Den Europæiske Investeringsbank Europäische Investitionsbank Ευρωπαϊκή Τράπεζα Επενδύσεων European Investment Bank Banco Europeo de Inversiones Banque européenne d'investissement Banca europea per gli investimenti Europese Investeringsbank Banco Europeu de Investimento

July 1988 · No 56 ISSN 0250-3867 EIB-Information

Annual meeting of the EIB'S Board of Governors In brief . . . The European Investment Bank's Board of Governors at their annual meeting, on 13 June in Luxembourg, approved the Bank's 1987 annual report and balance sheet. The Member States are represented by a When approving the ElB's 1987 An• Minister, usually the Finance Minister, on the Board of Governors. (') nual Report, the annual meeting In his capacity as chairman of the Board of Directors, EIB President of the Board of Governors re• Ernst-Günther Bröder, presented the annual report to the Governors. viewed the Bank's thirtieth year of Mr Bröder's address, that includes a summary of the ElB's activities activity (see pp. 1 to 5). Since its during the year, is reproduced below. Approving the annual report, inception in 1958, the EIB has con• the Governors congratulated the Board of Directors and the Manage• sistently stepped up its volume of ment Committee for their conduct of Bank affairs in 1987. operations and now ranks second, behind the World Bank, among major institutional lenders. More importantly, the Bank has managed The six-year term of the ElB's ElB's Audit Committee, Mr Constan• to acquire its present position Management Committee having tinos Thanopoulos, Manager, Bank against a constantly changing eco• come to an end, the Governors, on of Greece. Chairmanship of this nomic backdrop, while both con• a proposal from the Board of Direc• Committee rotates for one year to centrating on its basic task of ser• tors, reappointed, Ernst-Günther Mr Albert Hansen, Secrétaire Gén• ving the interests of the European Bröder, President, and C. Richard éral du Conseil du Gouvernement, Community and demonstrating con• Ross, Lucio Izzo, Alain Prate, and Luxembourg. Third member is Mr siderable versatility and professio• Miguel A. Arnedo Orbañanos as João Pinto Ribeiro, Juiz Consel• nalism. Safeguarding and consoli• Vice-Presidents. They appointed a heiro, Tribunal de Contas, Lisbon. new Vice-President, Mr Erling Jør• dating the Bank's AAA credit rating requires a cautious and circumspect gensen, Permanent Secretary, Bud• Reviewing the Bank's activities in approach ; at the same time, the get Department, Danish Ministry of its 30th year of existence, the market — whose constraints affect Finance, who was a Director of the Governors welcomed the contribu• both EIB lending and borrowing bank (since 1986). On 29 June, 1988, tion the Bank had made to the activity — calls for flexibility and a further new Vice-President was Community's development. They innovation. appointed, Mr Ludovicus Meule- commended the position the EIB mans, until then also a member of holds on financial markets and its Bank's Board of Directors (since efforts to suport new priorities This ability to adjust, underpinned 1976) (see centre page insert). facing the European Community. by the Bank's extremely sound financial base, will enable the EIB The Governors also appointed the The Board expressed satisfaction at to contribute actively towards new Board of Directors whose five- the Bank's participation in imple• attainment of the objectives year period of office had come to menting the Single European Act enshrined in the Single Act, parti• an end (for details see centre page and in responding to the challenges cularly the single market and grea• insert), and a new member to the of '1992' through its support of ter Community-wide economic and major infrastructure projects, deve• social cohesion (see pp. 5 to 8). (') The annual meeting was chaired by the lopment of advanced technology Governor for Denmark Palle Simonsen, Minis• and environmental protection. They During the 1988 Annual Meeting, ter of Finance, in the absence of the chairman, recognised the Bank's combination the Governors also appointed the Governor for Germany Gerhard Stolten• of pragmatism and professionalism, berg, Minister of Finance. Chairmanship of the members of the Board of Direc• Board of Governors, which rotates annually and noted that its cost-effective, tors and the Management Com• according to the alphabetical order of Mem• market-oriented approach had been mittee (see centre page insert). ber States, is taken over by the Governor for reinforced by changes in its internal Greece Panayotis Roumeliotis, Minister for structure and personnel policies, National Economy, as from 14 June, 1988, until the end of the day of the annual meeting in geared to increasing staff product• 1989. ivity. The Governors expected the EIB to regional policy, namely Portugal, more than 20 per cent of total len• continue to strengthen the social Greece, Ireland, Northern Ireland, ding in the Community. These loans and economic cohesion of the Com• the Mezzogiorno and certain parts centred chiefly on waste water munity through support for invest• of Spain. The Bank also boosted its treatment schemes or improve• ment in regional development. In support for capital investment in ments to the quality of drinking this context the Governors re- areas with traditional industries in water and on the installation of emphasised that close co• decline, or which were hampered equipment designed to reduce ordination was needed between the by structural problems, especially in atmospheric pollution from indus• Community's structural funds and France and the United Kingdom. trial sources, including coal-fired power stations. the EIB to ensure the most efficient Lending designed to sharpen the use of combined resources. They competitiveness of European indus• Investment for improvements to underlined that in striving to deve• try ran to 1.3 billion ECUs, of which Europe's transport and telecom• lop the less-favoured regions, grant 500 million went into advanced munications networks attracted finance should be used in such a technology projects. In furtherance 700 million ECUs. The type of infra• way that it generates supplemen• of your Decision in February 1987 structure financed included roads, tary investment and ensures the that the Bank should lend 750 mil• rail links and port installations as maximum qualitative and quantit• lion ECUs on the same terms and well as facilities underpinning the ative impact of Community resour• conditions as NCI IV, the Bank has development of air transport. ces. been able to step up its backing for In 1987, the total cost of investment productive investment by small and receiving EIB support in the Com• The address of President Broder to medium-sized enterprises located munity adds up to around 19 billion the Board of Governors follows : outside assisted areas. Aggregate ECUs, a figure equivalent to approx• lending in this category amounted imately 3 per cent of the Commun• Mr Chairman, to about 540 million in all. In addi• ity's gross fixed capital formation. Gentlemen, tion, loans amounting to 250 million In the less prosperous countries ECUs were directed largely to and regions, where much of the In 1987, the Bank's lending for the investment requiring cooperation financing was concentrated, the finance of investment totalled 7.8 between firms from different coun• contribution of projects supported billion ECUs, a rise of nearly 4 per tries. These various loans to indus• by the Bank, compared with total cent on the 7.5 billion lent in 1986. try came on top of those granted in investment, was considerably grea• This was accomplished against a the industrial sector under the hea• ter, ranging from 5.3 per cent in background of moderate economic ding of regional development. Greece to 14 per cent in the Mezzo• growth in the Community as a giorno. whole. Altogether, financing in the Com• munity for investment in industry, Last year, loans from the Bank's Lending in the Community services and agriculture ran to 2.6 own resources accounted for more amounted to 7.45 billion ECUs, up billion ECUs, about 35 per cent of than four fifths of total Community some 5.5 per cent on 1986's figure total lending in the Member States. lending for structural purposes. of 7.1 billion. The bulk of the funds, Of this overall amount, 1.6 billion Financing outside the Commun• 7 billion, were drawn from the was