EIB supports economic recovery efforts in Europe and Greece

The European Investment Bank supports economic recovery efforts in the European Union as a whole and Greece in particular in line with the EU Council and ECOFIN strategy. The Bank’s action through increased lending is targeted at the real economy in a sustainable form in three main areas: SMEs; climate change (including research, development and production of "clean" cars); and investment for cohesion and convergence within the EU.

Total EIB lending rose by 21% in 2008 to EUR 57bn, compared to EUR 48bn in 2007. Loan signatures rose sharply towards the end of the year, reflecting the EIB's swift response to help underpin economic recovery at the request of the European Union's Member States. In Greece in 2008, the EIB provided a total of EUR 1 165m in loans, 54% up from the EUR 755mn 2007 figure.

“We acted quickly for the European anti-crisis measures quantitatively and qualitatively, without sacrificing financial prudence. We stand at the service of Europe, and will continue to play a strong and active role in spurring economic recovery. In Greece, we doubled our support in 2008 compared to 2007. We financed projects for efficient and easily accessible trans-European transport networks (TENs), the "climate change” dimension of environmental protection but also that of improving the quality of life in urban areas and we paid special attention to smaller companies in cooperation with the Greek banking system” EIB Vice-President Ploutarchos Sakellaris said at a press conference held in Athens today.

Increased overall lending in all countries of activity

The European Investment Bank increased its overall lending for small and medium-sized enterprises (SMEs) in all countries of its activity by more than 42% in 2008, underscoring its commitment to provide rapid additional support for the European economy in the current crisis. The EIB committed itself last September to boosting SME financing to help smaller businesses weather the financial and economic storm. As a result, the Bank signed loans for SMEs worth EUR 8.1 bn last year - more than half of this in the fourth quarter alone - against EUR 5.7bn in 2007, while also making the lending process simpler, more flexible and more transparent. At the same time, the European Investment Fund, the EIB Group's specialised financing arm for small businesses, provided commercial banks with EUR 2bn in loan guarantees for SME lending and invested more than EUR 400m in venture capital funds.

Projects to protect the environment and support sustainability received in all counties loans totalling some EUR 19 bn in 2008, demonstrating EIB's “Green Economy” orientation. Loans for sustainable, competitive and secure energy in the EU and Accession Countries reached nearly EUR 8.9bn, of which one quarter was for renewable energy.

Lending for Europe’s “Knowledge Economy”, which includes funding for research, development and innovation, increased overall in all countries to a total of EUR 12.4bn.

Loans for trans-European transport and energy networks in all countries rose by one third to EUR 12.6bn, of which nearly EUR 10bn was for more efficient transport links.

One third of the total lending for projects in the European Union in 2008 was for economic and social convergence in the European Union. The EIB’s convergence lending covers a total of 113 regions in the EU-27 with a population of 190 million. These regions, which include most of the Greek territory, also receive strong support from the Structural and Cohesion Funds.

Although EU countries accounted for the lion's share of EIB lending in 2008, with more than 86% of the total volume, the Bank continued its support outside the EU - notably in the Enlargement Countries, the Mediterranean and the Eastern Neighbours, but also in the African, Caribbean and Pacific nations, Asia and Latin America.

Financial strength bolstering EIB’s overall activity

To accommodate this higher lending, the EIB significantly increased the volume of its bond issues last year to EUR 59 bn from EUR 55bn in 2007. Issuance was generally on very favourable terms, benefiting from the EIB's highest credit rating of AAA, although costs increased towards the end of the year as market conditions tightened.

Borrowing in the first three months of 2009 has already reached some EUR 30bn - more than one third of the Bank's funding programme for 2009.

Thanks to the EIB's efficiency and prudent financial management, its unaudited and therefore provisional surplus, or net profit, increased marginally to EUR 1.65bn in 2008 from EUR 1.63bn in 2007.

This solid surplus is in line with a slow but steady rise over recent years and allows the EIB to build for future growth. The EUR 67bn capital increase planned for this April and currently undergoing formal approval by the Board of Governors will be conducted without raising additional resources from the Member States, using the Bank's own accumulated reserves.

The EIB's capital adequacy ratio stands at 35.5%, illustrating the Bank's financial strength at a time when it is being asked to increase substantially its financing of projects. The EIB's risk management department is keeping both the borrowing and lending portfolios under careful scrutiny.

