EN    EN EN 
 
EN    EN  EUROPEAN COMMISSION 
Brussels, 2.7.2010 
SEC(2010)805 final 
  
COMMISSION STAFF WORKING DOCUMENT 
 
accompanying the 
Annual report from the Commission to the European Parliament,  
the Council and the Court of Auditors  
on the Guarantee Fund  
and the management thereof in 2009 
   
COM(2010)353 final 
 
EN 2   EN CONTENTS 
1. Guarantee Fund — Management re port as at 31 December 2009............................... 4 
1.1. Development of the Fund in 2009 — overview........................................................... 4 1.2. Situation of the Fund.................................................................................................... 5  
1.2.1. The Fund’s resources as at 31 December 2009............................................................ 5 1.2.2. The Fund’s assets as at 31 December 2009 ................................................................. 5 1.3. General and segment-by-segment analysis of the Fund............................................... 6 1.3.1. Analysis of the results of the Fund............................................................................... 6 1.3.2. Segment-by-segment analysis...................................................................................... 6 1.3.2.1. Analysis of money market operations.......................................................................... 6 1.3.2.2. Analysis of bond portfolio results................................................................................ 8 1.4. Analysis of performance and interest rate risk........................................................... 11 1.4.1. Interest rate risk...................................................................................................... .... 14 
1.4.2. Performance ............................................................................................................. .. 15 
2. Statement of financial position of the Fund as at 31 December 2009 ....................... 17 2.1. Economic outturn account (Statement of fi nancial performance) for the year ending 
on 31 December 2009 ................................................................................................ 17 
2.2. Balance sheet (Statement of financial position) as at 31 December 2009 ................. 18 2.3. Cash flow statement as at 31 December 2009 ........................................................... 21 3. Notes on the financial statements............................................................................... 22 3.1. General disclosures .................................................................................................... 22 3.2. Significant accounting policies .................................................................................. 22 3.2.1. Basis of preparation.................................................................................................... 22 
3.2.2. Significant accounting and j udgments and estimates................................................. 22 
3.2.3. Summary of significan t accounting policies.............................................................. 23 
3.2.3.1. Foreign currency conversion...................................................................................... 23 3.2.3.2. Cash and cash equivalents.......................................................................................... 23 3.2.3.3. Short-term investments .............................................................................................. 23  
3.2.3.4. Contributions......................................................................................................... ..... 24 
3.2.3.5. Securities lending activity.......................................................................................... 2 4 
 
EN 3   EN 3.2.3.6. Taxation .............................................................................................................. ....... 24 
3.3. Financial risk management ........................................................................................ 25 3.3.1. Interest rate and liquidity risks................................................................................... 25 3.3.2. Credit risk............................................................................................................. ...... 28 
3.4. Short-term investments — Available for sale assets.................................................. 31 3.5. Cash and cash equivalents.......................................................................................... 32 3.6. Contributions............................................................................................................. . 32 
3.7. Current liabilities....................................................................................................... . 32 
3.8. Financial operations revenue...................................................................................... 33 3.9. Financial operations expenses.................................................................................... 33 3.10. Subsequent events ...................................................................................................... 33  
 
EN 4   EN 1. GUARANTEE FUND — MANAGEMENT REPORT AS AT 31 DECEMBER 20091 
1.1. Development of the Fund in 2009 — overview 
As at 31 December 2009 the total assets (exclu ding accrued interest) of the Guarantee Fund 
(‘the Fund’) stood at EUR 1  220.2 million against EUR 1  071.8 million on 31 December 2008, 
an increase of EUR 148.4 million. 
100010251050107511001125115011751200122512501275
Jan Mar May Jul Sep Nov(millions euro)2009
2008
 
Figure 1: Trend in total assets in 2009 and 2008 
The increase in total assets wa s mainly due to a capital paym ent of EUR 91.9 million from the 
European Commission on 23 January 2009 a nd to coupon payments of EUR 38.2 million. 
The net operating result totalled EUR 40.9 million on 31 December 2009 compared with 
EUR 48.0 million on 31 December 2008. Interest inco me on AFS (available for sale) assets 
(net of the premium/discount spread ) totalled EUR 38.2 million, making up 93  % of the total 
result recorded on 31 December 2009. Interest in come on cash and cash equivalents totalled 
EUR 3.5 million, or 9  % of the total result. The rest (-2  %) reflects the net result of income 
from securities lending activity (EUR 77  047.72) and other financial charges (adding up to 
EUR -803  818.74).  
                                                 
