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C0MC93) 3 final 
Brussels, 12 January 1993 
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ï£=24±^i&pytï THE EUROPEAN INVESTMENT FUND 
(EIF) 
F v? VS5 PROPOSAL FOR AN 
ADDITION TO THE PROTOCOL ON THE 
STATUTE OF THE EUROPEAN INVESTMENT BANK 
empowering the Board of Governors of the EIB 
to establish the European Investment Fund 
PROPOSAL FOR A COUNCIL DECISION ON 
COMMUNITY MEMBERSHIP OF THE 
EUROPEAN INVESTMENT FUND 
(PRESENTED BY THE COMMISSION) 
THE EUROPEAN INVESTMENT FUND (EIF) 
Explanatory Memorandum 
A. INTRODUCTION 
In the context of promoting economic recovery in Europe, a proposal to 
set up a European Investment Fund (EIF) was endorsed by the European 
Council in Edinburgh on 11 and 12 December, who invited the Council and 
the EIB to give urgent and sympathetic consideration to the 
establishment as quickly as possible of the Fund. 
The discussions on the Fund were originally initiated by the Commission 
representatives in the Bank's Board of Directors and reflected the 
concern - also highlighted In C0M(92) 2000 - that the Bank should be 
able to contribute fully to the pursuit of the Community's objectives 
by assuming and managing more specific risks without jeopardizing its 
credit standing and mainstream lending. A Working Party of Board 
Members (principally representatives of Ministries of Finance) was 
mandated to conduct a detailed examination of the modalities and to 
work out specific proposals. 
B. PESCRtPTIQN OF THE EIF 
The Fund is a tripartite organization In which the Community, the EIB 
and other financial institutions will participate. 
The main objectives of the Fund will be to contribute to the 
strengthening of the Internal market and the furthering of economic and 
social cohesion. Major Infrastructure projects in the framework of the 
transeuropean networks (TENs), as well as small and medium-sized 
enterprises (SMEs), especially in Community assisted areas, constitute 
the main targets of support of the EIF. Other projects, for example in 
the areas of environmental protection and energy production, may become 
eligible later after decision of the Fund's ruling bodies. 
The Fund's operations will predominantly take the form of fInane la I 
guarantees, while the provision of equity will constitute a secondary 
activity and be developed at a later stage. Loan guarantees are, 
besides feasibility studies and interest subsidies, one of the three 
ways set out In the Union Treaty (Title XII, Art. 129C) in which the 
Community should concentrate Its financial interventions In favour of 
TEN projects. The targetting of SMEs, especially in Community assisted 
areas, on the other hand, corresponds to the objectives of both Title 
XI I I (Industry) and Title XIV (Economic and Social Cohesion) of the new 
Treaty. The operations of the Fund will be co-ordinated, where 
necessary, with other forms of Community Intervention. 
The EIF is intended to direct the main part of its activities towards 
projects that should operate wholly or partially on a self-financing or 
commercial basis. The existence of the Fund will thus facilitate 
private Infrastructure financing by providing a complement or 
alternative to recourse to government guarantees for infrastructure 
financing. The viability criterion will also be an essential element in 
its approach to SMEs. 
./. 
T 
2. 
The EIF Itself will operate on a self-sustaining basis and therefore 
seek an acceptable return on Invested capital by charging Its services 
in line with market practices. As a separate legal entity, Its accounts 
will be totally distinct from those of the EIB, although It will be 
created by decision of the Bank's Board of Governors. It will also be 
managed on a day-to-day basis by the EIB under mandate. 
Supervision and direction of the Fund's policy and activities will take 
place at the level of Its General Meeting, Supervisory Board and 
Financial Committee. The contributions from the Community budget wi I I 
be subject to the provisions of Article 24 of the Financial Regulation 
and to the normal control of the Court of Auditors. 
C. CAPITAL REQUIREMENTS 
The initial subscribed capital amounts to ECU 2 billion. According to 
initial estimates based on the prudential ratios suggested for the EIF, 
this would cover between 5 and 10 billion ECUs of guarantees. The 
Community budget will provide 30% of the Initial capital, the EIB 40% 
and other financial institutions the remaining 30%. 