deployed via global loans con• ity, under development cooperation Bank's own resources, with the cluded with an ever-widening range policy, amounted to around 400 mil• remaining 450 million coming from of intermediary institutions and tar• lion ECUs, of which 189 million the resources of the New Commu• geted towards small and medium- came from the ElB's own resources nity Instrument (NCI). This expan• scale ventures. The ElB's appraisal and 203 million from budgetary sion in lending from own resources and monitoring criteria exert a posi• resources managed by the Bank on squares with the forecast increase tive influence on the harmonisation behalf of the Community. The mapped out for 1987 in real terms at of investment planning in its areas Bank's operations in the ACP States the time of the last capital increase. of activity. last year were mounted largely For the second year running, the Loans totalling 2.3 billion ECUs under the Third Lomé Convention. Bank has been able to advance were devoted to investment which Nearly 350 million ECUs, a record loans in all the Member States. Italy furthered the Community's annual figure, was advanced in sup• continues to be the largest benefici• energy policy objectives. Of this port of investment schemes in 35 ary with nearly 42 per cent of the some 900 million went in support of countries and territories, chiefly in total, followed by the United King• schemes aimed at making more Africa. dom (15%), France (13.5%) and efficient use of energy. The other Spain (9.5%). In the Mediterranean countries, the 1.4 billion was split roughly evenly Bank made use of the amounts still between investment in diversifying remaining under the financial proto• During the course of last year, EIB imports and in developing indigen• cols in force, mounting operations funding for investment promoting ous energy resources. In addition, regional development came to worth 43 million ECUs. under its mandate from Euratom To finance its lending activities from more than 4.3 billion ECUs (compa• the Bank signed finance contracts red with 3.7 billion in 1986). Virtually own resources, the Bank's bor• representing 210 million ECUs rowings on capital markets all of this came from own resources jointly with the Commission. and more than two thirds of it was totalled 5.6 billion ECUs, which was channelled to investment in coun• In 1987, finance for investment less than the 6.8 billion raised in tries and regions commanding the helping to protect the environ• 1986. The downturn occurred des• highest priority under Community ment amounted to 1.6 billion ECUs, pite a rise in loan signatures. It hap- pened largely because signatures was to finance investment which economic and financial soundness were more-than-usually concentra• will strengthen the competitiveness of investment, it will continue to ted in the last few weeks of the of Community industry and it was make maximum use of such discre• year, and because there was an largely financed through global tion as is given by the Statute in increasing amount of global and loans, which have risen to about a respect of formal guarantees. This open-rate loans which have long quarter of the Bank's total lending seems to be the best course to fol• disbursement periods. The bulk of in recent years. The accession of low, since various ideas, such as the funds was raised through public Spain and Portugal on 1 January the creation of a guarantee fund, issues and private placings. Inter• 1986 gave the Bank's activity a fresh the establishment of subsidiaries bank operations and issues of impetus which is far from having and other arrangements, are still medium-term notes on the US mar• run its course. To ensure that the being discussed. Meanwhile if we ket were arranged to cover a large pattern of the Bank's lending conti• come up against certain limits, we part of early redemptions on bor• nues to evolve in line with the chan• ought to consider appropriate rowings concluded previously. ging requirements of the Commu• amendments to the Statute — pos• Community currencies, principally nity and of Community policy, the sibly on the occasion of a further the DM, ECU and lira, accounted for Bank's eligibility rules are kept capital increase. more than 70 per cent of funds tap• under constant review. On the borrowing side, the Bank's ped, compared with slightly less Moreover, one should not under• triple A status has been of increas• than 60 per cent in 1986. estimate the harmonising influence ing benefit in obtaining funds on At 31 December 1987, the balance exerted by the Bank on the shaping the best conditions as fewer and sheet total stood at 42.9 billion of projects in different Member fewer other borrowers were triple ECUs, compared with 40.7 billion a Countries or its efforts in favour of A ; and borrowing terms and condi• year earlier. more standardised procurement tions have been varied to take procedures. advantage of changing market In the first five months of 1988 over• conditions and meet customers' Lending formulae are also kept all Bank activity has proceeded in requirements as closely as possible. under review and here too there line with the projections submitted New features of the Bank's borro• have been changes in recent years to the Board of Directors last wing recently have included as the Bank has adapted to chan• December and a satisfactory deferred interest rate agreements in ging circumstances. Variable rate growth in lending operations can be the sterling, French franc and dollar loans were introduced in 1984 fol• expected for the year as a whole. markets, an issuing programme of lowing a decision of the Board of medium term notes in dollars, and Governors, and there has been a the issue of floating rate notes in considerable take-up of such loans Euro lire and short term notes deno• since that time. The Bank's Standing back from the events of minated in ECU. Indeed, in keeping agreement in 1987 to lend up to the past year, this is an appropriate with the Bank's status as a Com• 750m ECUs from its own resources moment to review some features of munity Institution, increasing use on the same basis as NCI IV also the Bank's development and policy has been made of the ECU which opened up new lending formulae. in a longer term perspective. has risen from zero in 1980 to 14 per Moreover, special ad hoc lending The eighties has been a period of cent of the Bank's borrowings in arrangements have been made for considerable change for the Bank. 1987. Last year the ECU was second individual projects from time to This is not just a matter of increa• only to the DM in the Bank's bor• time, a prominent example being sed lending, although between 1980 rowings. the Eurotunnel project last year and 1987 lending in the Community where traditional guarantees from increased at an average annual rate In sum, the Bank has kept in line co-financing banks will be replaced with the changing emphasis of of some 14 per cent, albeit with a by a charge on assets and revenues Community policy in its borrowing good deal of variation from year to once the tunnel is in service. year. The increased activity was and lending operations and it has adapted to changing conditions in associated with an increase in the The subject of guarantees is an individual markets with flexibility importance of the Bank's role as a important one for us as for any and good sense. Community institution and a diversi• financial institution. The Bank's Sta• fication of its role as a market parti• tute sets legal criteria for the kinds The strength of the Bank's financial cipant. of guarantee which the Bank can position, as represented by the high Loans for regional development accept for its loans. But following reserves and consistent operating continued to account for most of the Statute is not enough to ensure surpluses, underpins its triple A sta• the Bank's lending in the Commun• that the Bank does not make losses tus and this in turn provides sub• ity throughout the decade. Lending on its loan portfolio and economic stantial advantages for the Bank's in support of the Community's en• and financial soundness can be a borrowing and lending policies. At ergy objectives rose sharply in the better safeguard than some of the the same time, these policies, in early part of the period, and when it kinds of guarantee which are particular its policy in respect of its began to taper off with the