1 Report prepared by the EIB, which manages the Guarantee Fund’s assets for the Commission. 
 
EN 5   EN 1.2. Situation of the Fund 
1.2.1.  The Fund’s resources as at 31 December 2009 
The Fund’s resources increased by EUR 91.9 million, or 23  %, from EUR 402.5 million on 
31 December 2008 to 494.4 EUR million on 31 December 2009. 
This is explained by the movements shown in the table below: 
Resources  Situation as at  Move ments Situation as at 
   31/12/2008 in 2009 31/12/2009 
      
Provisioning + 2  805  005  162.91 91  960  000.00 2  896  965  162.91
Repayment of surplus - (1  775  870  000.00) 0.00 (1  775  870  000.00)
Activation of guarantee - (477  860  856.19) 0.00 (477  860  856.19)
Recovery of amounts guaranteed + 576  705  008.19 0.00 576  705  008.19
Repayment of Fund (9  %)  - (725  521  526.79) 0.00 
 (725  521  526.79)
    
Balance  402  457  788.12 91  960  000.00 494  417  788.12
1.2.2.  The Fund’s assets as at 31 December 2009 
The Fund’s holdings as at 31 December 2009 excluding accrued in terest totalled  
EUR 1  220.2 million, broken down as follows: 
EUR 153.3 million in the monetary portfolio (nom inal value of interbank term deposits); 
EUR 36.6 million in other cash equivalent s (commercial papers at cost); 
EUR 1.1 million in the current accounts; EUR 1
 029.2 million in the available for sale (AFS ) investment portfolio (market value of 
fixed-rate and floating rate bonds  (excluding accrued interest)). 
The Fund operates in one currency only, the euro. 
 
EN 6   EN 1.3. General and segment-by-segme nt analysis of the Fund 
1.3.1.  Analysis of the results of the Fund 
Overall, during the reporting period from 1 January 2009 to 31 December 2009 the Fund 
produced net revenue of EUR 40.95 million. Inve stment income on 31 December 2009 was as 
follows: 
 
  January–December 2009 
(in million EUR) 
   
Interest income on cash and cash equivalents  3.49 
Interest income on AFS assets  38.18 
Income from securities lending activity  0.08 
Commission and financial charges  -0.80    
Total  40.95 
The performance of the Fund portfolio was mon itored on a marked to market (MTM) basis. 
Over 2009, the portfolio delivered a 4.56  % MTM return, outperforming its benchmark by 
77.80 basis points. 
1.3.2.  Segment-by-segment analysis 
1.3.2.1.  Analysis of money market operations 
Money-market investments (excluding accrue d interest) totalled EUR 190.9 million on 
31 December 2009, compared with EUR 203.6 million a year before. 
The EUR 12.7 million decrease was due to a sh ift of investments from the money market 
portfolio to the bond portfolio. 
• Evolution of money-market rates in 2009 
In 2009 the economic situation continued to de teriorate. This had an impact on money 
markets in a variety of forms. Market liquidity  was very low and char acterised by high levels 
of volatility of EURIBOR/LIBOR fixings. Central banks reacted by drastically cutting interest 
rates and injected liquidity into  the markets by widening the elig ibility criteria for their open-
market operations and by increasing the size, matu rity and number of operations to ensure that 
all credit institutions have access to liquidi ty. The ECB reference rate decreased from 2  % to 
1 % during the first half of 2009. 
In this context interest rates reached all-time r ecord lows for Western Europe which lasted for 
more than six months. 
 
EN 7   EN Figure 2 shows the movements in the one- and three-month Euribor during 2009. 
 