Only 20% of subscribed capital will be paid-in; as far as the 
Community's share in the capital is concerned, this amounts to four 
annual instalments of 30 MECU each, or 120 MECU in total. 
The other 80% of the Community's capital share (480 MECU) will take the 
form of uncalled subscribed capital. This remaining capital can only be 
called by the Fund as and when required to meet Its liabilities, and 
not as a way to permit an expansion of Its operations. In addition, 
great care has been taken to ensure that the likelihood of this 
happening Is minimal. The Fund's Statute will include a number of 
specific ceilings and prudential rules to this effect, limiting total 
exposure and ensuring effective risk diversification as all 
shareholders have every interest In the Fund's financial success. 
As largest shareholder of the Fund, the EIB will finance Its share out 
of its annual surpluses. Share subscriptions by financial institutions 
will probably be phased over several years as a large number of them 
are concerned. The broad concept has already been presented to a large 
number of institutions and many have shown a receptive attitude to a 
potential shareholding in the Fund. 
D. BANKING SOLVENCY RATIO DIRECTIVE 
The Commission will take the necessary steps to have the EIF classed as 
a 'multilateral development bank' under the Solvency Ratio Directive 
for Credit Inst I tutions<1>. 
./. 
(1) Council Directive 89/647 of 18 December 1989 (O.J. L386 of 
30.12.89, p. 14) as amended by Commission Directive 91/31 of 
19 December 1990 (O.J. L17 of 23.01.91, p. 20). "*> 
3. 
COMMISSION PROPOSAIS 
Since the Board of Governors of the EIB is currently not empowered 
to establish a Fund, an addition to the Protocol on the Statute of 
the European Investment Bank Is required to this effect. This will 
entail an article 236 procedure. The Commission therefore Invites 
- the Council, after consulting the European Parliament, to 
deliver an opinion In favour of calling a conference of 
representatives of the Governments of Member States on the 
basis of the proposed addition to the Protocol on the EIB 
attached to this memorandum-, 
- the President of the Council to convene the conference for the 
purpose of determining the amendment by common accord. 
The Commission also asks the Council, after consulting the 
Parliament, to adopt the decision In annex on the Community's 
membership of the Fund. 
U 
PROPOSAL FOR AN 
ADDITION TO THE PROTOCOL ON THE 
STATUTE OF THE EUROPEAN INVESTMENT BANK 
empowering the Board of Governors of the EIB 
to establish the European Investment Fund 
HIS MAJESTY THE KING OF THE BELGIANS, 
HER MAJESTY THE QUEEN OF DENMARK, 
THE PRESIDENT OF THE FEDERAL REPUBLIC OF GERMANY, 
THE PRESIDENT OF THE HELLENIC REPUBLIC, 
HIS MAJESTY THE KING OF SPAIN, 
THE PRESIDENT OF THE FRENCH REPUBLIC, 
THE PRESIDENT OF IRELAND, 
THE PRESIDENT OF THE ITALIAN REPUBLIC, 
HIS ROYAL HIGHNESS THE GRAND DUKE OF LUXEMBOURG, 
HER MAJESTY THE QUEEN OF THE NETHERLANDS, 
THE PRESIDENT OF THE PORTUGUESE REPUBLIC, 
HER MAJESTY THE QUEEN OF THE UNITED KINGDOM OF GREAT BRITAIN 
AND NORTHERN IRELAND, 
RECALLING the objective defined by the Treaty, 
DESIRING to contribute to this objective and especially to the 
strengthening of the internal market and to economic and social 
cohesion, 
DETERMINED to provide for the necessary financial Instruments to this 
end, 
HAVING REGARD to the conclusions of the Presidency of the European 
Council in Edinburgh that urgent and sympathetic consideration should 
be given to the establishment as quickly as possible of a European 
Investment Fund, within the context of promoting economic recovery in 
Europe, 
AFFIRMING the benefits of close co-operation between the Community, the 
European Investment Bank and other undertakings in the Member States 
with an Interest In the objectives of the Fund, 
HAVE DECIDED to empower the Board of Governors of the European 
Investment Bank to establish the European Investment Fund and to this 
end have designated as their plenipotentiaries : 
WHO, having exchanged their full powers, found in good and due form, 
have agreed as follows : 
./. 