comple• acceptable under the Statute. In lending rates, constantly reinforce tion of some major projects and the addition to formal legal guarantees its financial position. Let me explain fall in the oil price, the growth sec• the Bank now takes increasing this virtuous circle. tors became loans to small and account of economic and financial As a matter of policy, the Bank's medium-scale enterprises and loans criteria in appraising projects and lending rates always reflect its bor• in favour of advanced technology deciding on loans. In cases where rowing costs as closely as possible, and the environment. Much of this the Bank is fully satisfied on the plus a small margin to cover admin- ¡strative expenses. In other words by lax management at the micro Although it is not the Bank's task to the Bank always charges market level. That is why the Bank is insis• draw up a strategy for European rates. To charge any less would cer• tent that, in general, grant finance industrial development, it must be tainly lead to accusations that the for investment should vary inversely in a position to respond readily to Bank was violating the principle of with the revenue which the invest• the exigencies of the markets. subsidiarity. The Bank lends its non- ment is expected to yield. The response will involve many borrowed funds of accumulated If this is done, in other words if loan areas. One which perhaps deserves reserves and paid-in capital at the and grant finance are combined a special mention is that of big same rates as its other funds. The intelligently by a mechanism which infrastructure projects. Such pro• largest part of its operating surplus also encourages appropriate local jects have a major contribution to then represents the opportunity decisions by public and private make to European integration and costs of these non-borrowed funds. bodies, one can be assured that the Bank will aim to play its part in The operating surpluses are rein• one form of financing will not dis• helping to finance them. The Bank vested for the benefit of the Com• place the other but that, on the con• will look at each such case on its munity. With sound management trary, each will yield optimum bene• merits and consider in a pragmatic they naturally tend upwards over fits both quantitatively and qualita• way the terms and conditions and time, although with variations from tively. This means that the Commu• guarantee arrangements which year to year as interest rates rise nity's potential for redressing dispa• might be appropriate and consis• and fall. These surpluses, and the rities in economic conditions within tent with the Statute and the guide• policies which underlie them, to• the Community is very great. The lines given by this Board. gether with the accumulated finan• outcome of the negotiations which Mr Chairman, what I have said cial strength of the Bank, underpin are currently taking place on these today about past and future deve• its growth, and ensure the mainte• matters will be of great importance lopments will have made clear to nance of its triple A solidity even at for the EIB, as well as for the Com• you that I see the Bank as an insti• times such as the recent past when munity as a whole, into the 1990s, tution which is evolving gradually there has been considerable turbu• and beyond. In line with its objec• and pragmatically within its statu• lence in capital markets and foreign tives and structure, the EIB can and tory framework, in line with the exchange markets. The strength of should undertake tasks which the development of Community policy its balance sheet is then a major other Community institutions are and with the irregular ebbs and advantage to the Bank and to the unable to accept. flows which occur in the market Community. The development of the internal place. Evolution has been a feature market presents a major challenge of the Bank's internal organisation to the Bank both on the borrowing as well as of its external behaviour Looking forward towards the 1990s, side and on the lending side of its and I would like to end with some there will be many developments in activity. comments on the ways in which the the Community to which the Bank organisation of the Bank is being will want to contribute. I shall men• On the borrowing side, the libera• prepared for the 1990s. tion two, namely the new emphasis lisation of capital markets should During the past two years nearly all on economic and social cohesion make it somewhat easier for the of the Bank's directorates have which is central to the reform of the Bank to operate in the markets been restructured to increase their Community's structural funds, and which have been most tightly regu• efficiency. Thanks to the limited the fresh impetus which is being lated in the past; and the Bank is early retirement scheme which was given to the completion of the inter• willing to play its full part in the approved in 1986, it has been poss• nal market. Both of these follow development of these markets. At ible to make rapid progress with from the passage of the Single the same time liberalisation must the recruitment and integration of European Act last year and, taken mean keener competition for funds. staff from the new member coun• together, they will have a major The Bank will have to adapt to tries with a minimal increase in effect on the nature and direction these conditions while taking care authorised posts and to introduce of the Bank's activity in the years to keep its triple A standing beyond new blood in senior positions. ahead. question. In preparation for this and as a modest step towards more The Bank sees its loans as having I mentioned a year ago that we flexible operations and a tighter an important role in complementing were in the process of revising the management of risk, the Bank is grants from the structural funds to structure of our remuneration sys• updating its methods of asset and foster economic growth in areas of tem to make it more performance- liability management. the Community where development oriented. I am happy to report to is lagging. The relationship of On the lending side, the Bank will you now that this reform has been grants and loans has to be a com• have to ensure that there is a pro• completed and that the new system plementary one. It would make no minent place in its operations for was put into effect at the beginning sense if the doubling of the struc• the finance of investment contribu• of the year. This will enable us to tural funds between now and 1993 ting to European integration and the attract and retain staff of the calibre were to result in a substitution of competitiveness of European indus• necessary to cope with changing grants for loans, for, if that hap• try. These are not new priorities for tasks, as regards both the Bank's pened, the recipient countries the Bank but the momentum which objectives and the banking environ• would find that many of the bene• increasingly characterises the de• ment in which we operate. fits they were expecting from real velopment of the internal market To remain efficient, we have conti• resource transfers at the macro gives them fresh urgency. The Bank nued our tight budgetary policy. In level were in practice frittered away will respond to this challenge. 1987 total administrative expendi- EIB Management Committee The ElB's Management Committee consists of the President and six Vice-Presidents who are appointed by the Board of Governors for renewable six year terms of office on proposal from the Board of Directors. At its annual meeting on 13 June 1988 the Governors reappointed Ernst-Günther BRÖDER, President, C. Richard ROSS, Lucio IZZO, Alain PRATE, and Miguel A. Arnedo ORBAÑANOS as Vice-Presidents. They also appointed Mr Erling JØRGENSEN as a new Vice-President. On 29 june 1988 Mr Ludovicus MEULEMANS was appointed as sixth Vice-President. The new Vice-Presidents succeed Messrs Arie PAIS and Noel WHELAN upon whom the titles of Honorary Vice-Presidents were conferred, in appreciation of services rendered to the Bank. The Management Committee is the Bank's full-time executive body, responsible for day-to-day business, recommending policy changes and financing decisions to the Board of Directors and then carrying responsibility for their implementation. The President, or in his absence one of the Vice-Presidents, presides over meetings of the Board of Directors.

