Solid as a rock
The European Investment Bank (EIB) will be making a significant contribution to boost growth in Europe. At the annual press conference in Luxembourg Werner Hoyer, President of the EIB revealed that lending activities will increase by 40% between 2013 and 2015.
The reason why the big tanker EIB has turned around from a cyclical to a countercyclical course is an unpleasant one: the economic situation in Europe remains difficult. Werner Hoyer, President of the Luxembourg-based EIB bank has felt the strong support and commitment of the bank’s shareholders, that is to say the 27 member states of the European Union. “With the ten billion euros of paid-in capital increase, we will be able to unlock 60 billion of additional EIB financing within the next three years. This lending will initiate projects up to 180 billion euros. This huge achievement has to be seen in the context of the efforts other European institutions are making, like the European Central Bank and the European Commission”.
At the same time, Mr Hoyer set the record straight: “We are neither a lender of last resort nor an ESM (European Stability Mechanism). We are responsible for providing financing for long-term investment in key areas of the economy, in particular the knowledge economy, innovation, research and development, energy efficiency and strategic infrastructure”.
More specifically, strategic infrastructure means an improvement of the European transportation systems, more intelligent networks and the combination of different carriers. Energy grids are the second and internet connectivity the third area in which the EU bank is heavily involved.
The European Investment Bank thus gives an exceptional response in exceptional times. It invests where other financial institutions are leaving or have already left the markets in order to promote growth, employment and innovation. The ultimate goal is to improve Europe’s long-term competitiveness.
During 2012, the EIB signed over 52 billion euros of new loans in over 60 countries; over 44 billion were for projects within the European Union. Small and medium sized companies are undoubtedly the backbone of the European economy. Last year, the EIB has helped more than 200,000 of these businesses to the tune of 13 billion euros. “In some parts of Europe the sources of financing for a lot of these companies have dried out. This has to do with the general situation of banks in Europe and with liquidity requirements; that it is why it is getting more and more difficult for smaller companies to get a loan”, Werner Hoyer explains.
Regarding the borrowing activity of 71 billion euros in 2012, it is interesting to see that more than 40% of the money came from non-EU countries. The large majority – 34% – comes from Asia, which is putting a lot of hope and trust into Europe’s economic development.
Supporting the recovery of growth is the EIB’s mission. But where do we stand in Europe right now? “Nobody can really say. Some people already declared the crisis over in 2012. I think it is a bit premature to make that claim”, Mr Hoyer nuances. But the EIB can see from the case of “programme countries” such as Ireland, Portugal or Greece that there is a light at the end of the tunnel. In other words: there is more than just blind hope. CW