencies.
As at 31 December 2004, the EIB’s outstanding lending amounted
to EUR 265.8bn and outstanding debt to EUR 214.8bn.
Economic and social cohesion in the enlarged EU (EUR 28.5bn)
Fostering the EU’s cohesion by contributing to the reduction
of imbalances between regions is the EIB’s prime task and
its first operational priority. With the Union’s eastward
enlargement, this priority has become even more important since
all of the new Member States qualify as designated assisted areas.
Within the EU-25 countries, individual loans (loans for individual
projects appraised by the Bank) worth EUR 21.5bn were granted in
2004 for investment contributing to the strengthening of the economic
potential of assisted areas. A further EUR 7bn was made available
as credit lines (global loans) to partner banks for the financing
of SME ventures and smaller-scale public investment. The total lending
of EUR 28.5bn for regional development represents some 72% of the
EIB’s aggregate lending within the EU-25.
The main sectors of lending in regional development areas were
transport and telecommunications infrastructure (accounting for
39% of the individual loans granted), investment in industry and
the services sector (20%), urban infrastructure (14%) and health
and education infrastructure (11%). In the new Member States the
EIB continued its efforts to support foreign direct investment,
as this contributes to the transfer of both know-how and capital
into the region and, therefore, to the modernisation and restructuring
of industry.
The cooperation with the European Commission’s Regional Policy
Directorate-General has been further intensified, notably in order
to improve coordination of the EIB’s activities with the operations
of the Structural Funds that are now also available to the new Member
States.
Innovative and knowledge-based European economy (EUR 7bn)
Through its “Innovation 2010 Initiative” (“i2i”),
the EIB supports the EU’s Lisbon Strategy for an information
and knowledge-based economy. The EIB’s target is to mobilise
EUR 50bn by the end of the decade to increase the EU’s innovative
capacity and enhance its longer-term competitiveness.
For the period 2004-2006 alone, the EIB’s target is to provide
EUR 20bn in medium or long-term financing in the key fields of education
and training, R&D and the dissemination of knowledge (launch
of innovative products, processes and services, particularly in
the private sector), and the creation and dissemination of ICT (hardware,
content and applications, notably e-services). This package includes
lending for the Quick Start Programme of the innovation part of
the European Action for Growth.
So far the EIB has lived up to its commitments under i2i. By the
end of 2004, total loans approved since the start of i2i in 2000
amounted to EUR 34.4bn, and loan contracts actually signed stood
at EUR 24.1bn. In 2004, some 60 i2i loans totalling EUR 7bn were
provided (2003: EUR 6.2bn; 2002: EUR 3.6bn).
Lending under i2i since 2000 has been divided between the three
key fields: R&D and downstream investment (42%); education and
training for furthering employability (29%); and ICT (29%). Projects
have been distributed throughout the EU-25. About three quarters
of total lending has been within regional development areas, in
order to help bring these less developed regions into the knowledge-based
economic fold. Some 80% of the total lending has been in the private
sector. With a full “i2i” pipeline at present, the EIB
is set to meet its objective of mobilising EUR 50bn in support of
the Lisbon Strategy by 2010.
Financing R&D and innovation involves different risks from
those encountered in financing physical assets. The EIB has therefore
gradually reinforced its capacity to grant loans that entail a higher
lending risk by increasing the provisioning reserve for its Structured
Finance Facility (SFF). Loans under the SFF will be made available
more widely for higher-than-usual risk operations in the field of
R&D and innovation.
The EIB has also taken the initiative to make better provision
for the specific financing needs of medium sized-enterprises (mid-caps,
i.e. businesses with more than 250 but less than 3 000 employees),
particularly for financing R&D. Efforts are currently being
made to further develop new financial instruments that combine loans
and grants (typically from the EU, but also from national budgets)
and will therefore enable more resources to be mobilised for R&D
and innovation.
The European Investment Fund (EIF) supports the Innovation 2010
Initiative by taking equity stakes in venture capital funds. In
2004, the EIF acquired holdings worth EUR 358 million (2003: EUR
135 million), expanding its portfolio of participations to EUR 2.8bn,
spread over some 200 funds operating in the EU-25. Last year’s
commitments, involving 15 venture capital funds, represented a good
range of operations in Italy, Spain, France, the UK and Germany,
as well as some operations in the new Member States. The EIF operates
as a fund of funds, with a bias (two thirds of its portfolio) towards
funds specialising in early-stage financing (primarily ICT and life
sciences) and the high-tech sector. It is now one of Europe’s
largest venture capital providers in this segment. Recently, the
EIF has broadened its investment policy to include also mid and
later-stage funds. Over 80% of the resources it has invested to
date has been provided by the EIB, with further capital coming from
the Commission.