Ernst-Günther BRÖDER — President since August 1984 German, born 1927. Previous career : Corporate Staff, Bayer AG 1956-1961 ; Projects Department, World Bank 61-64 ; Kreditanstalt für Wiederaufbau 64-84, as Head of Department 67-68, Deputy Manager 68-69, Manager 69-75, Member of Board of Management 75-84, Board of Management Spokesman 80-84. He has been a Director of the EIB 80-84, and Member, inter alia, of the Supervisory Board, Deutsche Finanzierungsgesellschaft für Beteiligungen in Entwicklungsländern GmbH (DEG) ; Panel of Conciliators, International Centre for Settlement of Investment Disputes ; Special Advisory Group, Asian Development Bank.

C. Richard ROSS — Vice-President since July 1978 British, born 1924: Fellow, Hertford College, Oxford and University Lecturer in Economics 51 ; Economic Adviser to H.M. Treasury 52-55 ; taught at Oxford 55-63 (Bursar of Hertford College from 1959) ; Dean, School of Social Studies and Professor of Economics, University of East Anglia 63-68 ; Member, East Anglia Regional Economic Planning Council 66-69 (Deputy Chairman 67-69) ; Special Consultant to OECD 68-71 ; Deputy Secretary, Central Policy Review Staff ("Think Tank"), UK Government Cabinet Office 71-78.

Lucio IZZO — Vice-President since June 1982 Italian, born 1932; Economic Research Department, Bank of Italy 58-60, 62-63; Rockefeller Fellow, Department of Economics, Massachussetts Institute of Technology 60-62 ; Assistant Professor of Economics, University of Rome 63-66 ; Associate Professor then Professor of Economics, University of Siena 66-74, subsequently Professor of Economics at the University of Rome; also Visiting Professor of Economics, London School of Economics 71-72. Participated in International Economic Association Round Tables 69, 75. Economic Adviser to the Minister of the Budget, Rome, 74-78 ; Economic Adviser to the Minister of the Treasury, 80-82. Italian Representative, OECD Working Party 3, Economic Policy Committee 76-81.

Alain PRATE — Vice-President since August 1984 French, born 1928, Inspecteur général des finances; Secretary to the EEC Monetary Committee 58-61 ; Director, Economic Structure, Commission of the European Communities, then Director-General for Internal Market, 61-67; Technical Counsellor for economic and financial questions to the President of France 67-69 ; Head of service, Inspection générale des finances and Rapporteur-général, Committee for the Economy and the Financing of the VI Plan 69-71; Director-General for customs and indirect duties 71-75; Managing Director, Crédit National, and President of Sofinnova (Society for Financing Innovation) 75-79 ; Deputy Governor of the Bank of France 79-84, First Deputy Governor 80-84. He was a Director of the EIB, 62-66.

Miguel Angel ARNEDO ORBAÑANOS — Vice-President since February 1986 Spanish, born 1944, degrees in law and economics, joined the Banco de España in 69 as economist in its Research Department, specialising in international economic affairs from 73, became Deputy Director for Monetary and Statistical Research in 81, and Deputy Director for Foreign Operations in 84. From 81 to 86 he was a member of the "Committee on Capital Movements and Invisible Transactions" of the OECD.