*> 
2. 
ARTICLE A 
The Protocol on the Statute of the European Investment Bank, attached 
to the Treaty establishing the European Economic Community shaI I be 
completed by the addition of the following article : 
"Article 30 
1. The Board of Governors of the European Investment Bank may, acting 
unanimously, decide to create the European Investment Fund, with 
legal personality and financial autonomy, and of which the Bank 
will be a founding member. 
2. The Board Is empowered to establish the Statute of the Fund and 
thus to define Its objectives, structure, capital, membership, 
financial resources, means of intervention, auditing arrangements, 
as well as the relationship between the ruling bodies of the Bank 
and those of the Fund. 
The Protocol on the Privileges and Immunities of the European 
Communities, as well as the arrangements for and the content of 
amendments to the texts establishing It, shall apply to the Fund. 
3. Notwithstanding the provisions of Article 20.2, the Bank shall be 
entitled to contribute to the subscribed capital of the Fund up to 
the amount determined by the Board, following unanimous decision 
thereto. 
4. The European Economic Community, represented by the Commission, 
may become a member of the Fund and contribute to its subscribed 
capital. Other undertakings with an Interest In the objectives of 
the Fund shall be invited to become members." 
ARTICLE B 
1. This addition to the Protocol on the Statute of the European 
Investment Bank shall be ratified by the High Contracting Parties in 
accordance with their respective constitutional requirements. The 
instruments of ratification shall be deposited with the government of 
the I ta I Ian Republic. 
2. This addition shall enter Into force following the deposit of the 
instrument of ratification by the last signatory State to take this 
step. 
./. 
ARTICLE C 
This addition to the Protocol on the Statute of the European Investment 
Bank, drawn up in a single original In the Danish, Dutch, English, 
French, German, Greek, Irish, Italian, Portuguese and Spanish 
languages, the texts in each of these languages being equally 
authentic, shall be deposited in the archives of the government of the 
Italian Republic, which will transmit a certified copy to each of the 
governments of the other signatory States. 
IN WITNESS WHEREOF the undersigned Plenipotentiaries have signed this 
add it ion. 
Done at on 1993 
7 
PROPOSAL FOR A COUNCIL DECISION ON 
COMMUNITY MEMBERSHIP OF THE EUROPEAN INVESTMENT FUND 
THE COUNCIL OF THE EUROPEAN COMMUNITIES 
Having regard to the Treaty instituting the European Economic Community 
and In particular Article 235 thereof; 
Having regard to the proposal by the Commission*1) ; 
Having regard to the opinion of Par I lament*2^ ; 
Whereas the European Council in Edinburgh Invited the Council and the 
European Investment Bank to give urgent and sympathetic consideration 
to the establishment as quickly as possible of a European Investment 
Fund (EIF); 
Whereas the EIF should constitute a cost-effective and efficient means 
whereby the Community, together with the Bank and other financial 
institutions, can provide a significant contribution to the accelerated 
completion of large Infrastructure projects of Community interest and 
can facilitate investment by small and medium-sized enterprises (SMEs), 
especially in Community assisted areas; 
Whereas Investments in large infrastructure projects of Community 
interest and In particular those belonging to transeuropean networks 
are essential to the reinforcement of economic and social cohesion and 
to the proper functioning of the internal market, and whereas some of 
these investments might involve projects of mutual interest with third 
countries ; 
Whereas investment support for SMEs, especially In Community assisted 
areas, Is an essential factor In the reinforcement of economic and 
social cohesion; 
Whereas the EIF will foster investment In both areas; 
Whereas a speedy implementation of the EIF will stimulate sustained and 
balanced growth within the Community; 
Whereas Article 30 of the Statute of the EIB empowers the Bank's Board 
of Governors to create the EIF and whereas the Board has decided to 
create the EIF<3>; 
Whereas the Community may become a member of the EIF; 
Whereas appropriate co-ordination shall be assured between the 
operations of the Fund and other Community financial and budgetary 
Instruments; 
./. 
(1) 
(2) 
(3) 7 
2. 
