EUROPEAN INVESTMENT DEN EUROPÆISKE INVESTERINGSBANK EUROPÄISCHE INVESTITIONSBANK ΕΥΡΩΠΑΪΚΗ ΤΡΑΠΕΖΑ ΕΠΕΝΔΥΣΕΩΝ BANCO EUROPEO DE INVERSIONES %Ui|tó EIB INFORMATION BANQUE EUROPEENNE D'INVESTISSEMENT BANCA EUROPEA PER GII INVESTIMENTI EUROPESE INVESTERINGSBANK BANCO EUROPEU DE INVESTIMENTO June 1995 · N° 84 EUROOPAN INVESTOINTIPANKKI EUROPEISKA INVESTERINGSBANKEN ISSN 0250-3891

Annual Meeting of the Board Contents Annual Meeting of the of Governors Board of Governors 1 The Governors have approved the I he European Investment Bank's The Board meeting was chaired by the ElB's 1994 annual report and bal• Board of Governors, at its annual meet­ Governor for The , Gerrit ance sheet and welcomed the Bank's major role in. implementing ing in on Monday 19 June Zalm, of Finance. The Gover• the EU's trans-European networks 1995, congratulated the Bank on con­ nors approved the ElB's 1 994 annual (TENs). solidating its activities during 1994 in a report and balance sheet, which at period of great turmoil on financial mar­ end-1994 stood at ECU 102.75 New Vice-President from kets and difficult economic conditions in billion. After the end of the day of the The Netherlands 6 the Member States. annual meeting, the nev/ chairman of , former Secretary of the Board is the Governor for Austria, Trade and Industry/Vice Prime-Minister The Board, which is made up of the fif­ Andreas Staribacher, Minister for of The Netherlands, has been appoin• teen Finance Ministers of the European Finance, who holds the post up until ted as Vice-President on the ElB's Union Member States, underlined the the end of the day of the next annual Committee. Bank's success in adapting to the rapid meeting. changes underway within the European The EIB Forum 1995 7 The first EIB Forum, assembling Union and to the new challenges in meet­ The Governors noted that the EIB had representatives from the banking ing the requirements of Union policies, in sustained its lending activity at a high sector, industry as well as the public level - some ECU 20 authorities, tackled the complex billion - during 1994, topic «The Provision of Infrastructure; and welcomed the ElB's The Role of the Private Sector». part in implementing the Union's economic rege• The EIB and enlargement neration policies, inclu• of the EU 8 ding the establishment of The EIB has welcomed Austria, a special «window» to Finland and Sweden as new Mem• accelerate and facilitate ber States. the financing of the prior• ity trans-European net• The EEA Financial Mechanism 10 Opening oí the Board of Governors' Annual Meeting work projects, announ• The EIB operates the EEA Financial Mechanism, established by the EFTA particular those for cohesion and the ced at the Essen European Council (De• Member States to reinforce the eco• financing of trans-European networks. cember 1994). nomic development of less prospe• They welcomed the Bank's achievement rous regions in the EU. in pushing forward European Union poli• The Governors also welcomed the cies to encourage economic growth, com• organisational and management chan• Mr René Karsenti new petitiveness and employment and stressed ges being introduced by the Manage• Director General of Finance 11 that the Bank should continue to place the ment Committee to increase the effi• Videoconferencing at the EIB 12 emphasis on «quality rather than quantity». ciency of the Bank and to enable it EUROPEAN INVESTMENT ANK

to adapt to the challenge of a chan• In 1994 the lending activity of the Bank subscribed ECU 384 million of initial ca• ging environment. as a whole stabilised at some ECU 20 pital. In its first year the Fund has appro• billion; the bond portfolio was restruc• ved 14 guarantees to a value of about The Board gave clearance for the EIB to tured; and a number of organisational ECU 700 million in respect of capital begin lending in South Africa, within a and management changes were taken projects in 5 Member States, of which 6 ceiling of ECU 300 million for a two forward. Details of the operations are to a value of some ECU 5 1 5 million year period. They appointed Rudolf de given in the Annual Report in front of have been signed. This is an encourag• Korte (The Netherlands) as Vice-Presi• you, so I shall restrict myself to the main ing start, but the Fund is still in its infancy dent on the Bank's Management Com• points of interest from the point of view and the greater part of its potential remains mittee to succeed Mr Corneille Brück, of Community policy. to be realised. I should like to pay a whose term of office finishes at the end warm tribute to its first Chairman, Eugenio of the montn and on whom the Gover• LENDING WITHIN THE EUROPEAN Greppi, who has established the EIF as a nors conferred the title of Honorary Vice- UNION going concern - and to the two other President in appreciation of his valuable members of the Financial Committee and contribution rendered to the Bank. By the end of 1994 the Bank had com• the small staff who have supported them - mitted the full amount of the ECU 7 billion and to welcome Mr Greppi 's successor, The Board appointed to the Audit Com• lending facility decided at the European Mr Georges Ugeux, who, subject to ap• mittee Juan Carlos Perez Lozano, Inspec• Council meetings in Edinburgh at the end proval by the EIF General Meeting tomor• tor General of the Agency for Internation• of 1992 and Copenhagen in mid row, takes up his new post on 20 June. al Cooperation, Ministry of Foreign 1 993. This was to accelerate the financ• Affairs; Madrid, (to replace Ciriaco de ing of infrastructure projects, and, so far, TRANS-EUROPEAN NETWORKS Vicente Martín who retires for personal about two thirds of the total has been (TENS) reasons) and re-appointed for a new disbursed in favour of some 1 40 projects. three-year term Albert Hansen, Secretary During the past year the Bank has contri• General to "he Luxembourg Government In a related Decision, a scheme was estab• buted positively to the TENs exercise, Council. lished whereby interest rate subsidies took part in the Christophersen Group of from the Union budget were to be personal representatives of Heads of applied to ECU 1 billion of Statement by Sir Brian Unwin KCB, EIB loans in favour of job-crea• President and Chairman of the Board ting SMEs. The EIB has al• of Directors to the annual meeting: ready committed 70% of the full amount, with alloca• Chairman tions going for investment Ladies and Gentlemen that should create some This is the first annual meeting of the 35 000 new jobs in the Board of Governors since the accession Union. of Austria, Finland and Sweden to the European Union, and I should like to A third Decision at Edin• begin by welcoming these countries to burgh was to create the Eu• membership of the Bank's governing ropean Investment Fund Sir Brian Unwin and , Governor for bodies. We have started operations in (EIF) to provide guarantees The Netherlands who chaired the annual meeting. each of these countries in support of both for capital investment Community policies, and we look for• carried out by SMEs and for major infra• State or Government and in the related ward to a continued development of this structure. The Fund has been operational discussions at the ECOFIN Council. activity. We have also begun to recruit since June 1 994, and will have its first Following up the conclusions of this staff of the three new nationalities - I am Annual General Meeting tomorrow, work, as endorsed by the Essen Euro• glad to report that fifteen professionals under the chairmanship of Commissioner pean Council, has meant a heavy com• have already joined us and others de Silguy. Subject to approval by the mitment for the Bank. We have carried should be joining soon. This is a good General Meeting tomorrow, to date 76 out economic, technical and financial start on which to build. from every Member State will have appraisals of most of the priority projects

