What Is the European Investment Bank?
The European Investment Bank (EIB) is a nonprofit European Union institution based in Luxembourg that makes loans, guarantees, and provides technical assistance and venture capital for business projects that are expected to further EU policy objectives. While almost 90% of EIB lending occurs within the EU, the remaining lending occurs in outside markets such as Southeast Europe and Iceland.
Understanding the European Investment Bank (EIB)
EIB loans are funded through by the bank, which borrows from the capital markets. The EIB refers to lend to small and medium-sized businesses (SMEs), less-developed European countries, environmental improvement and sustainability, energy security, trans-European networks, and knowledge economy projects. Borrowers often use EIB financing in conjunction with third-party financing. The commitment of the EIB often attracts additional financing from other parties.
The Structure of the European Investment Bank
The EIB is an EU entity and a bank. Therefore, it must adhere to both public and corporate governance principles. The institution has three decision-making bodies: the Board of Governors, the Board of Directors and the Management Committee. The Board of Governors sets the direction of the EIB, the Board of Directors oversees the strategic direction and the Management Committee supervises the daily operations of the EIB. The bank has 27 shareholders who are the Member States of the EU. As of 2021, Dr. Werner Hoyer, is the current president, and has held the position of director and chair since Jan. 1, 2012.
The History of the European Investment Bank
The European Investment Bank was founded in Brussels in 1958 when the Treaty of Rome was signed. At the time, the bank had just 66 employees. In 1968, the bank relocated to Luxembourg in 1968.
The EIB Group was formed in 2000 and was composed of the EIB and the European Investment Fund (EIF), the EU's venture capital organization that provides finance and provides guarantees for SMEs. The EIB is the EIF's majority shareholder and holds 61.3% of the shares. In 2012, the EIB Institute was created to promote European initiatives in EU Member States.
European Investment Bank Lending
In 2020, the EIB Group approved EUR 95.4 billion to support infrastructure, SMEs, and innovation and climate-related projects. The EIB Group is among the largest multilateral climate financiers in the world and has a AAA credit rating.
In 2012, in addition to the EUR 50 billion annual lending, and following the Global Financial Crisis, the EIB and its Member States unanimously approved a EUR 10 billion capital increase. for economically viable projects across Europe, particularly for the four priority sectors of innovation and skills, SMEs, clean energy and infrastructure.