ANNUAL REPORT 1993 EUROPEAN INVESTMENT BANK 1 EUROPEAN INVESTMENT BANK The financial institution of the European As a Community institution, the EIB The EIB grants loans mainly from the Community, the European Investment continuously adapts its activity to devel­ proceeds of its borrowings, which, Bank {EIB}, created by the Treaty of opments in Community policies. It there­ together with "own funds" (paid-in Rome, has seen its role reaffirmed by by contributes towards European inte­ capital and reserves), constitute its //own the Treaty on European Union. Its gration, particularly attainment of the resources 1/. Statute constitutes a Protocol to the Single Market, and promotes greater Treaty. economic and social cohesion. Outside the Community, EIB financing operations are conducted both from the The EIB is an institution enioying its own As a bank, it works in close collabora­ Bank's own resources and, under man­ legal personality and financial auto­ tion with the banking community both date, from Community or Member nomy within the Community system. The when borrowing on the capital markets States' budgetary resources. members of the EIB are the Member and when financing capital proiects. States of the EC, who have all subscri­ bed to the Bank's capital. Within the Community - protecting the environment and the Small and medium-scale projects are quality of life as well as safeguarding funded through global loans. the Cof)lmunity's architectural and The EIB's main activity is to contribute natural heritage; Global loans are similar to temporary concretely, by financing capital projects, - promoting urban development; lines of credit opened with banks or to the balanced development of the - attaining Community energy policy financial institutions operating at Euro­ Community, while adhering to the rules objectives; pean, national or regional level. These of strict banking management. - enhancing the international com­ intermediaries draw on the proceeds to petitiveness of industry and integrating finance, in accordance with EIB criteria, As stipulated in Article 20 of its Statute, it at Community level; productive-sector projects, generally the EIB pays particular heed to ensuring - supporting the activities of small and undertaken by small and medium-sized "that its funds are employed as ration­ medium-sized enterprises. enterprises, and infrastructure schemes, ally as possible in the interests of the notably involving communications or Community". the environment, promoted by local PROJECTS authorities. OBJECTIVES EIB loans may be granted to public or In all cases, the EIB finances only part private borrowers in the following sec­ of the investment costs, supplementing In keeping with the guidelines laid down tors of the economy: the borrower's own funds and other in the treaties and in the light of devel­ sources of finance. Loans do not normal­ opments in Community policies, projects - communications, environmental and ly exceed 50% of investment costs ('). considered for EIB financing must con­ energy infrastructure, tribute towards one or more of the fol­ The EIB helps to finance investment pro­ lowing objectives: - industry, services and agriculture. grammes in conjunction with the opera- - fostering the economic advancement of the less favoured regions; The EIB finances large-scale projects by - improving transport and telecommu­ means of individual loans concluded (') This ceiling has been raised for projects financed nications infrastructure of benefit to the directly with promoters or through under the Community growth initiative launched in Community; financial intermediaries. Edinburgh at the end of 1992 (see page 13). tions of the Structural Funds and of the Grace periods in respect of repayment Outside the Community Community's other financial instru­ of principal may be accorded, usually ments. Loans from the EIB may be used for between 2 and 5 years. The EIB also provides financing for in association with national or Com­ projects outside the Community fol­ munity grant aid. Currencies lowing authorisation from its Board of Governors. Authorisation is given: Loans are generally disbursed at par, in APPRAISAL the light of the EIB's holdings and bor­ - case by case, for financing for rowers' preferences: certain types of project of particular Project appraisal, conducted by EIB - either in a single currency; importance to the Community, notably staff, is designed to verify the technical - or in a mix of currencies. communications or energy supplies; and financial viability of the scheme concerned, as well as its economic ben­ Currencies are those of EC Member - as ceiling amounts in the case of efits. The appraisal looks into the Countries, the ECU and certain curren­ financing in individual