2 EUROPEAN INVESTMENT ANK

identified by the Christophersen Group, LENDING OUTSIDE THE EUROPEAN BALANCE SHEET and the has already UNION approved loans of some ECU 4.8 At 31 December 1994, total loans and billion for all or part of 8 of the priority Lending outside the Union increased to guarantees outstanding came to ECU transport TENs; and ECU 1.3 billion for over ECU 2.2 billion in 1994. The 106.5 billion. The EIB therefore still has 4 priority energy projects. In addition, main feature was a doubling of lending substantial headroom to develop its acti• priority projects to the value of over ECU in the ACP States from a low level, vity within its statutory lending ceiling 2.5 billion are currently under detailed which is a gratifying increase, given the which rose from ECU 144 billion at the Bank appraisal. intractability of the economic problems end of last year to ECU 1 55 billion on which many of these States face. There 1 January with the accession of the new Most of these, and indeed the other was a marked recovery in lending for in• Member States. TENs projects, are big and complex dustry, and in regional cooperation pro• and require special handling. We have jects in Eastern and Southern Africa. The Bank's operating surplus in 1994 therefore established special arrange• was ECU 970 million, a return on the ments whereby we shall become enga• The Bank continued to play its role in im• Bank's own funds of nearly 7.5%. The ged in these projects earlier and more plementing the redirected Mediterra• management of the Bank's total liquid actively than in other investment. In suit• nean policy, lending more than ECU assets generated a revenue of ECU 200 able circumstances we shall also help 600 million, mainly for regional coope• million representing an overall return of with financial engineering, including the ration projects'. In Central and Eastern 2.83% in 1994. The figure would provision, where appropriate, of un• Europe, which now includes all three of have been higher but for a fall as at 3 1 usually long maturities and grace pe• the Baltic States, and where the Bank is December 1994 of some ECU 240 riods. This package of measures consti• playing an increasingly important role, it million in the market value of the Bank's tutes our special TENs «window». lent almost ECU 1 billion in 1994; and bond portfolio. This amount will be fully in Asia and Latin America over ECU recouped as bonds are held to maturity, We would prefer to implement it in part• 200 million. which, subject to a restructuring to im• nership with the private sector, which prove the composition of the portfolio, is can contribute managerial expertise, BORROWING AND what we intend. and an entrepreneurial spirit that make DISBURSEMENTS for greater efficiency and a better shar• Consistently with this intention, and with ing of risks. Integrating private opera• To finance its lending, the Bank borrow• the agreement of the Board of Directors tors into TENs projects is not, however, ed the equivalent of ECU 14 billion in and the Bank's external auditors, we easy. The problems and potential bene• '18 currencies on the world's capital have transformed the bond portfolio into fits were ventilated in the EIB Forum markets. Community currencies account• an investment portfolio, that is to say a which we held in Amsterdam last month, ed for almost 80% of this, more than buy and hold portfolio, from 1 January and I shall let you have the conclusions half of it being accounted for by the Ital• 1995. This means that, subject to the of this Forum when we publish them ian Lira, the Deutsche Mark, the Pound restructuring, fluctuations, up or down, in shortly. Sterling and the French Franc. There the market value of the underlying securi• was increased recourse to swap opera• ties will no longer be reflected in the Our heavy involvement in the Edinburgh tions, mainly to obtain floating rate profit and loss account. As a matter of Facility and TENs did not deflect us from funds. fact, there has been an improvement in our.primary objective in the Community, bond markets since the beginning of this which is· to contribute to the economic Disbursements have been relatively sta• year, which has increased the market development of the least favoured re• ble since 1 990 at about ECU 1 5 billion value of the portfolio. gions. Last year again, some 70% of a year. Although the ECU accounted our lending in the Member States, or for only a modest proportion of funds As "regards general banking risks, the more than ECU 1 2 billion, was focused raised it has remained one of the main Board of Directors has recommended, in On investment promoting regional deve• currencies of disbursement. The Bank line with the Bank's policy of prudent lopment. This was mainly in areas at• has not needed to borrow ECU on the management, that the balance sheet tracting grants from the Structural Funds same scale as its lending because it has provision for such risks be increased to and the Cohesion Fund. a positive cash flow in this currency. a round figure of ECU 400 million O f E A Τ M E N E - '. ■