Figure 2: Movements in money-market  rates during 2009 (source: Reuters) 
• Profile of counterparties 
In accordance with the agreem ent between the Commission and the EIB on the management 
of the Fund, all banks with which deposits ar e placed should have a minimum short-term 
credit rating of P-1 (Moody’s or equivalent).  The breakdown, including accrued interest, is as 
follows: 
 
EN 8   EN Aaa/P-1
6%A2/P -1
11%A1/P -1
19%
Aa2/P -1
11%
Aa3/P -1
53%
 
Figure 3: Short-term interbank investments by type of counterparty on 31 December 20092 
• Geographical breakdown 
As regards diversification of  counterparty location, the EIB is pursuing its objective of 
diversifying the geographical distribution across the countries  of the European Union by 
placing the short-term deposits in  a number of banks located in the main EU financial centres. 
This allows it to seek better market conditi ons and to obtain the mo st competitive yield. 
1.3.2.2.  Analysis of bond portfolio results 
The bond portfolio, seen as a long- term investment portfolio, is made up of euro-denominated 
securities initially acquired w ith the intention of holding them until maturity. In the Fund’s 
financial statements these securities are classified  as ‘available for sale’ (AFS) in line with EC 
accounting rule 11. On 31 December 2009, the market value (excluding accrued interest) of fixed-rate securities with a resi dual period to maturity of less than three months totalled 
EUR 15.2 million, between 3 months and one ye ar EUR 73.5 million and between one and 10 
years EUR 901.3 million. 
The starting value of the securities in this portfolio is the acquisition cost. The difference 
between the cost and the redemption value is the premium/discount spread, which is divided 
pro rata temporis  over the remaining life of each of the s ecurities using the effective interest 
rate method, as specified in  the EC accounting rules. 
On 31 December 2009, the nominal value of the i nvestment bond portfolio (fixed and floating 
rate notes) was EUR 1
 003.9 million, against a clean market value of EUR 1  029.2 million. 
In accordance with the 2009 annual investment strategy, the global (modi fied) duration of the 
bond portfolio decreased over 2009 to 3.1 years at the end of the year. On 31 December 2009 
                                                 
2 On 31 December 2009 short-term interbank investme nts including accrued interest  totalled EUR 190.0 million. 
EUR 153.4 million were invested in  short-term deposits and EUR 36.6 million in di scount papers. The discount papers have the fo llowing 
ratings: EUR 10.5  m Aaa/P-1; EUR 8.0  m Aa3/P-1; EUR 18.1  m A1/P-1.  
 
EN 9   EN the market value (excluding accrued interest ) of the investment bond portfolio came to 
EUR 1  029.2 million compared with a book value of EUR 1  001.7 million (including 
premiums/discounts), which gives an unrealised fair value gain of EUR 27.5 million, compared with an unrealised fair value gain of EUR 11.5 million and a market value 
(excluding accrued interest) of EUR 868.2 million on 31 December 2008.  
During 2009 the euro area 2- to  10-year yield curve spread steepened by 84 basis points to 
204 basis points. This movement occurred as a result of short-term yields declining by 40.6 
basis points, whereas long-term yields increa sed by 43.4 basis points, as shown in Figure 4.  
 
Figure 4: Steepening of euro area yield curve during 2009 using German government 
benchmark bonds (source: Bloomberg) 
In accordance with the 2009 approved investment strategy and with the i nvestment guidelines, 
a total nominal amount of EUR 175.5 million wa s invested in fixed-rate sovereigns, 
government guaranteed bonds and AAA agency securi ties with maturities ranging from one to 
five years. The objective of all these transactions was to maxi mise the expected performance 
and maintain a conservative risk profile with respect to the relevant  country allocation in 
relation to the corresponding benchmark. The char ts below show the total investments in 2009 
and the country diversification of the portfolio. 
2009 Investments
52%48%SAS Bonds
Government
Guaranteed Bonds
 Country exposure
28%
28%22%7%5%4%3%3%Austria
France
The Netherland
Spain
Germany
Greece
Ireland
Portugal
 
 
EN 10   EN On 1 January 2009, a total nominal amount of  EUR 83.7 million of redemptions on the 
securities portfolio was scheduled for the year, split as follows: 
• EUR 73.7 million for the fixed rate, and 
• EUR 10.0 million for the variable rate. 
Furthermore, no new investments in floati ng rate notes (FRN) were executed during 2009. 
EUR 41 million were executed during the first quarter of 2009 in the new government guaranteed asset class instead of the FRN i nvestments envisaged in the 2008 strategy. 
• Breakdown of the investment por tfolio between fixed-rate a nd variable-rate securities 
(nominal value): 
Variable rate
4%
Fixed Rate
96%
 
Figure 6: Breakdown of the investment portfolio between fixed-rate and variable-rate securities 
as at 31 December 2009 
• Redemption profile of investment  portfolio (nominal value) 
050100150200
2010 2011 2012 2013 2014 2015 2016 2017 2018(million euro)Variable rate
Fixed rate
 
