The European Investment Bank (EIB) has proved to be a solid pillar of financial strength and stability in last year’s exceptionally difficult economic environment.
The EIB increased its total lending volume in 2009 to EUR 79bn, a 37% rise from EUR 58bn in 2008. This represents a new milestone in providing financial support for the European economy.
“The EIB, as the EU’s Bank and the largest multilateral financing institution, delivered in 2009 an unprecedented volume of effective, quick and large-scale funding for measures to combat the economic crisis, without sacrificing financial prudence. In the coming years, and especially in 2010, we will dedicate our product mix and expertise in support of recovery”. EIB Vice-President Plutarchos Sakellaris stated at a press conference held in Athens today.
Targeting recovery
Compared to pre-crisis levels the EIB has substantially increased its financing volumes. Already in 2008 loans worth EUR 57.8bn were signed marking a significant increase compared to 2007’s total of EUR 47.8bn. The EIB pledged an even higher level for 2009 of EUR 79.1bn in loan signatures, a figure that it far exceeded.
In 2009, the EIB reinforced its focus on (1) small and medium-sized enterprises (SMEs), (2) economically weaker regions across Europe (“convergence regions”) and (3) the energy sector in the context of the fight against climate change. Funding was as follows:
1. EUR 13bn in credit lines to intermediary banks for targeted lending to SMEs, an increase of 55% compared to the year before. This activity benefited more than 50 000 SMEs across Europe.
2. EUR 29bn - (a 36% increase from EUR 21bn in 2008) accounting for 37% of the Bank’s total lending volume - was to convergence regions. The lending was geographically well-balanced across the EU, with the new Member States receiving EUR 13bn.
3. EUR 15bn aimed at mitigating climate change, through financing projects contributing to the reduction of the volume of CO2 emissions: renewable energy (EUR 4.2bn), energy efficiency (EUR 1.5bn), R&D for cleaner transport (EUR 4.7bn) and investment in urban transport (EUR 5.5bn).
… and beyond
The EIB promotes sustainable development, which is closely related to social well-being. Its activities in 2009 therefore continued to support in a reinforced way areas with long-term sustainable growth potential for the post-crisis era:
- EUR 25.3bn, which represents 32% of its total lending for 176 environmental projects (2008: EUR 18bn for 150 environmental projects).
- EUR 18.2bn for investment in the knowledge economy compared with EUR 12.5bn in 2008. This is a year-on-year increase in lending of almost 50% – the result of concerted efforts by the EIB to respond to the economic crisis by stepping up support for future-oriented investment.
- EUR 11.9bn (+20% to 2008) for transport TENs and major transport routes, facilitating the freedom of movement of goods and people and helping the development of less favoured areas.
- EUR 14.8bn in 2009 was for the combined energy sector (EUR 10.2bn in 2008), of which EUR 4.2bn for renewable energy (RE) projects (EUR 2.2bn in 2008), and EUR 1.5bn for energy efficiency (EE), double 2008’s amount. The Bank’s role in supporting RE development has been widely recognised, as evidenced by a number of awards received in 2009 from major specialist magazines and publishers for its RE financing.
Solid support to the real economy in Greece
In 2009 the EIB provided a total of EUR 1.6bn, up 33% compared to EUR 1.2bn in 2008.
Vice-President Sakellaris stated “In Greece in 2009 our key policy was to support small and medium-sized enterprises (SMEs). Our funding was amplified by the synergies created with most major Greek banks. This partnership aimed at restoring growth that can only come from strong and flourishing enterprises. We maintained our firm support to the country’s major economic infrastructure mainly in transport and energy, targeting growth leverage. I am also pleased that in 2009 we inaugurated a new era in smaller infrastructure investments in Greece, in sectors other than transport, procured as public-private partnerships”.
In 2009 the EIB joined forces with eight major Greek banks to support the real economy in order to counteract the impact of the crisis by easing SME funding in this difficult period. The EIB provided slightly more than EUR 1bn to support SMEs and small and medium-scale infrastructure investments to be carried out by private or public bodies, including local authorities, as well as beneficiaries of any size. Financing was for investments in the fields of industry, tourism, services, the knowledge economy, energy and environmental protection in Greece.
The EIB also provided EUR 19m for a larger industrial project. The loan was for modernising Elval Group’s aluminium processing plants at Oinofyta. Elval Group produces aluminium rolled and extrusion products. Symetal produces and sells aluminium foil products for flexible packaging and food products as well as converted aluminium foil for the same applications. The main investment concerned a new foil rolling mill as well as civil works and the necessary ancillary equipment. The project also included significant environmental investment.