from ECU 350 million, and that ECU maturity, although the administrative costs and outside. For example, the Bank has 1020.8 million be appropriated to the that the Bank incurs can vary considerably received and responded positively to Bank's Additional Reserves. The set of from one case to another. We are there­ new remits such as support for the peace accounts that is in front of you shows fore proposing some modest differentia­ processes in Northern Ireland, in Gaza that, by any measure, the Bank's finan­ tion of the basic mark­up to reflect cost dif­ and the West Bank and in South Africa. cial position remains extremely sound. ferences of various kinds. Our proposals These new remits are important, and the are on the agenda of the Board of Direc­ Bank is proud to be able to undertake POLICIES AND PROSPECTS tors for their meeting later today. them. Another feature of the Bank's changing role as a Community institution But financial strength, though important, The question as to what constitutes is the increasing importance of some of is not the Bank's only objective. Our adequate security against credit risk, its existing remits. Our role in the TENs Mission, as you see from the new state­ as required by the Bank's Statute, is both exercise is a good example. Another is ment at the front of our Annual Report, is a legal matter and an economic one. A cohesion, which is all the more important to further the objectives of the European sovereign guarantee or equivalent from if the path to monetary union is to be Union by making long term finance avail­ one of the Member States obviously properly prepared. able for the finance of sound investment. satisfies both sets of criteria, and, so long as most of the secu­ In sum, as I indicated to you last year, af­ To fulfil this Mis­ rity which the Bank ter several years of exceptionally rapid sion, the Bank must obtained was of growth, the Bank's activities within the evolve with the Eu­ this kind, the ques­ Union are increasing in importance and ropean economy tion as to what complexity more than in volume, and it is and the priorities of constitutes adequate entirely right that they should do so. Community policy. security was not of With the increased integration of markets Both have been major importance. within the Union, they are also becom­ changing rapidly. Fewer sovereign or ing more market­related. The EIB is a Within the Com­ equivalent public bank and in areas such as loan pricing munity the playing sector guarantees and the handling of loan security, the EIB field is becoming are, however, now cannot stand aside from trends in the rest more level, large­ The Governors of the new Member Slates (the available. Indeed, of the banking system. A consequence ly as a result of Swedish Finance Minister, above) participated less than half the is that, within the Union, the Bank is act­ for the first time in the Annual Meeting. the internal market Bank's current len­ ing less differently from other market par­ programme, and the services that the ding in the Union is covered by such ticipants than it used to. Bank offers are less different than they guarantee; the rest is guaranteed by used to be from those of other financial banks or secured on the projects themsel­ Outside the Union, change is taking a institutions. In a related trend, the private ves. In order to maintain the high stan­ different form. There is increasing pres­ sector is everywhere expanding as a re­ dards of creditworthiness on which the sure to lend more, both in our existing sult of privatisation and deregulation, Bank has always insisted, and at the areas of operations and in new parts of and the recipients of the Bank's loans same time to provide the additional flexi­ the world, and the traditional balance are increasingly private enterprises.The bility within the Statute necessary to en­ between lending inside and outside the Bank is adjusting to these trends in a able the Bank to respond to the changing Union may be beginning to shift. The number of ways. The most important credit environment, we have further Bank is ready to respond to this, provi­ concern loan pricing and the taking of strengthened our credit risk and monitor­ ded that there is no doubt about the security against credit risk. ing capability, but with an emphasis on continuing priority of our activities within satisfying key financial and banking ra­ the Union (to which, of course, we hope The Bank's mark­to­market loan pricing sys­ ther than purely formal criteria. that some of our present «third country» tem has remained unchanged since the recipients will soon belong); that lending late 1980s with a standard mark­up of These changes are designed to reinforce outside the Union continues to benefit 1 5 basis points. This means that all those the ability of the Bank to support Com­ from satisfactory guarantee arrange­ who borrow from the Bank pay the same munity economic policy. This role conti­ ments; and that the resource and staf­ price for a loan of given currency and nues to increase both within the Union fing implications for the Bank are recog­ EUROPEAN Ι Ν V E S Τ ΛΑ Ε Ν Τ BANK