Figure 7: Investment portfolio: Rede mption profile as at 31 December 2009 
 
EN 11   EN The latest final maturity date for fixed -rate securities on 31 December 2009 was 4 July 2018. 
• Profile of issuers 
All the securities held in the portfolio are in  line with the manageme nt guidelines and meet 
the following criteria: 
– Securities issued by Member States: minimum rating Baa3; 
– Securities issued by a supranat ional institution, other States or public companies: minimum 
rating Aa2; 
– Covered bonds: rating Aaa; 
– Securities issued by banks and co rporations: minimum rating Aa2. 
The profile of issuers on 31 December 2009 was as follows: 
M EM BER STATE Aa1
3.7%M EM BER STATE Aaa
33.6%
M EM BER STATE Aa2
12 . 3 %M EM BER STATE A1
2.7%M EM BER STATE A2
8.9%M EM BER STATE Baa1
2.5%PU BLI C COMPANY Aaa
21 .0%BANKS Aaa
0.5%CORPORATE Aa1
0.5% COVERED BOND Aaa
14 . 3 %
 
Figure 8: Investment portfolio: Profile  of issuers as at 31 December 2009 
1.4. Analysis of performance and interest rate risk 
The performance of the Fund is  monitored on a marked-to-market (MTM) basis against a 
composite benchmark index. This index is the result of combination of the following sub-indices: 
– Euribid 1M for money-market operations; 
– Euribid 3M for floating rate notes and fixed-ra te bonds with less than one year to maturity; 
– IBOXX EUR sovereign indices for fixed-ra te bonds issued by sovereign (or similar) 
issuers, split by maturity buckets;  
 
EN 12   EN – IBOXX EUR collateralised covered3 indices for fixed-rate b onds issued by corporate (or 
similar) issuers, split by maturity buckets. 
Index weightings are based on portfolio composition and are reviewed as follows: 
• on the last day of each month: the dates which define the time buckets (up to 1 year, from 1 
year to 3 years, from 3 years to 5 years, from 5 years to 7 year s and from 7 years to 10 
years) are updated. As a consequence, the sh ifts between buckets due to the ageing of 
existing positions are ta ken into account only  once per month at th e end of the month, 
following the same procedure underlyi ng management of the IBOXX indices; 
• during the month, whenever a change higher than 5  % in one of the asset classes (above or 
below the last benchmark adjustment) is obse rved. This change can be the result of: 
– the impact of a contribution from the Europ ean Commission to the portfolio (external cash 
flows from the European Commission); 
– the impact of a withdrawal from the portfolio to the European Commission (external cash 
flows to the European Commission); 
– the impact of a transaction se ttled (sales and purchases); 
– the impact of a redemption; 
– the sum of the impact of previous events ac cumulated from the last benchmark adjustment, 
also taking into consideration the change s in the clean values of the positions. 
                                                 
3 The European Commission and the EIB agr eed to adopt the IB OXX collateralised covered indices instead of the IBOXX EUR 
AAA corporate indices starting on 1 January 2009.  
 
EN 13   EN  
Bucket (years)  Performance benchmark 
sector  
Instrument 
 Percentage of total 
portfolio (2009 average) 
0-1 1 m Money market 20.63  % 
  3 m FRN and fixed-rate bonds 11.03  % 
1-3 Sovereign 18.09  % 
  Covered bonds 0.30  % 
3-5 Sovereign 14.85  % 
  Covered bonds 3.03  % 
5-7 Sovereign 9.97  % 
  Covered bonds 4.26  % 
7-10 Sovereign 15.55  % 
  Covered bonds   
Fixed- 
rate 
bonds 
2.29  % 
Total   100  % 
 
EN 14   EN 1.4.1.  Interest rate risk 
The interest rate risk sensitivity of the MTM value of the portfolio mainly stems from its 
fixed-rate exposure. A one basis point (bp) increase in interest rates reduces the value of the 
portfolio by EUR 378  621.00, of which EUR 375  571.00 is related to the fixed-rate bond 
exposure. The total modified duration of th e Fund stood at 3.01 years at the end of 2009. 
GF Sub-Portfolios Market Value 
(excluding accrued 
interest) Modified 
Duration 
(Years) Interest Rate 
Exposure 
(+/-1  bp) 
Floating Rate Notes  39 255  400 0.22 -/+ 906 
Fixed-Rate Bonds 989  959  978 3.66 -/+ 375  571 
Money-Market Deposits  189  909  298 0.11 -/+ 2  144 
Cash Account 1 106  422(4)   
Total GF 1 220  231  098 3.01 -/+ 378  621 
                                                 