In addition, the EIB provided further support towards quality of life through urban development and a friendlier city environment. In particular, the Bank provided a total of EUR 250m for the design, construction, testing and commissioning of the first phase of the metro system in Thessaloniki, the second largest city in Greece and a major business centre for the southern Balkans. The further development of quality metro systems in the metropolitan areas of Athens and Thessaloniki (where more than some 60% of the Greek population lives) will improve quality of life by reducing reliance on the car/bus road transport modes with their harmful environmental implications. The EIB has been supporting the development of the metro systems in Greece with a total of nearly EUR 2.2bn since 1991.
Since it began operations in Greece, the EIB has paid special attention to transport due to the peripheral location and fragmented geomorphology of the country. In 2009, the Bank extended EUR 55m for the modernisation and extension of Pier 1 of the Port of Piraeus, which is Greece’s main sea gateway and an important trans-shipment hub towards other Eastern Mediterranean and Black Sea countries. Linked to north-south transport corridors it can be a hub for the Greek hinterland and the whole of Central and Eastern Europe. It is a European priority project that is fully in line with our transport lending policy and supports the modal shift towards more energy-efficient and environmental-friendly transport.
For energy, a total of EUR 250m went to the Greek Public Power Corporation for the extension and reinforcement of the Greek transmission and distribution networks, covering the whole range from high tension (400kV) down to low tension.
With a EUR 10m loan for the Hellenic Fire Services the EIB inaugurated a new phase for public-private partnerships (PPPs) in sectors other than transport in Greece. The EIB launched the PPP financing structure in Greece with the new Athens Airport in 1996. Since then the country has financed a series of flagship large-scale infrastructure projects through PPPs. Over the past four years, the EIB has worked closely with the Greek authorities to expand the PPP model to smaller infrastructure projects. This new loan for fire stations throughout the country was the culmination of these common efforts. It opened the way for a number of new projects to come. The project included the design, construction, insurance, maintenance and operation of seven fire department buildings in Alexandroupoli, Giannitsa, Veroia, Lefkada, Kalavryta, Gargalianoi and Thessaloniki.
In addition, the EIB and the Commission bolster recovery and further development especially in the convergence countries, through advisory services, financial engineering and customised financial products, especially in the new Member States. There are specially conceived Cohesion Policy Joint Initiatives, the so-called “Js”, originating from partnerships established between the European Commission, the EIB/EIF and other international financial institutions.
JEREMIE - Joint European Resources for Micro-to-Medium Enterprises initiative (EIF, European Commission) is a new way of using EU Structural Funds to promote SME access to finance via Holding Funds.
In Greece ssignificant progress has been made on the implementation of the JEREMIE initiative. The transfer of the amount of EUR 100 m to the JEREMIE Holding Fund took place in early June 2009. In parallel, in response to the economic and financial crises, the Investment Strategy and Planning was updated reflecting the results of market testing performed by the EIF for both debt and equity products. The revised portfolio is composed of approximately 50% Funded Risk Sharing, 20% Microfinance and 30% equity products.
In September 2009, the Investment Board approved the first JEREMIE financial instrument – the Funded Risk Sharing – for the amount of EUR 45 million. This instrument aims at supporting micro and small enterprises in the start-up and newly established phase (with a business history of less than 36 months), through the provision of loans of up to EUR 100 000, with maturity of 2 to 5 years, for investment and working capital financing (linked to development or expansion activities). The competitive procedure for the selection of the financial intermediaries, with the support of which the funds will reach the SMEs, is expected to be initiated shortly. The Microfinance and equity products above, have been developed and are currently under discussion with the Managing Authorities.
JESSICA - Joint European Support for Sustainable Investment in City Areas (EIB, European Commission and Council of Europe Development Bank) is designed to help the authorities in EU regions to exploit the use of financial engineering instruments under the 2007-2013 Structural Funds' programmes in order to support investments in sustainable urban development in a more efficient manner.
In Greece, in 2009 the EIB carried out a general JESSICA evaluation study assessing market demand for financial engineering instruments in support of sustainable urban development. An additional specific study has also been carried out concerning energy efficiency for the whole country and solid waste management, mainly for Attiki and greater Thessaloniki area. Both studies have been recently submitted to the Greek Authorities. In Greece, the signature of a Funding Agreement for the setting up of a JESSICA Holding Fund is planned for the first half of 2010 with an envisaged contribution expected to exceed EUR 100 million. The main purpose of the Holding Fund will be to establish Urban Development Funds. Through the UDFs it will be possible to make repayable investments in projects forming part of an integrated plan for sustainable urban development. The Ministries involved and EIB will be working together with Greek municipalities and banks in identifying such projects.
Photographer: EIB ©To be defined
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