nised and accepted. I am sure that you tiations with the staff representatives - tors and Internal Audit. I believe they will continue to ensure that the Bank is whose constructive approach I should are necessary both on grounds of sub­ fully involved and consulted on all devel­ like to acknowledge - we have also stance - the arrangements have not kept opments affecting its activities outside the now introduced modifications to our pace with the increased weight and Union. salary system, in particular to the rela­ complexity of the Bank's business - and tionship between performance and indi­ for reasons of accountability and trans­ ORGANISATION AND vidual salary advancement. This will parency at a time when this Bank, like MANAGEMENT progressively reduce automatic entitle­ all other international financing institu­ ment to annual increments, relate reward tions, must be seen to have thorough, ef­ As times change, the Bank must continue more closely to performance - again, ba­ fective and independent accounting ar­ to change with them. In addition to the sed on a new appraisal system - and rangements. I very much hope you will developments I have mentioned, we have bear down on growth in salary costs as support them. taken further measures to ensure that the a whole. I believe it will combine the lev­ organisation and management of the el of remuneration necessary to recruit BUILDING EXTENSION Bank is appropriate and adequate to and retain a highly professional staff with meet the Bank's external responsibilities. the salary control appropriate to a pub­ Finally, I told you last year that the exten­ With resources that are still small in com­ lic institution. sion to the Bank's building was well un­ parison with any other international finan­ der way. I can now report that it was cing institution, and a growing complex­ I have also announced, and am in the formally opened on 10 May, having ity and variety of business, the Bank's staff process of implementing, a number of been completed at the end of last year are under intense pressure and we must important organisational changes de­ with only a few weeks' delay and, sub­ not abuse their loyalty and dedication. signed to clarify the responsibilities of Di­ ject to the settlement of claims raised by rectorates, reduce duplication and over­ the main contractor, within the budget Some further increases in staff will, there­ lap, and in particular streamline the authorised by the Board of Directors. I fore, be necessary, and the Management technical and economic advice provi­ think this is a remarkable achievement Committee has budgeted for a net increa­ ded by the expert services within the and I should like to thank and pay tribu­ se of some 20 posts in the current year. Bank. The core of these changes is the te to all concerned in the project, not We are, however, reviewing our budget creation of a single Projects Directorate, least the project team within the Bank and cost-control systems in order to make through the merger of the Bank's Techni­ who have kept tight and highly profes­ them tighter, more transparent and more cal Advisory Services with the project re­ sional control over the project. We effective. This means that we must conti­ lated units of our Directorate. now have a fine extension, of architectu­ nue to make even better use of existing This will be reinforced by further rational­ ral distinction, which will accommodate resources and a number of changes have isation both of internal Bank procedures the Bank's growing needs for some time been made, or initiated, to that effect. and organisation and, with their agree­ to come. ment, procedures for decision-taking by

First, the establishment of the single senior the Board of Directors. CONCLUSIONS management cadre, which I announced last year, has now taken place. Each ACCOUNTABILITY AND It has been an exceptionally challen­ post is remunerated on the basis of an TRANSPARENCY ging year for the Bank. While maintai­ evaluation of that post and merit will be ning a high volume, and greater vari­ acknowledged primarily by bonus A further important change is the set of ety, of activity, we have sought to maint­ awards geared to performance on the proposals which, after endorsement by ain the quality of that activity while res­ basis of a new appraisal system. The the Board of Directors, the Management ponding positively to the policy require­ structure is new, but I believe it will pro­ Committee has submitted to you for ments of the Community and the in­ gressively provide greater flexibility at se­ strengthening the Bank's audit structures. creasingly market-related environment nior staff level, and make for better career These have the full support of the Audit in which the Bank must operate. I opportunities. Committee and they are designed to up­ have described to you some of lhe date and strengthen the respective roles changes we are making to meet these At the same time, with the support of the of the three audit «pillars» of the Bank - challenges and I have no doubt that, Board of Directors and after long nego­ the Audit Committee, the external audi­ with the continuing professionalism

5 E U R 0 : r ' . Ν . : : " ν Ε Ν τ BANK

and loyalty of the Bank's staff, we shall succeed in doing so. MR RUDOLF DE KORTE APPOINTED VICE­PRESIDENT

It is conventional in statements like this to At their annual meeting on 19 June 1995, the ElB's Governors appointed Mr pay tribute to the staff. I do so today, Rudolf de Korte (The Netherlands) as Vice­President on the Bank's Manage­ however, on behalf of myself and the ment Committee, with effect.from 1 July 1995. Before joining the EIB, Mr De Management Committee, with particular Korte was Home Secretary (1986) and Secretary of Trade and Industry/Deputy strength and sincerity. They are having Prime Minister (1986­1989) as well as Member of Parliament in The to cope wih severe operational pressu­ Netherlands. He succeeds Vice­President Corneille Brück (Luxembourg) on the res, as well as substantial internal chan­ Management Committee, whose term of office ends. The Governors confer­ ges, as the Bank adapts its practices red the title of Honorary Vice­President on Mr Brück in appreciation of his ser­ and structures to the needs of today and vices rendered to the Bank. tomorrow. I am grateful for their coope­ ration and forbearance ­ and for their With the appointment of Mr De Korte, the Management Committee is com­ sheer hard work ­ and I should also like posed as follows: Sir Brian Unwin, President of the EIB, Messrs Wolfgang to express my personal thanks to the Roth, Panagiotis­Loukas Gennimatas, Massimo Ponzellini, Luis Marti, Mrs new Management Committee «team» for their supoort and commitment during Ariane Obolensky and Mr Rudolf de Korte,Vice­Presidents. The Board of Go­ the past year. vernors has decided to increase the Management Committee by one Vice­ President. The new Vice­President, a national from one of the new Member

I am sorry that today will be the last ap­ States Austria, Finland and Sweden, is to be appointed shortly (This will be pearance as a member of the Manage­ reported on in EIB Information N° 85). ment Committee of Corneille Brück, from whose experience, shrewdness and guid­ The Management Committee, whose members are appointed by the Board ance we have all benefited greatly. I of Governors, on a proposal from the Board of Directors, is the ElB's full­time look forward, however, to working with executive body, responsible for day­to­day business, recommending policy his successor. changes and financing decisions to the Board of Directors and assuring their implementation. The President, or in his absence one of the Vice­Presidents, Chairman, may I express my gratitude presides over meetings of the Board of and that of my colleagues on the Mana­ Directors. gement Committee to the Board of Di­ rectors and to you, the Governors, for your continuous support. Dutch, born 1936. Starting his career for Shell ( 1904­68} and then working for Unile­ EIB PRIZE ver­Emery Ltd (1969­77), De Korte became