4 The EUR 1.2 million ‘cash account’ balance reported in th is table does not include any payments relating to 
commissions or fees. This explains why it does not matc h the EUR 1.1 million total for the ‘current account’ 
balance reported in Section 2.2. The ‘cash account’ balance is, however, reset at the beginning of each year to 
match the total balance of the current accounts.  
 
EN 15   EN 1.4.2.  Performance 
Over 2009, the portfolio delivered a 4.56  % MTM return. The trend in the portfolio return and 
the excess return over its benchmar k are shown in the table below. 
 Portfolio  Out-performance 
       
 Market value 
(including accrued 
interest) Monthly  
 return  
(absolute return in 
%) YTD  
 return  
(absolute return in 
%)  Monthly 
excess return  
(in %) YTD  
excess return  
(in %) 
31/1/09 1  187  673  029 -0.0017 -0.0017  0.1533 0.1533 
28/2/09 1  190  301  740 0.2213 0.2197  -0.3734 -0.2192 
31/3/09 1  197  781  395 0.6839 0.9051  -0.0159 -0.2367 
30/4/09 1  203  105  009 0.4445 1.3536  0.2128 -0.0225 
31/5/09 1  201  424  126 -0.1397 1.2120  0.1457 0.1252 
30/6/09 1  210  493  093 0.7549 1.9760  0.0160 0.1424 
1/7/09(1)1 206  816  404 -0.3037 1.6662  -0.3098 -0.1736 
31/7/09(2)1 222  003  621 1.2585 2.9457  0.3284 0.1587 
31/8/09 1  229  191  705 0.5882 3.5512  0.2412 0.4075 
30/9/09 1  238  624  734 0.7674 4.3459  0.2728 0.6920 
31/10/09 1  240  815  053 0.1768 4.5304  0.0123 0.7060 
30/11/09 1  245  885  453 0.4086 4.9576  0.0647 0.7760 
31/12/09 1  241  139  626 -0.3809 4.5577  0.0048 0.7780 
(1) Returns calculated from 30/6/2009 to 1/7/2009. 
(2) Returns calculated from 1/7/2009 to 31/7/2009: the total July return on the portfolio stood at 0.9509  % and the total July return on 
the benchmark stood at 0.9363  %. 
During 2009, the money-market rates decrease d, following the extraordinary measures 
implemented by the central banks to fight the ec onomic crisis. The Euribor 1-month rate stood 
at 0.453  % and the Euribor 3-month rate at 0.700  % on 31 December 2009. 
During the first half of the year, the fixe d-income markets were marked by a volatile 
environment, which produced a negative impact on the return on the securities portfolio in 
January and May and a positive impact in February, March and April. 
During the second half of the year, the 1-year to  5-years tenors of the yield curve decreased, 
generating a positive impact on the return on th e securities portfoli o. During the last two 
 
EN 16   EN weeks of December, the significant widening of  the credit spread on Greece resulted in a 
negative return on the portfolio. 
Starting on 1 July 2009, the floa ting rate notes have been va lued by using market quotes 
instead of prices derived from  models. This change produced an impact of about -30 basis 
points on the return on the portfo lio and had a similar effect in terms of excess return on the 
portfolio over its benchmark. 
As a result, the portfo lio delivered an excess return of 77.80 basis points over its benchmark 
for the whole year 2009. 
 
