EUROPEAN INVESTMENT BANK - EIB

The European Investment Bank (EIB) is the European Union's financing institution. The Bank is responsible for enhancing the European integration and development, the economic and social cohesion and the innovation in the less-favoured regions of the EU. According to Protocol No 8 on the location of the seats of the institutions (accompanying the Treaty of Amsterdam and annexed to the Treaty establishing the European Community and the Treaty on European Union), the EIB is settled in Luxembourg. Since its institution in 1958 (Treaty of Rome), the EIB has been an autonomous institution with its legal personality, financial autonomy and its own decision-making structure. Given to its independence, the Bank is allowed to take lending decisions solely on the basis of a project’s merits. Articles 9, 266 and 267 of the Treaty on the Functioning of the European Union (TFUE) lay down the mission and tasks of the bank; the objectives, structure, capital, membership, financial resources, means of intervention and auditing arrangements of the EIB are contained in the EIB's Statute (set out in Protocol No 10 annexed to the Treaty establishing the European Community).

1.Structure and Governance

The EIB is owned by the 27 Member States of the European Union. These shareholders have subscribed an amount of the Bank's capital according to the economic weight (in terms of GDP) within the European Union that they showed at the time of the EU accession. Since the entry into force of the Accession Treaty in May 2004, the EIB capital has been more than EUR 163.6 billion. Following the decision of the EIB's Board of Governors of 30 March 2009, the Bank’s subscribed capital has been increased by EUR 67 billion, bringing it to EUR 232, 392 billion as at 1 April 2009. Under its Statute, the Bank is allowed to grant loans not exceeding in value two and a half times this amount. The EIB's capital is subscribed by the Member States in accordance with their economic weight.

Source: EIB website

The Bank administrative bodies are: the Board of Governors, the Board of Directors and the Management Committee. In addition to this, there is an Audit Committee supervising the operations of the Bank. The Member States are the EIB shareholders, so they are represented in the Bank's main independent decision-making bodies, the Board of Governors and the Board of Directors. In particular, the Board of Governors consists of Ministers appointed by the Member States (generally the finance ministers), it lays down general directives for the Bank's credit policy, approves the annual balance sheet and the annual report, it decides whether to increase the subscribed capital and whether to finance projects or to grant loans to a Member State outside the European Union. All the Board of Governors' decisions are taken by majority (50% or more of the subscribed capital). The Board of Directors is chaired by the President of the Bank and consists of twenty-eight directors and eighteen alternate directors. The directors shall be appointed by the Board of Governors for five years, one nominated by each Member State. It takes decisions with respect to granting finance and fixing the interest rates on loans granted (whereas the commission does on guarantees). The Board of Directors is also responsible for the supervision on the management of the Bank, which must be coherent with the provisions of the Treaties and of the EIB’s Statute and with the general directives laid down by the Board of Governors. Each director has one vote and the decisions of the Board of Directors are taken by a majority of at least one third of the members representing 50% or more of the subscribed capital. The Management Committee consists of a president and eight vice-presidents appointed for a period of six years by the Board of Governors on a proposal from the Board of Directors. It has the following tasks: it manages the current business of the EIB, under the authority of the President and the supervision of the Board of Directors; it prepares and ensures the relative implementation of the decisions of the Board of Directors; it acts by majority when delivering opinions on proposals for raising loans or granting loans and guarantees. Finally, the Audit Committee is an independent body that supervises the operations of the Bank, and it reports directly to the Board of Governors. The Governors appoint the three members and three observers composing the Audit Committee.

2. Mission and operation

The EIB's main task is to provide long-term finance in support of the EU policy objectives in the areas of small and medium-sized enterprises,cohesion and convergence,the fight against climate change, environmental protection and sustainable communities, sustainable, competitive and secure energy, the knowledge economy and trans-European networks. In particular, in 2009, 89% of the total EIB financing was devoted to these aims. The EIB is also particularly active outside the EU in order to foster the EU external cooperation and development covering over 150 countries (the pre-accession countries of South-Eastern Europe, the Mediterranean partner countries, the African, Caribbean and Pacific countries, Asia and Latin America, and Russia and other neighbours to the East). There is a strategic document, approved by the Board of Directors, for defining medium-term policy and setting operational priorities in the light of the objectives assigned to the Bank by its Governors. For the 2006-2008 period, the lending activity, as resulted from the Bank's Corporate Operational Plan (COP), was focused on six priorities: economic and social cohesion in the enlarged EU; implementation of the Innovation 2010 Initiative (i2i); development of Trans-European and Access Networks; support for EU development and cooperation policies in partner countries; environmental protection and improvement, including climate change and renewable energy; support for small and medium-sized enterprises, as well as mid-cap companies of intermediate size. Information on the projects financed, the borrowings undertaken and the financial statements of the EIB Group and the EIB, are available in the Annual Report published on the EIB official web site. The lending activity is financed by borrowing on the capital markets. The EIB generally issues mainly public bonds with AAA credit rating.

3. EIB Group

The EIB Group was created in 2000, consisting of the EIB and the EIF. The EIB, owning 61.2% of the shares, is the EIF majority shareholder (the European Commission owns 25% and the remaining is owned by other European Financing Institutions).Within the Group, the EIB supports small and medium-sized enterprises (SMEs) by providing medium- and long-term bank loans to large capital investment projects.

Link: http://www.eib.org/
Editor: Bianca GIANNINI
© 2010 ASSONEB