There is just one further announcement Member of Parliament for the WD ¡Volkspartij that I must make. As you may know, the voor Vrijheid en Democratie) in 1978. He Bank awards the EIB Prize every two was Home Secre­tary in 1986 and Secreta­ years for a doctoral dissertation, and un­ ry of Trade and Industry/Deputy Prime Minis­ der the rules of the prize the awards are ter during the years 1986­89. He returned to first announced at the annual meeting of Parliament in 1990. the Board of Governors. The EIB Prize was set up to stimulate academic re­ search in investment and finance on the are Andreas Löffler at the Free University retical perspective». The Jury found occasion of the Bank's 25th anniversa­ of Berlin for his thesis on «The capital both works of high academic standard ry. This year the Prize jury, which is asset pricing model as an equilibrium with practical relevance. I am sure you chaired by Lord Roll of Ipsden, decided model», and Peter Nippel at the Univer­ will want to join with the Management to split the award. I am happy to inform sity of Cologne for his thesis on «The Committee in congratulating the two you that the two successful candidates structure of debt contracts from a theo­ winners. EUROPEAN INVESTMENT ANK

The EIB Forum 1995

I he Bank's first «EIB Forum» was hindering the implementation of TENs, contribute to collective infrastructure»; held in Amsterdam on 18-19 May and and examined ideas to give further im• and Sir William Ryrie, Vice-Chairman of focused on «The provision of infrastruc• petus to the process with involvement the Commonwealth Development Cor• ture; the role of the Private Sector». The from the private sector. poration and former Executive Vice-Presi• importance of the subject and the ElB's dent of the International Finance Corpo• catalytic role in accelerating the finan• The Forum's first day was chaired by Sir ration on «Financing infrastructure facili• cing of the trans-European networks Brian Unwin who made the keynote ties: The role of the private investor». (TENs) in transport, telecommunications speech. Other speakers were: the EIB and energy transfer infrastructure was re• Governor for the Netherlands, Gerrit The Forum's conclusion was made by flected in both the eminence of the Vice-President Roth, who pointed out speakers and the high level of the that the public sector would still participants. In all over 200 dele• have a crucial role in financing in• gates attended the two-day forum frastructure, particularly in those representing the banking and in• transport projects where rates of re• dustry sectors, governments, and turn were not attractive enough for the media throughout Europe. private funding. It was also clear that public sector banks, parallel to The EIB decided to hold the forum the ElB's commitment, had a major because of its central position in contribution to make in the develop• helping to meet one of the greatest ment of a special partnership be• challenges for the turn of the century - Zalm, Minister of Finance on «Infrastruc- tween the pub-lie and private sectors. ensuring sufficient investment in major tural facilities: The Dutch vision on co• The fundamental problem in pushing for• infrastructure projects, particularly the operation with the private sector»; Pierre ward the priority TENs projects was the priority TENs. Ideas on the significance Richard, PDG of Crédit Local de sharing of risks between public and pri• and financing of infrastructure in the devel• on «Public Utilities: Shifting to the private vate sectors. If the Member States wish• opment of Europe have advanced consi• sector»; Wolfgang Hager, Director of ed to see private sector participation derably in recent years, and were high• the European Centre for Infrastructure reduce demands on public budgets, lighted in the Christophersen Group's re• Studies, Rotterdam on «Industry needs they had to set out clear frameworks for port to the Essen Council in December and can deliver efficient infrastructures»; infrastructure projects so the private sec• 1994. The EIB has played a key role in and Neil Kinnock, European Commis• tor could evaluate clearly their risk. the group, which raised the profile and sioner responsible for Transport'on «The advanced the priority of the TENs. private sector's role in development of Guest speaker at the dinner on the first trans-European networks». day was Jacques Santer, President of Measures being taken by the Member the European Commission, and the wel• States to improve long-term budgetary The Second day was chaired by ElB's coming address al the start of the Forum performance to meet the Maastricht cri• Vice-President Wolfgang Roth with spee• was given by the Mayor of Amsterdam, teria for Economic and Monetary Union, ches by: Chancellor Franz Vranitzky of Schelto Patijn. and development of current economic Austria who spoke on «Partnership of thinking on the role of the private and private and public sectors in Central The Forum was a success, not at the public sectors, are emphasising the and Eastern European economies»; least because of 'he quality of the contribution the private sector can make Heinz Sandhäger, Director General in speeches and the discussions. They will to the process of modernising and ex• the German Ministry of Transport who be published in a booklet which will panding Europe's vital infrastructure. How• presented the address of Matthias Wiss- come out Mid-July. The publication «EIB ever, moving from the definition of priority mann, German Minister for Transport on Forum 1995» can be ordered (for free) TENs and their financing needs to their «The East German experience»; Rainer through the ElB's Information and Com• realisation as investment projects is diffi• Masera, Italian Minister for the Budget, munications Department, fax numbei cult. The EIB Forum discussed the issues on «Motives for the private sector to 00 352 4379 3189. r EUROPEAN INVESTMENT BANK