The venture capital market still faces a difficult environment,
particularly in the early-stage segment. The presence of private
investors remains fragmented, mainly because of the uncertain economic
situation and strong risk aversion. In such difficult times the
EIF’s presence in the market is all the more important as
a stable source of funds and thus in helping to attract private
sector funding.
The EIF further assists the investment activity of SMEs indirectly
by providing guarantees for the SME loan portfolios of financial
institutions and public guarantee agencies. In 2004, the EIF provided
a total of EUR 1.4bn in guarantees for SME portfolios, bringing
its guarantee portfolio to EUR 7.7bn. These guarantees facilitate
the securitisation of such portfolios or reduce regulatory capital
allocation to such assets, which gives banks greater scope for lending
to SMEs.
Trans-European Networks (EUR 7.9bn)
Efficient transport, energy and information networks are vital
for the economic integration of the enlarged EU. In response to
the successive EU initiatives identifying Trans-European Networks
(TENs) in the EU-25 and the remaining Accession States, the EIB
has scaled up its lending in support of TENs, after having already
been heavily involved in financing TENs over the last 10 years.
The EIB is giving particular attention to the TENs-related part
of the Quick Start Programme (QSP) of the European Action for Growth.
Up to EUR 25bn will be made available in the period 2004-2006 for
transport TENs, particularly for projects under the QSP. In special
cases it will be possible for loans to be granted for up to 75%
of the investment costs and for periods of up to 35 years, with
flexible repayment terms.
In 2004, signed loans in support of TEN projects within the enlarged
EU totalled EUR 7.9bn, of which EUR 6.6bn for transport and EUR
1.3bn for energy projects.
Environmental protection (EUR 10.9bn)
In 2004, the EIB signed individual loans for environmental projects
totalling EUR 10.9bn, of which EUR 10.4bn in the EU-25 (EUR 9.8bn
in the EU-15). The EIB’s target of devoting 30-35% of its
total annual individual loans in the EU-25 and the Accession Countries
to environmental projects was reached. Most of the lending was directed
to the urban environment (EUR 6bn), i.e. urban transport and urban
renewal.
The EIB has attached greater importance to renewable energy. At
the International Conference for Renewable Energy in Bonn (2004),
the EIB pledged to increase renewable energy’s share of total
new electricity generation capacity financed by the Bank in the
EU from some 15% at present to 50% by 2010, including a greater
share for non-wind power. This is in line with the EU’s target
to increase renewable energy’s share of electricity generation
in the EU-25 to 22% by that time. The EIB, in support of the EU’s
Lisbon Agenda, is also considering funding renewable energy projects
involving new and innovative technologies that, although not meeting
the Bank’s standard criteria for economic viability, can demonstrate
that they have the potential to become economically viable within
a reasonable timeframe.
In support of climate change policies, the EIB launched new initiatives
in 2004: the EUR 500 million Climate Change Financing Facility to
assist European businesses participating in the EU’s Emissions
Trading Scheme starting in January 2005; the EUR 10 million Climate
Change Technical Assistance Facility, providing conditional grant
finance for the identification of projects in transition and developing
countries that are linked to the Emissions Trading System; and the
Pan-European Carbon Fund, which should support the trading of emissions
rights and is still under detailed discussion with the EIB’s
cooperation partner, the World Bank.
The EIB’s approach to environmental protection and climate
change is set out in the Bank’s Environmental Statements (2003
and 2004), which have been published on the Bank’s website.
Support for EU development and cooperation policies (EUR 3.5bn)
In 2004, lending under FEMIP totalled a record EUR 2.2bn, split
between four key fields: the private sector (33%), transport (30%),
energy (25%) and the environment (8%).
FEMIP aims to develop the private sector and social and economic
infrastructure in the Mediterranean Partner Countries, with a view
to preparing them for the Euro-Mediterranean free trade area envisaged
by the Barcelona Process for 2010. The Facility provides the business
community (including foreign investors) with access to financial
products that are not easily available in the region (long-term
loans, risk-sharing finance, risk capital and funding for technical
assistance).
In the ACP (African, Caribbean and Pacific) countries, 2004 was
characterised by a slowdown in activity, reflecting the economic
situation in the ACPs, a halt to lending in countries such as Côte
d’Ivoire and Zimbabwe, and the constraints linked to the Cotonou
Agreement. Perceptions of high risk and administrative obstacles
hampered foreign direct investment. However, potential projects
are increasingly being identified and the environment for private
sector investment in the ACP countries is steadily but surely improving.
Borrowing activities in 2004
The EIB strengthened its leading role in the international bond
markets. The volume of borrowing increased by 19% to EUR 50bn, raised
through 282 transactions in 15 currencies. Issuance in EUR (35%
of total funding) and USD (36%) accounted for the largest share,
followed by GBP (19%). The three core currencies (EUR, GBP, USD)
thus together accounted for 90% of funding. Currency diversification
continued, with issuance in 12 additional currencies (10% of funding),
mainly currencies of new and future EU Member States.