Erling JØRGENSEN, Vice-President from 14 June 1988 Danish, born 1931 ; Principal Assistant in the Statistical Department of the Ministry of Economics 56-63; Head of Research at the Institute of Applied Social Research 63-69 ; Head of Section and subsequently Head of Department at the Central Statistical Office 69-75 ; Permanent Secretary, Ministry of Finance from 75-88 ; President of the Board of Directors of Kongeriget Danmarks Hypotekbank og Finansförvaltning from 75-88 ; teacher and then examiner in macroeconomics at University of Copenhagen from 57-88 ; Director of School of Public Administration Studies 83-86 ; Member of Board of Directors of Dansk Olie og Naturgas A/S from 83-88 ; Member of OECD's Economic Policy Committee from 75-88 ; Member of the Board of Directors of the European Investment Bank from 86-88.

Ludovicus MEULEMANS — Vice-President from 29 June 1988 Belgian, born in 1924. Joined the Ministry of Finance in 1948 ; at the Treasury, Department for Financial and Monetary Relations with other countries, in turn Advisor 62-71, Principal Advisor 71-75, Inspector General 75-85, flP*^Bif Director-General of the Treasury 86-88 ; Alternate Governor of the Inter-American Development Bank 76-88, of the African Development Fund 74-88 and the African Development Bank 83-88 ; member of the EEC's Monetary Committee 66-76 and 88 ; member of the ElB's Board of Directors 76-88 ; Government Commissioner to the Belgo-Luxembourg Exchange Institute 69-88 and the Institut de Réescompte et de Garantie 88, Minister of Finance representative on the Board of Directors of the Office National du Ducroire 65-88, Créditexport 76-88 and Société belge d'investissement international 76-88. Appointment of the Board of Directors

The ElB's Board of Directors was appointed for a further statutory five-year term by the Board of Governors at its annual meeting on 13 June 1988. The Board of Directors consists of 22 Directors (21 nominated by Member States and 1 nominated by the Commission of the European Communities) and 12 Alternates (11 nominated by the Member States and 1 by the Commission). The Directors' term of office is renewable. The Board assures that the Bank is managed according to the provisions of the Treaty of Rome, the Bank's Statute and general directives from the Board of Governors. The Directors are responsible for deciding on loans and guarantees, the raising of funds and setting interest rates, acting on proposals from the Management Committee. The Directors propose appointments to the Management Committee and submit the ElB's annual report to the Board of Governors.

New members appointed to the Board of Directors are :

Directors Michael J. SOMERS Secretary, National Debt Management, Department of Finance, Dublin Lars TYBJERG Assistant Permanent Secretary, Budget Department, Ministry of Finance, Copenhagen

Alternates R.I.G. ALLEN Under Secretary, Head of EC Group, (Overseas Finance), H.M. Treasury, London L. Fernanda FORCIGNANO Dirigente Generale del Tesoro, Ministry of the Treasury, Rome M.J.L. JONKHART President-Directeur, De Nationale Investeringsbank NV, The Hague Christian NOYER Sous-Directeur des Affaires Multilatérales à la Direction du Trésor, Service des Affaires Internationales, Ministry for Economie, Financial and Budgetary Affairs, Paris Maurice O'CONNELL Assistant Secretary, Department of Finance, Dublin

Members of the Board who have been reappointed are :

Directors Luigi ARCUTI Presidente dell'Istituto Mobiliare Italiano, Rome Bruno BIANCHI Condirettore Centrale, Banca d'Italia, Rome Richard BRANTNER Sprecher des Vorstands der Kreditanstalt für Wiederaufbau, Frankfurt Corneille BRÜCK Président-Directeur de la Caisse d'Epargne de l'État, Luxembourg Antonio Maria COSTA Director-General for Economic and Financial Affairs, Comission of the European Communities, Brussels Jos DE VRIES Plaatsvervangend Directeur, Directie Buitenlandse Financiële Betrekkingen, Ministry of Finance, The Hague Timothy Patrick LANKESTER Deputy Secretary (Overseas Finance), H.M. Treasury, London Elizabeth LLEWELLYN-SMITH Deputy Secretary, Department of Trade and Industry, London Pedro MARTINEZ MÉNDEZ Director General del Tesoro y Politica Financiera, Ministry for Economic and Financial Affairs, Madrid Paul MENTRE Président-Directeur Général du Crédit Nationale, Paris Ludovicus MEULEMANS Directeur Generaal van de Administratie der Thesaurie, Ministry of Finance, Brussels Rudolf MORAWITZ Ministerialdirigent, Federal Ministry of Economic Affairs, Bonn Luis Antonio GOMES MORENO Director-Geral do Tesouro, Ministry of Finance, Lisbon Waldemar MÜLLER-ENDERS Ministerialdirektor, Federal Ministry of Finance, Bonn Miguel MUÑIZ DE LAS CUEVAS Presidente del Instituto de Crédito Oficial, Madrid Alexander J.O. RITCHIE Chairman, The Union Discount Company of London pic Yves ROLAND-BILLECART Directeur Général de la Caisse Centrale de Coopération Économique, Paris Denis SAMUEL-LAJEUNESSE Chef du Service des Affaires Internationales, Direction du Trésor, Ministry for Economie, Financial and Budgetary Affairs, Paris Mario SARCINELLI Direttore Generale del Tesoro, Ministry of the Treasury, Rome Dimitrios ZACHARIADIS-SOURAS Adviser to the Minister for National Economy, Ministry for National Economy, Athens.