The EIB and enlargement of the European Union

òince the accession of Austria, a financial mechanism which the EIB is vanger (Norway) with Saint Petersburg Finland and Sweden to the European actively involved in administering (see (Russia) via Oslo, Stockholm and Hel• Union on 1 January 1995, the Euro• article, page 1 0). sinki. In Sweden, a loan of ECU 15 pean Investment Bank's shareholders million was advanced for a submarine have numbered 1 5 Member States. The A LEGACY OF CLOSE RELATIONS cable permitting electricity exchanges ElB's theatre of operations has thus once with across the Baltic and again been extended and the Bank's As a prelude to accession and within another for modernisation of six power financing capacity strengthened. the framework of the EEA agreement, stations in the North of the country the ElB's Board of Governors had already (ECU 85.5 million). In addition, the The 'swiftness with which the accession authorised the Bank, on 8 April global loan mechanism - allowing procedures, initiated in 1992, were 1994, to provide loans and guarantees funds to be made available to smaller completed was due very much to the in the EFTA countries worth ECU 500 businesses, via local banks, for finan• willingness of the applicant countries million per annum over two years. Ac• cing their productive investment needs - rapidly to integrate the «acquis commu• cordingly, in 1994, the EIB lent ECU was also activated in Austria in 1994 nautaire» into their advanced econo• 165 million for a variety of capital pro• in cooperation- with Osterreichische In• mic and social fabric. The acceding jects both benefiting the economies of vestitionskredit AG. countries' and the Union's mutual desi• the applicant countries and developing re for greater cooperation had first their ties with the Union. Taking advantage of ties already for• been given tangible expression by en• ged with economic and financial circles try into force on 1 January 1 994 of the Some ECU 74 million were devoted to in these countries during the period lead• agreement on the European Economic improving and modernising telephone ing up to accession, the EIB has been Area (EEA). This agreement is design• links between Austria and seven neigh• able rapidly to press ahead with identi• ed not only to broaden economic bouring countries, while over 60 fying new capital investment schemes. flows between countries of the Euro- million helped to upgrade sections be- During the first half of 1 995, the Bank committed around ECU 233 million in support of a wide range of projects in the three new Member Countries with the emphasis on the energy sector (hy• dropower and combined-cycle plants) in Sweden, environmental protection (sewage treatment facilities in major conurbations) in Austria and Sweden, the motor vehicle industry in Austria plus road and rail transport in Scan• dinavia and Austria. Furthermore, glob• al loans, particularly subsidised credit lines for small job-creating enterprises ("), have been arranged with the partici-

Initial projects financed by the EIB in the new Member Stales include energy generation and (1) The European Council held in Essen in De• Iransmission schemes. cember 1994 identified 14 top-priority TENs Iransport projects and 1 0 priority energy transfer pean Union and the European Free .tween Turku and Helsinki of the El 8 projects. For details on the ElB's role in suppor• Trade Association (EFTA) but also to motorway on the Nordic Triangle, one ting TENs, see «EIB Information» No. 81 of associate the EFTA countries in the of the priority trans-European network September 1994. structural development of the Union's (TENs) projects approved by the Essen (2) See «EIB Information» No. 82 of November less privileged regions by establishing European Council ( ) and linking Sta• 1994. EUROPEAN N V E S Τ Μ Ε Ν Τ i Ν Κ

on capital increases and ap­ bed capital which has thus been in­ point members of the Board creased to ECU 62 billion. The ceiling of Directors and the Manage­ on loans outstanding, in accordance ment Committee. with the ElB's Statute, has consequently been raised to ECU 155 billion, equi­ Each of the three new Mem­ valent to 250% of subscribed capital. ber States has nominated a The proportion of capital paid in and full member of the Board of to be paid in remains unchanged at Directors and, by common 7.5%, while the new members will set­ accord, one alternate mem­ tle their corresponding contributions in ber between them (':|. Hen­ eight equal instalments by October ce, since 1 January 1995, 1998. Strengthening links between the new Member States and the Board of Directors has their EU partners through energy exchange and comprised 25 Directors and With loans and guarantees outstanding telecommunications infrastructure. 1 3 Alternates, of whom 24 of around ECU 106 billion at 31 De­ pation of several banking partners in and 12 respectively are nominated by cember 1 994, the EIB last year helped each of the new Member Countries. the Member States, with one Director to finance over 200 large-scale projects and one Alternate being nominated by and some 8 000 ventures mounted by As a result of these numerous projects, the European Commission. The Board of smaller businesses or local authorities. the EIB, already an active player on the Directors ensures that the Bank is man­ Drawing on this expertise, the Bank is Austrian and Swedish capital markets, aged in keeping with both will soon be building up its borrowing the Treaty establishing the Breakdown of the ElB's subscribed capital as between activity in the currencies of the three new European Community and the EU's fifteen Member States Member Countries. the' ElB's Statute and that the general directives laid