Stronger support for the real economy in Greece

EIB Vice-President Ploutarchos Sakellaris stated in Athens today: “Further to the importance of EIB lending to SMEs emphasised by Greek Prime Minister Costas Karamanlis alongside the other EU leaders, we doubled our support for smaller companies also in Greece, and we will step it up even higher in 2009. This allows us to reach the smaller enterprises, which are the backbone of the Greek economy, and simultaneously the financial system. Granting loans worth EUR 30bn through commercial banks throughout Europe shows our confidence in the future of both Europe’s economic fabric and its financial system. Last October I announced my intention to double our funding for SMEs in Greece in 2009, as compared to 2008, as well as to widen the number of our partner banks in the country. Today I am confident that we will exceed by far this target. We will not restrict our efforts to SMEs but equal attention shall be devoted to economic infrastructure, energy, “Green” and “knowledge” economy development associating both public and private sectors”.

In 2008 the EIB joined forces with the Pancretan Cooperative Bank and Piraeus Bank and provided a total of EUR 185m (from EUR 75m in 2007), to support small and medium-scale enterprises (SMEs) and small and medium infrastructure investments to be carried out by private or public bodies, including local authorities, as well as beneficiaries of any size, for investments in the fields of the knowledge economy, energy and environmental protection in Greece. Lending to SMEs in cooperation with the banking sector combines the advantages of the EIB's first-rate access to world capital markets, where it raises most of the funds for its lending activity, with the local network and know-how of domestic partner banks. The EIB will use its capital strength to help counter the effects of the erosion of confidence in the financial sector. Up to 2011 and in partnership with commercial banks, the EIB will mobilise EUR 30bn for smaller companies in Europe, at the request of EU Finance Ministers. EUR 15bn will flow in the first two years, i.e. up to the end of 2009.

In 2008 the EIB provided further support for urban development and the environment. In particular, the Bank provided a total of EUR 500m in loans, of which EUR 300m concerned the Athens Metro B project for the design, construction and commissioning of 6 extensions to lines 2 and 3, whilst EUR 200 m financed the design, construction, testing and commissioning of the first phase of the Thessaloniki Metro system. The further development of quality metro systems in the Metropolitan areas of Athens and Thessaloniki (where more than some 60% of the Greek population resides) will improve quality of life by reducing reliance on the car/bus road transport modes and their harmful environmental implications. The EIB has been supporting the development of the metro systems in Greece with a total of nearly EUR 2bn since 1991. Moreover, Greece together with Portugal, pioneered among EU Member States the way to exploit financial engineering mechanisms to more effectively support investment in sustainable urban development by signing a Memorandum of Understanding foreseeing the establishment of a special Holding Fund under the JESSICA initiative. JESSICA (Joint European Support for Sustainable Investment in City Areas) is an initiative of the European Commission and the EIB, supported by the Council of Europe Development Bank.

Since the onset of its activity in Greece, the EIB has paid special attention to transport, due to the peripheral location and fragmented geomorphology of the country. In 2008, the Bank extended its financing to the south-western part of Greece through the provision of EUR 200mn in support of the Elefsina-Korinthos-Patras-Pyrgos-Tsakona motorway construction. The new motorway, implemented as a Public Private Partnership (PPP) by OLYMPIA ODOS S.A., will assure the region’s efficient links with the Athens Metropolitan area and the northern regions of Greece. The motorway will also directly benefit the economic development of the Greek provinces that it traverses, some of which were badly damaged last summer by extensive fires. Quick access to fire-fighting units will be possible in case of need via the new motorway, while additional measures will further enhance the environmental quality of the infrastructure. It will also improve the quality of life of the inhabitants of the area, who are often cut off from urban centres which provide administrative, economic and medical services. Due to its importance for the economic development of the region and the Union as a whole, the motorway is considered a priority trans-European transport (TEN) investment, jointly supported by the European Commission and the EIB.

A total of EUR 280m in loans was allotted to Greece’s Public Power Corporation. EUR 140m of the EIB funds were for the new Aliveri natural-gas fired combined cycle power plant on the island of Evia, and EUR 140m went to the extension and reinforcement of the Greek transmission and distribution networks, covering the whole range from high voltage of 400kV down to low voltage lines.

Projects signed in 2008: a total of EUR 1 165 million