In its funding strategy, the EIB continued to pay close attention
to quality of execution and secondary market performance, which
helped EIB bonds remain a stable store of value. In addition, the
Bank remained responsive to opportunities for targeted and structured
issuance. This strategy enabled the Bank to increase its issuing
activity substantially, while playing a pathfinder role, notably
by developing new areas of long-dated issuance, inaugurating issuance
in new currencies and reviving issuance in dormant segments. The
market’s positive reception to the Bank’s funding strategy
was underlined by the Bank’s receipt of an exceptional range
of top awards for its funding activities, including IFR’s
‘Borrower of the Year’, ‘Most Impressive Borrower’
in the Euroweek poll and ‘Best Supranational Borrower’
from Euromoney.
Benchmark issuance delivered improved liquidity and a wider range
of maturities for investors. About 25% of total funding in 2004
was in maturities of ten years or longer. In EUR, a pioneering new
15-year issue for EUR 4bn created a long-dated benchmark segment
alongside leading sovereigns. It contributed significantly to diversification
of the investor base in Europe, notably among long-dated investors
such as insurers and pension funds. In USD, the Bank was unique
among international borrowers in issuing in all key benchmark maturities
from two to ten years. This also helped to diversify the investor
base. USD placings with US investors grew, with on average one third
of USD benchmark issues being placed with US accounts. In GBP, the
Bank doubled the number of benchmark taps and provided liquidity
in maturities up to 2054.
The Japanese market remained a large source of funding, both for
issues in JPY and in foreign currencies. The stronger regional presence
in certain other markets benefited from the revival of dormant segments,
notably in AUD and CAD. The Bank also doubled its issuance in ZAR,
reinforcing its position as the largest foreign issuer. A further
source of diversification came from issues in synthetic Turkish
liras and Russian roubles, where cash flows are denominated in USD.
Another important area of development was in currencies of new
and future EU Member States, where issuance amounted to EUR 1.2bn.
In this region the Bank not only strengthened liquidity and offered
a wider range of maturities, but also issued in three new currencies
(the Maltese lira, Slovenian tolar and Bulgarian lev), in each case
being the first AAA-rated or sovereign class issuer other than the
national government. As in previous years, the Bank was the largest
issuer in the new and future Member States other than local sovereigns.
The further growth in local currency borrowing has also supported
EIB lending activity and the Bank’s position as the largest
lender in the region.
Overall outlook
The EIB does not strive for growth for the sake of growth. Rather,
it will intensify its strategy to focus on value added, i.e. more
quality than quantity. Value added means:
1. consistency between lending operations and the priority objectives
of the EU,
2. quality and soundness of each investment project,
3. particular financial benefits obtained by the use of EIB funds
and the need for such benefits in order to accelerate desired investment.
In practical terms, the EIB’s objective is to limit lending
growth within the EU-15 to a nominal 2% per annum, while lending
in the new Member States should increase more rapidly, to reinforce
the EIB’s contribution to these countries’ economic
catching-up process. Likewise, lending to Accession and Candidate
Countries as well as to non-EU countries could continue to grow
at a more sustained pace. The main lending priorities will remain
the same as outlined above.
The EIB, as the European Union’s finance institution contributing
to the achievement of the Union’s policy objectives, feels
duty-bound to be highly transparent and provide a maximum of information.
As a bank, however, it also has a duty to protect the legitimate
commercial and market-sensitive interests of its clients. Between
these two interests, the EIB has to strike a balance. Establishing
transparency is an ongoing process. In recent years the EIB has
made great progress; efforts to improve transparency will continue.
Additional sources of information
Further details may be obtained from the briefing notes on the
following topics:
1. Economic and Social Cohesion - Regional Development
2. i2i (Innovation 2010 Initiative)
3. Development of the Trans-European Networks (TENs)
4. The EIB’s environmental activities in 2004
5. EIB Group support for SMEs
6. Human Capital
7. FEMIP - Mediterranean Partner Countries
8. EIB activity in the future Member States in 2004
9. Western Balkans region
10. ACP/Cotonou Agreement
11. Asia and Latin America (ALA)
12. EIB’s activities in Russia
13. EIB Capital Market Operations in 2004
14. Transparency policy, Governance and relations with NGOs
15. European Investment Fund
The briefing notes, together with the press release and the brochure
“The EIB Group in 2004: projects financed”, are accessible
on the EIB’s website www.eib.org.
For further details, please contact the Communication/Press Department,
Ms Sabine Parisse, tel.: (+352) 021459159 or (+352) 4379 3138, Fax
(+352) 4379-3188; e-mail: [email protected]
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