A final point to mention is that six banks down by the Governors are from the new Member Countries have complied with. It is respon­ subscribed to the capital of the Euro­ sible for deciding on EIB pean Investment Fund (EIF) ('), highligh­ loans, guarantees and bor­ ting the unreserved support of economic rowings. and financial circles in these countries for Community instruments fostering in­ In early 1995, the Board vestment within the Union. of Governors decided to in­ crease from seven to eight INSTITUTIONAL IMPLICATIONS the number of members of the Management Commit­ The accession of Austria, Sweden and tee, the Bank's resident Finland also has direct consequences for execu-tive body responsible the EIB in terms of its organisational for overseeing day-to-day business ('). making a major contribution towards the structure. The Management Committee ensures in­ goals of the now enlarged European ter alia due appraisal of loan applica­ Union with its ever greater sphere of in­ Each of the three new countries has a seat tions and assessment of borrowing oppor­ fluence. on the Board of Governors, the ElB's high­ tunities on the capital markets before the est decision-making body consisting of corresponding decisions are taken by the the Ministers designated by the Member Board of Directors. (3) See «EIB Information» Nos. 81 and 82 of September and Novembei 1994. States. The Board of Governors lays (4) See box article, page 5, «EIB Information» down general directives on credit policy, GREATER SCOPE FOR OPERATIONS No. 83 of February 1995. authorises financing operations outside the |5) The new member of the Management Com­ Union and approves the accounts and an­ The new Member States are contribu­ mittee is currently being appointed. Further details nual report. The Governors also decide ting, as to 7.1%, to the Bank's subscri- will be provided in "I IB Information·· I Jo. 8 Y EUROPEAN INVESTMENT A N ·'

The EEA Financial Mechanism

Under the agreement on the Euro• urban renewal and rehabilitation, certain limits, be combined with other pean Economic Area (EEA) which enter• transport, training and education can grants from the Structural Funds and ed into force on 1 January 1994 and in particular attract EIB loans carrying the Cohesion Fund or with standard seeks to promote stronger trade and an interest rebate and/or grants from EIB loans. The interest rebate is accor• economic relations between the signa• the EEA financial mechanism. ded for a period of no more than ten tories, a financial mechanism was es• years and repayment of the principal tablished by the participating countries In order to foster more widespread tra• amount of the loan may be deferred then members of EFTA (European Free de between the EEA partners, the by up to two years. Trade Association), namely Austria, agreement is also anchored on the «ac• Finland, Iceland, Liechtenstein, Nor• quis communautaire» (existing Commu• As to the grant component, the mecha• way and Sweden. This mechanism is nity legislation) as far as the free move• nism can cover up to 50% of the capi• ment of persons, tal costs of private-sector projects and services, gooäs as much as 85% in the case of envi• and capital to• ronmental protection or transport sche• gether with pa• mes. Training and education projects rallel policies on can be subsidised as to 75-80%, social aspects, while feasibility studies can be financed environmental entirely by grant aid. protection, com• pany law and PROJECTS APPRAISED BY THE EIB competition are concerned. The six EFTA countries which originally implemented the EEA financial mecha• The EEA finan• nism entrusted the EIB with administer• cial mechanism ing funds and appraising projects gi• has remained ven the Bank's long experience and Furthering the development of the EU's least prosperous regions. in force follo• mature expertise in this area. The EIB designed to support investment in cer• wing the accession of Austria, Finland does not however decide on alloca• tain regions of the European Union and Sweden to the European Union, with tion of the financial resources availa• lagging behind in their development the Community budget bearing these ble under the mechanism; if submits with a view to their closer economic three countries' financial contribution proposals to the EFTA Financial Com• and social integration into the EEA. corresponding to almost 82% of the re• mittee - the decision-making body set The regions eligible for assistance pur• sources deployed (the balance being up by the six donor countries - and, at suant to the agreement are: Greece, provided by Norway, Jceland and the same time, seeks the opinion of the , the island of Ireland and, Liechtenstein). Commission which rules on the pro• in Spain, the regions of Andalucía, As• jects' compliance with Community leg• turias, Castilla-La Mancha, Ceuta-Me- ECU 2 BILLION OVER FIVE YEARS islation and EU objectives. The Com• lilla, Valencia, Extremadura, Galicia, mission also ensures that projects finan• the Canary islands and Murcia. All The mechanism as a whole is making ced are consistent with other actions these regions qualify for aid from the available to beneficiary regions, over promoted by the Structural Funds or Structural Funds and are accorded Ob• the period 1994-1998, ECU 500 supported by other EU financial instru• jective 1 status, signifying that their million in grant aid and 2% interest re• ments. Gross National Product (GNP) is less bates on ECU 1 .5 billion in EIB loans. than 75% of the Community average. The package comprises five annual Since the accession of Austria, Finland The fields of environmental protection, tranches and financing can, subject to and Sweden to the Union, the Com- EUROPEAN INVESTMENT BANK

mission has represented these three same criteria as for its other lending grants for improving infrastructure facili• countries' interests on the Financial operations. The financial, economic ties at eight universities and a vessel- Committee. and technical aspects of each project traffic management system in Spain, are examined as well as its compatibili• constructing the Lisbon metro and, in Project promoters should forward ap• ty with EU objectives, sectoral policies Greece, training geothermal energy'ex• plications for loans directly and infor• and environmental regulations and perts, funding the Attica Management mally to the EIB. Applications for standards at both national and Com• Training Centre and restoring four mon• grants must be lodged by the national munity levels. The EIB also ensures asteries on Mount Athos. Finally, authorities responsible. The EFTA Fi• compliance with procurement regula• loans carrying interest rebates have nancial Committee rules on projects tions, as defined in Community direc• been granted for implementing a waste• likely to receive priority consideration tives on public tendering, non-discrimi• water treatment and sewerage pro• for grant aid from the EEA financia nation and transparency. ject in the Valencia region, upgrading mechanism. road and motorway infrastructure in OPERATIONS TO DATE Galicia, constructing water supply and When appraising projects standing to sewage disposal systems in the Extre- benefit from a grant or a subsidised Since the mechanism was established, medura region and building the Lisbon loan, the EIB generally applies the the Financial Committee has approved metro.