Whereas In order to meet the objectives of the Fund, it would be 
appropriate to consider It as a multilateral development bank for the 
purposes of Council Directive 89/647 as amended by Commission Directive 
91/31; 
Whereas Article 24 of the Financial Regulation shall apply to the 
contributions from the Community budget and the Commission shall 
furnish all the Information necessary to the Court of Auditors for the 
examination of the accounts of all Community revenue and expenditure 
stemming from its membership of the EIF; and whereas the specific 
provisions concerning the audit of the EIF itself are contained in the 
Statute of the Fund; 
HAS DECIDED AS FOLLOWS : 
Sole Article 
The European Economic Community, represented by the Commission, 
becomes a member of the European Investment Fund and hereby approves 
the Statute of the Fund, as annexed to the present Decision. 
Done 
1 
ANNEX 
EIF STATUTE 
(Document still at draft stage; will be Included as soon as available) 
s* 
FINANCIAL STATEMENT 
SECTION 1 FINANCIAL IMPLICATIONS 
1 . Title of operation 
European Investment Fund (EIF) 
2. Budget heading Involved 
Section III (Commission), Part B (Operating appropriations), 
Article B2-400 and Article B5-730 for the paid-in part of 
subscribed capital. 
Article B5-731 for the callable part of subscribed capital. 
These lines are to be created by SAB, as are the corresponding 
chapters and t it les. 
3. Legal basis 
To be created by the proposed decision, on the basis of Article 
235 of the Treaty. 
4. Description of operation 
4.1 Specific objectives of operation : the European Council of 
11, 12 December in Edinburgh approved the creation of the 
European Investment Fund (EIF). The Community (30% of 
capital), the European Investment Bank (40%) and financial 
institutions (30%) will be the members of the EIF. 
4.2 The duration of the Community's Involvement in the Fund is 
undefined and will in principle cover the whole life of the 
Fund. The Community's budgetary contribution to the paid-in 
capital of the Fund is spread out over 4 years (cf. point 
7.1). 
4.3 Target population : the EIF specifically aims to support the 
creation of transeuropean networks throughout the Community 
and the financing needs of small and medium-sized enterprises 
(SMEs), especially In Community assisted areas. 
5. Classification of expenditure 
5.1 Non-compulsory expenditure. 
5.2 Differentiated appropriations. 
5.3 Type of revenue Involved : as a shareholder of the EIF, the 
Community will be entitled to receive dividend payments if 
and when the Fund's General Meeting decides to make dividends 
avallable. 
6. Type of expenditure or revenue 
- the Community's contribution will take the form of a 30% 
participation in the subscribed capital of the Fund. 
- the Community will receive dividend payments in proportion to 
its capital share. 
./. 
/K) 
7. Financial Impact on appropriations for operations 
7.1 Method of calculating total cost 
- The total subscribed capital of the EIF amounts to 2 billion 
ECU, of which the Community holds 30% (600 million ECU). 20% 
of this amount (120 million ECU) will be paid-in in 4 equal 
annual Instalments of 30 million ECU from 1993 onwards. 
- A token entry Is proposed for the callable part of the 
Community's capital, given that the amount and timing of any 
call on this budget line cannot be calculated in advance and 
furthermore it Is highly unlikely that this budget entry will 
be called on at any moment (similar treatment to that for the 
callable capital of EBRD). 
7.2 Indicative schedule of appropriations 
- the paid-in part of the Community's share in the subscribed 
capital will be paid to the EIF in four equal annual 
instalments of 30 million ECUs from 1993 onwards i.e. 120 
mi I I ion ECUs in total. 
- The callable part shall be subject to call only as and when 
required by the Fund to meet its liabilities. 
7.3 Financing 
In 1993, the 30 MECU contribution to the paid-in capital 
could be financed as follows: 
- 14 MECU under Article B2-400 , corresponding to the 
available margin under category 2; 
- 16 MECU under Article B5-730, to be deducted from resources 
allocated to transeuropean networks (under category 3) In 
the 1993 budget. 
The choice of budgetary lines for 1993 is without prejudice 
to the decisions to be taken on which lines should finance 
the capital contributions In subsequent years; these 
decisions will be taken In the framework of the annual 
budgetary procedure, taking account of the characteristics of 
the projects financed. 