Alternates Kaj BARLEBO-LARSEN Director-General for Coordination of Structural Instruments, Commission of the European Communities, Brussels T. Alastair CLARK Head of Financial Markets and Institutions Division, Bank of England, London Jacques DELMAS-MARSALET Directeur Général-adjoint de la Caisse des Dépôts et Consignations, Paris Winfried HECK Ministerialdirigent, Federal Ministry of Finance, Bonn Horst MOLTRECHT Ministerialdirektor i.e.R., Federal Ministry for Economic Cooperation, Bonn Miguel MORA HIDALGO Vocal Asesor de la Dirección General del Tesoro y Política Financiera, Ministry for Economic and Financial Affairs, Madrid Paolo RANUZZI DE BIANCHI Direttore Generale del Debito Pubblico, Ministry of the Treasury, Rome.

New Appointment Mr Meulemans having joined the Management Committee, his successor on the Board of Directors will be appointed shortly. ture rose by only 3 per cent. Last ensure that staff resources are Audit Committee. Supported by the year the number of posts increased applied to the changing priorities Bank's external auditors and the by only 1 per cent; and the 1988 which you, the member countries of strengthened internal audit service, budget restricts this year's increase the Community, set for the Bank the Committee has extended its to 1 per cent as well. This indicates and to ensure also that modern work of reviewing the Bank's inter• a considerable increase in produc• technology is used to best advan• nal procedures and the implement• tivity since our staff numbers have tage. Moreover our aim must still be ation and results of projects. We increased less rapidly than our bor• to simplify decision-making proces• have thus the instruments in place rowing and lending activity at a ses, tighten working procedures to monitor our efficiency. time when this activity itself was further and increase flexibility in Mr Chairman, Gentlemen, becoming more complex. responding to new tasks. Permit me, in conclusion, to express my own gratitude and that of my We are keeping the Bank's organi• Finally, I would like to record my colleagues for your continuing sup• sation continuously under review to thanks for the work done by the port.

The Single Act and the EIB Financing In July 1987 the Single Act came into force and already it is shaping the Channel Tunnel the future of the European Community. Restating the objectives of The Bank's £ 1 billion (or FF 10 the Treaty of Rome, the Single Act is an expression of the renewed billion) contribution to the political will to make progress in the building of the European Com• financing plan of the Channel munity. The act also touches on the European Investment Bank's Tunnel has demonstrated its role in the years to come. ability to co-operate with other financial institutions in suppor• Lending for projects which further In 1987 loans for such investment ting schemes which are very the balanced development of the projects amounted to 655 million complex in view of the finan• common market, the European ECU'S. Over 45 % of this amount cing requirements. The EIB Investment Bank is making an im• went to air transport : improvement bases its decisions to finance portant contribution to the achieve• of airport facilities in France, Italy on its expert appraisal of the ment of Single Act objectives. Its and the United Kingdom, the acqui• economic, technical and finan• specific input consists of its expe• sition of aircraft, and air traffic con• cial characteristics of invest• rience in financing projects in a trol centres. An important part of ment projects. In the case of number of key areas and the flex• the remaining loans was for the the Channel Tunnel, the Bank's ibility of its financing facilities. construction of numerous sections of road and motorways in Spain, decision has helped to under• France, Italy, Portugal and Great pin the scheme's credibility and The internal market Britain. to draw in additional sources of finance. Thus, co-operating in partnership with project pro• Free flow of information moters and co-financing institu• Community transport An internal market also presuppo• tions, the Bank makes available infrastructure ses the free flow of data and infor• its expertise in project apprai• One of the core objectives of the mation and increased investment in sal and financial engineering Single Act is the progressive estab• telecommunications facilities will for the realisation of transport lishment of an "area without inter• help to bring this about. Being projects which further Euro• nal frontiers in which the free linked as it is with the upward trend pean integration. The expe• movement of goods, persons, servi• in the service industries, the tele• rience gained in drawing up the ces and capital is ensured" in accor• communications sector continues to financing plan for the Channel dance with the EEC Treaty before grow : partly to develop physical Tunnel will help in the imple• the end of 1992. capacity, but also to improve net• mentation of other major Euro• pean transport ventures. The establishment of rapid and effi• work management and production cient transport links inside and be• of services. tween Member States is a prerequi• In 1987, the EIB financed the laying transmissions between European site for the internal market's suc• of a submarine optical-fibre cable countries. cess. A considerable part of the connecting Ireland and Great Britain ElB's lending activities is already and, the year before, the Bank Economic and social cohesion effectively geared to this objective : financed the acquisition, launching the Bank helps to lay the founda• and operation of a new generation Regional development tions of the internal market by of telecommunications satellites by financing a broad range of invest• Eutelsat, the European Telecommu• Article 130 A of the Treaty of Rome ment in Community transport infras• nications Satellite Organisation, as amended by the Single Act sta• tructure. providing for high-capacity digital tes that to "promote its overall har- monious development, the Commu­ finance — covering between 20 % turai funds and the EIB. The objec­ nity shall develop and pursue its and 50 % of costs, depending on tive is to maximise the impact of actions leading to the strengthening individual projects — accounted for the total of Community financial of its economic and social cohe­ just over 3 °/o of aggregate capital support by achieving the largest sion", in particular by "reducing dis­ investment within the Community. possible volume of economically parities between the various In the case of the least prosperous sound investment in the areas con­ regions and the backwardness of regions, however, the share of EIB cerned. Grant finance should not be the least-favoured regions". Article financed investment was distinctly used to replace loans, but to gen­ 130 Β calls on the structural funds, higher, ranging from 11.3% in erate supplementary investment, the European Investment Bank and Portugal, 9.5% in Ireland, 7.2% in thus ensuring the maximum impact the other existing financial instru­ Italy — 14% in the Mezzogiorno of both types of finance. Reinfor­ ments of the Community to support alone — to 5.3 % in Greece. cing economic and social cohesion these objectives. The attainment of the internal mar­ does not imply counteracting mar­ ket forces but using them through In stressing the need for solidarity, ket necessitates additional invest­ the flexible and rational use of the the Single Act re-emphasises the ment in the less favoured regions. available resources. importance of balanced regional Previously protected areas will be development, an economic policy opened up to competition and com­ aim which has always been fore­ parative advantage will shift. As the A competitive Community most among the ElB's objectives. In stronger regions are better placed each year since its foundation and more alert to seize the opportu­ Modern technology approximately two-thirds of the nities of the free flow of goods and To improve the competitive Bank's lending was for investment services, the need for action in the strength of Europe's industry at in the less favoured regions, contri­ weaker regions grows. In order to home and abroad, the development buting to their economic develop­ attain economic growth throughout and introduction of advanced tech­ ment and often serving other policy the Community, regional develop­ nology ranks high among the Single aims (improving Community trans­ ment remains a priority. Act objectives. The completion of port or serving energy objectives) at Loans and grants the internal market should enhance the same time. In the regions com­ the competitiveness of Community manding the highest priority under There is a need for a wide range of industry by reducing transaction Community regional policy, EIB investment, from investment in costs, developing economies of finance has become significant in human capital to modern infrastruc­ scale and scope and fostering effi­ macroeconomic terms. ture. Basically, two kinds of Com­ cient specialisation. But the internal In 1987, for example, some 4.35 bil­ munity finance are available : grants market will also offer new opportu­ lion ECUs (or 62% of the Bank's from budgetary resources and nities for foreign competitors. lending on own resources within loans, for which the European Therefore, research, development the Community) helped regional Investment Bank is the main source. and innovation remain major Com­ development. 70 °/o of this amount Their combined optimal use requi­ munity priorities and, consequently, went to the regions with the sev­ res close co-ordination between the the European Investment Bank erest structural problems. Invest­ Commission of the European Com­ increasingly finances investment in ment which the Bank helped to munities which manages the struc- advanced technologies. In many respects 1984 was a land­ Outline map of major road and rail links highlighting mark year for the recognition, at a main EIB contributions Community level, of the basic importance of technological pro­ gress for growth potential through increased competitiveness. Several major programmes were launched at the time (ESPRIT, RACE, BRITE) and, at their annual meeting in June that year, the Bank's Board of Governors endorsed recommenda­ tions on Bank activity in the field of modern technology. The EIB was to focus on two broad categories : the manufacture of high-tech products, and the introduction of new advanced production processes. Particular attention should be given to projects involving industrial co­ operation between firms in different Member States.