René Karsenti is ElB's new Director General of Finance

On 1 May 1995 René Karsenti ressources on the finest terms availa• years in senior positions in the treasury has taken over from Philippe Marchat, ble, and to make the Bank act as a organisations of the World Bank and as Director General of Finance at the stimulus for the European Union's ca• the International Finance Corporation European Investment Bank. pital markets. (IFC). Until 1989 he was a Senior Manager of the World Bank's Finan• Philippe Marchat, who turned 65 ear• Before joining the EIB, René Karsenti cial Operations Department. From lier this year, joined the EIB some 1 2 had a remarkable career. He has 1989 to 1991 Mr Karsenti was Di• years ago and looks back on an rector of the Treasury and Finan• impressive record of achievements cial Policy Department of the at the helm of a strong team of IFC, the private sector arm of the professionals. With aggregate World Bank Group. Before, he be• borrowings of more than ECU 14 gan his career as an investment billion in each of the last two analyst and portfolio manager at years, the EIB has become, during the Caisse des Dépots et Consig• Philippe Marchat's term of office, nations in Paris. the first of the international financ• ing institutions in borrowing and Mr Karsenti is 45 years old, is lending. His contribution to the married and has two daughters. He Bank was truely exceptional, holds an engineering degree from thanks not only to his length of Lyon University and a in Philippe Marchai and René Karsenti service, but also to his faculty for economics from Sorbonne Univer• taking the wider and longer view to been Treasurer of the EBRD in London sity, Paris. He was also a researcher develop the ElB's borrowing policies since its inception in May 1991. Prior in finance and economics at the Univer• with a dual aim: to raise the Bank's to this appointment he spent eleven sity of California, Berkeley. I

I EUROPEAN INVESTMENT Α Ν κ

Videoconferencing at the EIB ECU Below are the ECU values in nation­ al currencies, as at 31 March I he European Investment Bank has patibility of links between different video­ 1995; these rates are applied for established the H320 videoconference conference systems around the globe the second quarter in preparing system at its headquarters in Luxembourg meeting these standards is guaranteed. financial statements and operational as well as in its Department for in The basic requirements to make the statistics of the EIB: Rome and its Representative Office in system work are audiovisual equip­ DEM 1.85173 BEF 38.0760 Brussels. ment such as cameras, microphones FRF Ó. 49478 LUF 38.0760 GBP 0.82961 1 ITL 2291.05 and visualization screens, the COm­ NLG 2.0726 ESP 170.305 With the introduction of videoconferen­ pression/DECompression (CODEC) sys­ DKK 7.34932 PTE 195.553 cing, the EIB is able to diversify and tem, conference rooms and telecommuni­ IEP 0.827969 GRD 302. 719 improve its external and internal com­ cations links. SEK 9.92232 ATS 13.0311 FIM 5.81302 USD 1.33941

EIB Information is published period­ ically by the European Investment Bank in eleven languages (Danish, Dutch, English, Finnish, French, German, Greek, Italian, Portuguese, Spanish and Swedish],

Material which appears in EIB­Informa­ tion may be freely reproduced; an ac­ knowledgement and a clipping of any article published would be appreciated.

/ 00, bd Konrad Adenauer L­2950 Luxembourg let. 4379­1 ­ fax 437704 ­ H320 Videoconferencing 43 93 67 Videoconferencing at lhe ElB's headquarters in Luxembourg. Depariment for Italy: Vìa Sardegna, 38 ­ I­00Ì87 Rome munications. In chosing its equipment, numbe tel. 4719­1 ­fax4873438­ The videoconferencing H320 Videoconferencing 48 90 55 26 the EIB has focused on the interopera­ are the following: Athens Office: bility of its system with those of other Amalias, 12 ­ GR­ i0557 Athens tel. 3220773/774/775 ­ fax 3220776 users. For instance, the H320 system For the EIB in Luxembourg: Lisbon Office: fulfils the Bank's frequent needs for H320 Videoconferencing (­352) 43 93 Avenida da Liberdade, 144­156, 8° contacts with the European Commis­ 67 Ρ­1250 Lisbon lel. 342 89 89 or 342 88 48 ­fax 34704 87 sion and the Council of Ministers in For the EIB Representative Office in London Office: Brussels. Another major aim is to redu­ 68, Pali Mail ­ London SW1Y 5ES Brussels: lel. 0171­343 1200 ­ fax 0171­9309929 ce the communications barriers with H320 Videoconferencing (­32) 2 280 Madrid Office: other banking institutions as well as Calle José Ortega γ Gasset, 29 11 40 project promoters. E ­ 28006 Madrid lel. 431 1340 ­ Íax431 1383 For the Department for Italy in Rome: Representative Office in Brussels: All EIB videoconferencing rooms are H320 Videoconferencing (­39) 6 48 Rue de ta Loi 227 Β­1040 Brussets equipped with faxes to allow the exchange 90 55 26 lel.'2309890 ­ fax 230 58 27­ H320 Videoconferencing 280 t I 40 of documents during the meetings. For booking of EIB videoconferencing

facilities, the General Secretariat (Proto­ Design by MEINBACHDESIGN Videoconferencing provides visual com­ col) can be contacted: Photos: EIB photographic library; p.8: Energitidningen munications at distance. Since the intro­ Vattenfall; p.9: Baltic Cable. tel. number (­352)43 79­1; Printed on chlorine­free paper duction of the H320 standards­system by Ceuterick B­3000 Leuven for sound and images in 1 990, the com­ fax number (­352) 43 77 04. ■ IX­AA­95­002­EN­C