countries or project's consistency with Community cies traded internationally. groups of countries under agreements'; policy guidelines as well as its com­ conventions or decisions on Community pliance with environmental protection Interest rates financial cooperation. and procurement regulations. The pro­ moter's financial situation and cash flow The EIB's first-class credit rating (" AAA") The EIB's field of operations under the projections along with security offered enables the Bank to raise funds on the latter heading encompasses: are also examined. keenest terms available at the time. - the African, Caribbean and Pacific Once the appraisal is completed, the As it operates on a non-profit-making countries signatories to the Lome EIB's Board of Directors, acting on a pro­ basis, the EIB onlends the funds bor­ Convention (ACP States) plus the Over­ posal from the Management Committee, rowed by it on the markets at a rote, seas Countries and Territories (OCT); decides on the granting of a loan, tak­ adopted continuously, reflecting each ing account of the opinions of the Mem­ currency's market cost plus a small mar­ - countries, signatories to cooperation ber State concerned and the Commis­ gin to cover the Bonk's operating costs. or association agreements with the sion of the European Communities. Community, in: Rates may be set upon signature of the finance contract or on the occasion of • the Mediterranean region each disbursement (open-rote contract). • Central and Eastern Europe FINANCIAL TERMS AND Loans ore granted mainly at fixed rates, • Asia and Latin America; CONDITIONS but those with very long terms may be granted at rates revisable after a set - the European FreeT rode Association Maturity period of generally 4 to 10 years. Loans (EFTA) Countries, over the period 1994- may also carry variable rates possibly 1995 (see page 22). The EIB grants long-term loans of which convertible into fixed rates. the maturity depends on the type of Special arrangements apply to such project concerned and its technical life. The method adopted for setting rates is financing, the terms and conditions of It generally varies between 7 and 12 the same for all countries and sectors. which are determined by various finan­ years for industrial projects and may The EIB does not accord interest subsi­ cial cooperation agreements. extend to 20 years or more for infra­ dies, although these may be granted by structural schemes. third parties. Key Data 1993 1992 (ECU million) Financing provided 19611 17033 From own resources 19 531 16 904 of which loons 19480 16830 of which guarantees 51 74 From other resources 80 129 Within the Community 17 724 16140 of which Edinburgh facility 2363 ACP States and OCT 226 252 Mediterranean Countries 680 321 Central and Eastern European Countries 882 320 Asian and Latin American Countries . 99 Resources raised 14224 12974 Community currencies 11 334 9 058 Non-Community currencies 2 890 3 916 Disbursements 15980 14898 From awn resources 15 818 14798 From other resources 162 100 Aggregate outstanding Financing from own resources and guarantees . 98 022 84 273 Financing from other resources . 4334 5 414 Short, medium and long-term borrowings . 78 661 67 784 Subscribed capital 57600 57600 of which paid in and to be paid in 4 321 4 321 Reserves and profit for the financial year 9165 7838 Balance sheet total 96537 84667 Bank staff . 810 785 Loans signed Disbursements Resources Balance sheet 20000 20000 20000 100000 80000 15000 15000 15000 60000 10000 10000 10000 40000 5000 5 000 5000 20000 0 0 0 0 85 87 89 91 93 85 87 89 91 93 85 87 89 91 93 85 87 89 91 93 N.B.: Bar charts in ECU million. ·I 1-e ANNUAL REPORT 1993 This annual report is available also in the following languages: DA ISBN 92-826-7702-8 DE ISBN 92-826-7703-6 ES ISBN 92-826-7701-X FR ISBN 92-826-7706-0 GR ISBN 92-826-7704-4 IT ISBN 92-826-7707-9 NL fSBN 92-826-7708-7 PT ISBN 92-826-7709-5 ISBN 92-826-7705-2 Text finalised 22 March 1994 2 THIRTY-SIXTH ANNUAL REPORT OF THE EUROPEAN INVESTMENT BANK CONTENTS Managing bodies Page Board of Governors 4 Audit Committee 4 Board of Directors 5 Management Committee - Organisation Structure of the Bank 6 Foreword 9 The EIB, the Community's financial institution 11 Objectives and achievements 11 Overview of activity in 1993 . 12 Economic background 16 Community context. 18 The EIB in 1993 . 25 Financing provided within the Community 25 Breakdown by Community policy objective 29 Financing operations by country. 39 Operations outside the Community 49 ACP States and OCT . 49 Mediterranean Countries .. 53 Central and Eastern European Countries 54 Asian and Latin American Countries. 57 Resources raised . 59 Evolution of capital markets . 59 EIB borrowing operations on the financial markets . 60 Treasury liquidity