Across the whole range of the technological frontier The EIB has financed a wide range of high-tech projects since. It has provided loans for robotisation, fac­ The ElB's Board of Governors con­ Loans for environmental protection tory automation and Computer firmed this approach at their annual Development of lending according Aided Design and Manufacturing meeting in 1984. To maximise the to scheme million ECUs 1600 (CAD/CAM) and it has financed the Bank's contribution to environmen­ EillllH Atmospheric pollution development of the megachip and tal protection it endorsed guidelines Π Sewerage and water user specific integrated circuits. EIB widening the scope for EIB support. ^^ schemes 1400 loans have helped the implementa­ The guidelines stressed that, while V/ZA Other operations tion of biomedical and biotechnical always insisting that national, inter­ I Cultural heritage investment projects and investment national and Community regulations 1200 in advanced telecommunications are applied strictly, the EIB should systems. The launching and opera­ aim to get the investor to go tion of a new generation of commu­ beyond existing regulations and , 1000 nication satellites and jet engineer­ adopt the least polluting design. To ing have also received EIB finance. give an incentive for investment in _ 800 In 1986-1987 the ElB's lending for such anti-pollution measures, the advanced technology totalled over 1 EIB offers to increase the amount of billion ECUs. its finance. While the Bank, as a 600 Indirectly, Community competitive­ rule, lends up to 50 % of fixed investment costs, it is willing to pro­ ness also concerns the more effi­ _ 400 cient use of its complementary vide additional finance of up to imports, particularly in the energy 10% of total project cost for incor­ sector, which accounted for a porating anti-pollution equipment 200 quarter of the Bank's financing offering greater protection than that within the Community in 1987. The required under existing legal regula­ energy policy objectives at the tions. basis of the Bank's lending activity are threefold : development of own EIB lending for environmental pur­ resources (nuclear, oil and gas, poses has increased significantly in Operating in a changing hydro), diversification of imports recent years. Loans for environmen­ environment away from oil (natural gas and coal tal protection reached over 700 mil­ infrastructure), and rational use of lion ECUs in 1986 and more than The effective implementation of the energy, mainly energy saving in doubled to 1 580 million in 1987. Single Act objectives implies a very industry. By financing these pro­ These figures only relate to projects substantial commitment of financial jects, the competitive position of where environmental considerations resources. The eventual doubling of the Community as a whole is have played a determining role in the finance available from the struc­ strengthened by the increased the decision to finance. Including tural funds has already been deci­ security of supply and by lower projects for which environmental ded. On its side, the European energy costs. considerations were important but Investment Bank can be flexible in secondary in the decision to the volume of its lending. Given the finance, as is the case for invest­ AAA standing of the Bank on world Environmental protection ment in geo-thermal and hydroelec­ capital markets, the amounts it can tric power plants, district heating, lend are limited only by the overall bypasses to facilitate traffic flows, ceiling set by capital subscription. The Single Act formulates Commu­ and noise reduction at airports, the As the capital was effectively nity environmental policy. Rooted in total lending figure for projects doubled as of January 1986 (giving the principle that environmental benefitting the environment is signi­ a ceiling of 72 billion ECUs for total protection is to be an integral part ficantly higher. loans outstanding), there is room of the Community's other policies, the aims of actions relating to the environment are "to preserve, pro­ tect and improve the quality of the The World Bank and the European Investment environment ; to contribute towards Bank join forces protecting human health ; to ensure a prudent and rational utilisation of The World Bank and the European Investment Bank are working natural resources". together to combat environmental pollution in the Mediterranean. In a joint evaluation study of environmental problems they are re­ Concern for the conservation of viewing the investment needs and priorities in water supply and natural resources and environmen­ effluent treatment, industry and energy, agriculture and land-use, and tal protection has long been a shipping pollution. In addition, the study identifies financial and characteristic of the ElB's lending administrative constraints, provides cost estimates and makes recom­ activities. The detailed appraisal of mendations on sources of international finance for a comprehensive all projects submitted to the Bank regional environmental protection programme. The outcome will help for financing always takes in the en­ to finetune the Bank's operations in France, Greece, Italy, and Spain vironmental consequences of the as well as in the twelve non-Community countries bordering on the proposed investment. On an increa­ Mediterranean in which the EIB finances investment projects in the sing scale the EIB finances projects context of co-operation agreements concluded between the coun­ specifically because they contribute tries concerned and the European Community. to environmental protection. IXAA88056ENC

