The president of the European Investment Bank, Werner Hoyer, has expressed its commitment and willingness to support growth and jobs, and to assist in the financing of the Juncker plan. In 2014, it lent EUR 77 billion to EU Member States. He also stresseed that “many private investors are starved of investments providing them with a modest but safe return, which the EIB’s AAA rating guarantees.”
Where has the Juncker plan to kick-start investment come from?
Last Tuesday, finance ministers from the 28 Member States gave the green light for the launch of the European Fund for Strategic Investments (EFSI). It will receive EUR 21 billion from the EIB and the European Commission, which should generate EUR 315 billion of investments over three years. Ministers agreed that the bank shall maintain a say in selecting the projects, via a committee of independent experts. Each year, it shall raise between EUR 60 and 80 billion on the financial markets to finance itself, so it is crucial that projects selected by the fund are examined from an economic and not political perspective.
Will you, as promised, be able to take more risks than at present?
The principle is simple: money from the European budget will serve as a guarantee for funded projects and, therefore, will potentially cover the initial losses if the project turns bad. This will allow us to authorise funding for more complex, more risky and smaller projects. When we secured a capital increase of 10 billion in 2012, we expected that this would trigger EUR 180 billion in loans between 2013 and 2015. These forecasts put me in a cold sweat. But this multiplier of 18 was reached eight months ahead of schedule and will even reach 20 by the end of 2015. With the Juncker plan, we are reducing this leverage to 15. Clearly, everything will depend on the appetite of private investors, but many of them are starved of investments providing them with a modest but safe return, which the EIB’s AAA rating guarantees.
Everything will depend on the appetite of private investors, but many of them are starved of investments providing them with a modest but safe return, which the EIB’s AAA rating guarantees.
At what point will you be ready?
The legislation necessary for the creation of the EFSI will be adopted by Parliament at the earliest in June and at the latest in November. However, the EIB will now be able to pre-finance projects eligible for the future fund. We hope to present the first projects in the second quarter of this year. In November, the Member States submitted a list of around 2000 projects. We are beginning to examine them with two objectives in mind: the quality and speed of implementation.
Will you take customers away from private banks, as they fear you will do?
No, we will finance riskier projects or those requiring very long-term financing, while in many countries, banks are still cleaning up their balance sheets, which hampers their financing of the economy. Last December for example, a Danish company, which is developing a Ebola vaccine, requested a loan from us. This is a risk linked to the success or failure of scientific research that commercial banks are no longer taking.
Do you still hope that Member States will contribute to the EFSI?
Not for the time being. Member States do not want to invest in a “common pot, but prefer to keep their budgetary resources to co-finance projects on the ground. This is not a concern. It frees us from the logic of “fair returns, when states ask that what they are owed be the same level as their contributions.
Will you help Greece?
The EIB is the only non-Greek bank in Greece which has not left the country. Since 2010, it has provided EUR 11 billion to individual projects, but also to guarantee the loans to SMEs from Greek banks. We can do more provided there is a clear political framework and sound projects.
Interview by Anne Bauer
*French version of this interview was published in Les Echos on 23 February 2015