European Investment Bank
EU leaders to sign off on EIB capital increase
By Sarah Collins | Friday 22 June 2012
EU leaders, meeting for a summit on 28-29 June, are likely to sign off on an extra €10 billion in capital for the European Investment Bank, which it is estimated could generate up to €180 billion to invest in the EU economy. At a meeting of EU finance ministers, on 22 June, the EIB’s major shareholders said they were prepared to say ‘yes’ to an increase. “It looks as if, when it goes to the heads [of state and government], there will be extra capital put into the EIB,” said Irish Finance Minister Michael Noonan. “In a general discussion, all the bigger countries providing a lot of the capital were tending in that direction,” he said. Germany, France and Italy and the UK together make up 60% of the bank’s cash base and guarantees.
The European Commission and the EIB said in a joint study, on 21 June, that with €10 billion of extra paid-in capital, the bank could lend up to €60 billion over the next four years to support SMEs, to build road, rail and air links or to promote ‘clean’ energy generation. That figure would rise to €180 billion once private investors are brought in. The EIB is also preparing to launch a project bond initiative, where it would part-guarantee the issue of bonds by private consortiums that manage the building of new public transport, energy or broadband networks.
European Commission President José Manuel Barroso and EIB President Wener Hoyer said in a joint letter to EU heads that the moves “represent a smart investment in Europe’s future and [...] signal that we are determined to act together to achieve our common goals”. The capital increase and project bonds are part of a new ‘growth pact’ that is expected to be inked at the summit. It will also include a commitment to reallocate EU Structural Funds to boost jobs.