EN 17   EN 2. STATEMENT OF FINANCIAL POSITION OF THE FUND AS AT 31 D ECEMBER  2009 
The financial statements for the Fund have been prepared by the EIB in accordance with 
International Financial Reporting Standards (IF RS) and the accounting rules adopted by the 
European Commission, in particular ‘Accounting rule 11 — Financial a ssets and liabilities’, 
dated September 20045. These financial statements are presented in euro. This is the financial 
statement for the Fund’s assets managed by th e EIB. The annual accounts of the Guarantee 
Fund for the year ending on 31 December 2009 have been audited and certified by an 
independent auditor. 
2.1. Economic outturn account (Statement of  financial performance) for the year 
ending on 31 December 2009 
  Notes Year to 
 31.12.2009 
 EUR Year to 
 31.12.2008 
 EUR 
       
       
Financial operations revenue 7    
Interest income   41  676  644.38 47  665  167.17
Interest income on cash and cash equivalents   3  496  637.06 8  043  015.28
Interest income on available for sale assets   38  180  007.32 39  622  151.89
Realised gains/loss on sale of available for sale assets   0.00 1  085  236.81
Income from securities lending activity   77  047.72 52  156.81
Financial operations expenses 8    
Other financial charges   (803  818.74) (784  325.01)
Thereof: Management fees   (687  539.60) (658  322.32) 
SURPLUS FROM NON-OPERATING ACTIVITIES   40  949  873.36 48  018  235.78
       
SURPLUS FROM ORDINARY ACTIVITIES   40  949  873.36 48  018  235.78
       
ECONOMIC RESULT OF THE YEAR   40  949  873.36 48  018  235.78
The accompanying notes form an integral part of these financial statements.
                                                 
5 This is based on revised standards IAS 32 and 39, as issued by the IASB on 18 D ecember 2003, and, consequently, does not 
integrate the provisions set out in the version of IAS 39 endorsed by the European Commission on 19 November 2004.  
 
EN 18   EN 2.2. Balance sheet (Statement of financ ial position) as at 31 December 2009 
ASSETS  Notes 31.12.2009 31.12.2008 
    EUR EUR 
CURRENT ASSETS      
       
Current receivables      
Other current receivables   3  626.09 0.00
Thereof: Receivables from securities lending activity   3 626.09 0.00
Total current receivables   3 626.09 0.00
       
Short-term investments 4    
Available for sale portfolio — cost   1  004  786  115.50 857  292  051.50
Available for sale portfolio — actuarial difference   (3  096  484.22) (633  286.00)
Available for sale portfolio — adjustment to fair value   27  525  747.60 11  509  579.98
Available for sale portfolio — accruals   20  197  940.31 18  781  321.92
Total short-term investments   1 049  413  319.19 886  949  667.40
       
Cash and cash equivalents 5    
Current accounts   1  078  498.12 1  209  530.44
Short-term deposits — nominal    153  300  000.00 182  557  991.00
Accrued interest on short-term deposits   113  282.91 872  562.49
Other cash equivalents — cost   36  554  203.91 19  842  008.01
Accrued interest on other cash equivalents   34  830.41 15  625.58
Total cash and cash equivalents   191  080  815.35 204  497  717.52
       
Total current assets    1 240  497  760.63 1 091  447  384.92
       
TOTAL   1  240  497  760.63 1  091  447  384.92
    
 
EN 19   EN  
LIABILITIES  Note 2009 2008 
    EUR EUR 
A. EQUITY      
Capital    494  417  788.12 402  457  788.12
Reserves      
First-time application — Fair value reserve   152  812.75 56  045.30
Revaluation to fair value of available for sale assets   27  525  747.60 11  509  579.98
Accumulated surplus      
Results brought forward   676  733  999.20 628  715  763.42
Economic result of the year   40  949  873.36 48  018  235.78
Total equity   1 239  780  221.03 1  090  757  412.60
B. CURRENT LIABILITIES      
Accounts payable 6    
Others   717  539.60 689  972.32
Total current liabilities    717  539.60 689  972.32
       
TOTAL   1 240  497  760.63 1  091  447  384.92
The accompanying notes form an integral part of these financial statements.
 