8. Anti-fraud measures 
Not applicab le. 
SECTION 2 : ADMINISTRATIVE EXPENDITURE 
The proposed operation will not Involve any increase in the number 
of Commission staff or administrative expenditure 
./. 
3. 
SECTION 3 : ELEMENTS OF COST-EFFECTIVENESS ANALYSIS 
1. Objectives and coherence with financial programming 
The quantified objectives are to be defined by the ruling bodies 
of the EIF, once the Fund is established. The Fund Is expected to 
extend guarantees up to 5-10 billion ECUs In total. 
! 
2. Grounds for the operation 
The proposed operation is a cost-effective one and constitutes an 
efficient use of budget resources for the following reasons : 
a. The capital of the EIF will not only be provided by the 
Community, but also by the EIB as well as by other financial 
institutions. 
b. The EIF will facilitate access to private capital for 
Investments of considerable Importance to the Community, 
notably through the extension of loan guarantees. 
c. The Fund will generate a substantial leverage effect. It is 
estimated that the Fund, whose total subscribed capital will 
amount to 2 billion ECUs, will be able to extend guarantees up 
to 5-10 billion ECUs; In total this could support up to 20 
billion ECUs of projects. 
d. Compared to loan guarantees directly extended by the Community 
budget (e.g. In favour of transeuropean network projects), the 
Fund provides a much better protection for the Community budget 
should a call be made upon those guarantees. 
3. Monitoring and evaluation of the operation 
The EIF will operate on a commercial basis. It will generate 
income from Its activities as It will charge premiums and fees 
which are commensurate with the level of risk taken on by the 
Fund. The performance of the Fund will be measured by several 
indicators : 
- the overall demand for Its services; 
- the volume of its activities; 
- the volume of Investments generated by the Fund's 
Intervent Ions; 
its financial performance in terms of yearly net Income; 
- etc. 
/>l 
IMPACT ASSESSMENT FORM 
THE IMPACT OF THE PROPOSAL ON BUSINESS 
with special reference to small and medium-sized 
enterprises (SMEs) 
Title of proposal : European Investment Fund (EIF) 
The proposal 
1. From a subsidiarity point of view, the EIF's activities are to be 
carried out at a Community level for the following reasons : 
a. The target sectors (transeuropean networks - TENs - and small 
and medium-sized enterprises - SMEs -, especially in Community 
assisted areas) are of direct Community interest. 
b. The Fund will be organically linked to the EIB, the Community's 
largest financial Instrument after the Community budget. 
c. The pooling at a Community level of large financial guarantees 
extended on a commercial basis greatly Improves diversification 
and hence lowers premium levels. 
The impact on business 
2. a. The establishment of TENs (in the transport, telecommunications 
and energy transport sector) will be beneficial to Community 
business in general and will facilitate cross-border 
activities, 
b. Besides its support for networks, the EIF will also address the 
financing needs of SMEs, especially In Community assisted 
areas, through the extension of guarantees and of equity 
through financial Intermédiaires. 
3. No specific action Is requested from business. 
4. The economic effects of the proposal are substantial : 
a. Employment : 
- the Implementation of TENs will generate a very substantial 
Investment effort (public works, high-tech and research, 
etc.) and will therefore result in the creation of an 
Important number of jobs, both for the execution of the 
Investment programmes and for the operation and maintenance 
of the networks. 
- financing support for SMEs, especially in Community assisted 
areas, will help these firms to prosper and develop. 
b. Investment : 
considerable effect (cf. 4.a), concentrated In sectors with a 
high economic potential (e.g. high-speed trains, 
telecommunications networks, etc.) as well as In regions which 
are catching up with the Community average. 
./. 
/)li 
2. 
c. Competitive position : 
will be Improved through the provision of high quality services 
in the transport, telecommunications and energy fields. 
5. The financing needs of SMEs, especially in Community assisted 
areas, are specifically taken Into account by the current 
proposa I. 
Consultation 
6. The current proposal has been widely discussed with a large number 
of financial Institutions, some of which are likely to become 
shareholders of the EIF. 
V 

ISSN 0254-1475 
COM(93) 3 final 
DOCUMENTS 
ËN 0! 
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ISBN 92-77-51912-6 
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