for further expansion. The Bank can rectly contributes as the world's also be flexible in the financial biggest borrower and lender in characteristics of its loans : curren­ ECUs. However, a single financial cies, loan formats and maturities, market will also entail increased guarantee arrangements and other competition among financing insti­ Ecu features have evolved over time tutions. In such a situation the spe­ Below are the ECU'S values in national and lending conditions are adapted cific characteristics of the EIB as a currencies, as at 30 June 1988; these to changing investor requirements. bank and a Community institution rates are applied to the third quarter in will stand out. Its partnership and preparing financial statements and operational statistics of the Bank : The progressive realisation of the flexibility, coupled with the profes­ internal market will also change the sionalism of its staff in project DM 2.07521 FB 43.4741 environment in which the Bank ope­ selection, appraisal and monitoring, £ 0.667628 Flux 43.4741 rates. Financial and monetary inte­ ensure that the EIB will continue to FF 6.99875 DKr 7.88073 gration is another Single Act objec­ play its role in the construction of Lit 1 539.75 Dr 166.434 tive and one to which the EIB indi­ Europe, now and after 1992. Hfl 2.34037 £irl. 0.772392 Ptas 138.686 Esc 169.319 US$ 1.14098

European University Institute : The EIB awards three scholarships EIB-Information is published periodi­ The European Investment Bank's and Formentini' scholarships please cally by the European Investment Bank in nine different languages 'Campilli and Formentini' scholar­ contact the European University (Danish, Dutch, English, French, ships for the academic year 1988/ Institute at the following address : German, Greek, Italian, Portuguese 1989 have been awarded to Luigi Badia-Fiesolana and Spanish). Brighi, Luigi Bosco and Friedrich Via dei Roccettini 9 Schneider. These scholarships, Material which appears in EIB- 1-50016 San Domenico Di Fiescole Information may be freely reproduced ; which are named after Pietro Cam­ (Fl) an acknowledgement would be appre­ pilli, the ElB's first President (1958- Telephone: (055) 47 79 31 ciated and also a clipping of any article 1959) and Paride Formentini, the published. Bank's second President (1959- 100, bd Konrad Adenauer 1970), have been granted annually, L-2950 Luxembourg since 1978, to students writing their 1989 EIB Prize tel. 4379-1 — telex 3530 bnkeu lu doctoral theses at the European The EIB Prize will be awarded again telecopier 43 77 04 University Institute in Florence on in 1989. Established on the occasion Department for Italy: economic topics relevant to the of its 25th anniversity in 1983, the Via Sardegna, 38 — 1-00187 Rome ElB's areas of operation. Prize is awarded every two years tel. 4719-1 — telex 611130 ban keu I telecopier 474 58 77 Mr. Brighi's thesis will examine for a doctoral dissertation on the uncertainty and multiplicity of equi­ topic of investment and finance. Liaison Office The Prize, consisting of 10 000 ECUs for the United Kingdom: libria in dynamic macroeconomic 68, Pall Mall models. A recent graduate of the and a diploma signed by the Chair­ London SW1Y 5ES University of Modena, Mr Brighi will man of the Prize Jury and the Presi­ tel. 8393351 enroll at the European University dent of the EIB, was first awarded telex 919159 bankeu g Institute as a freshman. Mr Bosco's in 1985. telecopier 9309929 thesis examines macroeconomic To qualify, theses must have been Liaison Office interdependence and co-ordination accepted as doctoral dissertations in Lisbon: of economic policy, with reference Avenida da Liberdade, 144-156, 8? by a university or equivalent institu­ P-1200 Lisbon to the relations between Europe tion in a Member Country of the tel. 328989 or 328848 and the United States. He first European Community between telex 15576 bnkeu ρ received an EIB scholarship for the January 1985 and 1 February 1989. telecopier 37 04 87 academic year 1987/88. Mr Schnei­ Candidates must have the national­ Representative Office in Athens: der's scholarship has also been ity of one of the Member Countries Ypsilantou 13-15 renewed. His research focuses on and be under 40 years of age on the GR-10675 Athens the regulation of the banking sector tel. 7249811 date the thesis is sent to the EIB as telex 222126 bkeu gr with special emphasis on compa­ an entry for the Prize. The closing telecopier 7249814 ring the banking systems of Ger­ date for submission is 1 February many and the United States. 1989. Representative Office in Brussels: The scholarships, which are cur­ Rue de la Loi 227 Β-1040 Brussels rently worth FB 488 000 (about The rules for the 1989 EIB Prize will be published in the next issue of tel. 2309890 — telex 21721 bankeu b 11000 ECUs), are administered by telecopier 2305827 the European University Institute EIB-Information as well as in one of and are intended to cover the stu­ the September issues of the Official dents' study costs and living Journal of the European Communi­ expenses for the year. ties. Enquiries may be addressed to For further information on the Euro­ Mr Cees Post at the European Investment Bank, telephone 4379- Printed in Luxembourg by Imprimerie pean Investment Bank's 'Campilli Centrale, 4223. 15, rue du Commerce, Luxembourg

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