EN 20   EN Statement of changes in equity for the year ending on 31 December 2009 
Reserves Equity 
(EUR) Capital 
Fair value 
reserve — 
First-time 
application Changes in fair 
value of 
available for 
sale assets Accumulated 
surplus/deficit Economic result 
of the year Total 
Balance on 1.1.2008 527  176  693.70 268  318.67 (3  895  732.16) 575  841  062.23 52  874  701.19 1  152  265  043.63 
Fair value adjustment — Available 
for sale reserve 0.00 0.00 15  405  312.14 0.00 0.00 15 405  312.14 
First-time application — Recycling 
due to sale of investments 0.00 (212  273.37) 0.00  0.00 0.00 (212  273.37) 
Payment to the European Union (125  750  000.00) 0.00 0.00  0.00 0.00 (125  750  000.00) 
Recovery of guarantees called 1  031  094.42 0.00 0.00 0.00 0.00 1 031  094.42 
Allocation of the economic result of 
2007    52  874  701.19 (52  874  701.19) 0.00 
Result of 2008  0.00 0.00 0.00  0.00 48  018  235.78 48 018  235.78 
Balance on 31.12.2008 402  457  788.12 56  045.30 11  509  579.98 628  715  763.42 48  018  235.78 1  090  757  412.60 
Fair value adjustment — Available 
for sale reserve 0.00 0.00 16  016  167.62 0.00 0.00 16 016  167.62 
First-time application — Recycling 
due to sale of investments 0.00 96  767.45 0.00 0.00 0.00 96 767.45 
Payment to the European Union 91  960  000.00 0.00 0.00 0.00 0.00 91 960  000.00 
Recovery of guarantees called 0.00 0.00 0.00 0.00 0.00 0.00 
Allocation of the economic result of 
2008 0.00 0.00 0.00 48  018  235.78 (48  018  235.78) 0.00 
Result of 2009 0.00 0.00 0.00 0.00 40  949  873.36 40 949  873.36 
Balance on 31.12.2009 494  417  788.12 152  812.75 27  525  747.60 676  733  999.20 40  946  247.27 1  239  780  221.03 
 
EN 21   EN2.3. Cash flow statement as at 31 December 2009 
    Year to 2009 Year to 2008 
    EUR EUR 
Investing activities     
  Interest received on cash and cash equivalents 4  236  711.81 8  582  713.48
  Management fee paid during the year (658  322.32) (678  951.39)
  Bank charges/audit fees paid during the year (117  929.14) (124  302.69)
  Purchase of investments — Available for sale portfolio (228  822  855.00) (147  585  260.00)
  Proceeds of investments — Av ailable for sale portfolio 83  730  000.00 179  415  215.96
  Interest received — Available for sale portfolio 36  922  145.60 40  834  028.61
  Income from securities lending activity 73  421.63 52  156.81
Net cash flows from investing activities (104  636  827.42) 80  495  600.78
Financing activities     
  Contributions r eceived from the European Commission  91  960  000.00  0.00
  Contributions repaid to the European Commission 0.00 (125  750  000.00)
  Recovery of interventions 0.00 1  031  094.42
 Net cash flows from financing activities 91  960  000.00 (124  718  905.58)
        
Net increase/(decrease) in cash and cash equivalents (12  676  827.42) (44  223  304.80)
Cash and cash equivalents at beginning of financial year 203  609  529.45 247  832  834.25
Cash and cash equivalents at end of financial year 190  932  702.03 203  609  529.45
   
   
Cash and cash equivalen ts are composed of:  
  
Current accounts 1  078  498.12 1  209  530.44
Short-term deposits  153  300  000.00 182  557  991.00
Bills maturing within three months of issue 36  554  203.91 19  842  008.01
Total cash and cash equivalents 190  932  702.03 203  609  529.45
The accompanying notes form an integral part of these financial statements.
 
EN 22   EN3. NOTES ON THE FINANCIAL STATEMENTS  
3.1. General disclosures 
The rules and principles for the manageme nt of the Guarantee Fund (the ‘Fund’) are 
set out in the Agreement between the Eu ropean Commission (‘the Commission’) and 
the European Investment Bank (‘the EIB’) dated 25 November 1994 and the 
subsequent amendments dated 17/23 September 1996, 8 May 2002 and 25 February 2008. 
The main principles of the Fund, as extrac ted directly from the Agreement, are as 
follows: 
• The Fund will operate in one single curren cy, i.e. euro (EUR ). It will invest 
exclusively in this currency in orde r to avoid any exchange rate risk. 
• Management of the Fund will be based on the traditional rules of prudence adhered 
to for financial activities. Pa rticular attention will be pa id to reducing the risks and 
to ensuring that the managed assets ha ve a sufficient degree of liquidity and 
transferability, taking into  account the commitments which the Fund will have. 
3.2. Significant accounting policies 
3.2.1.  Basis of preparation 
The financial statements for the Fund have been prepared in accordance with the 
accounting rules adopted by the Accounting Officer of the European Commission, in 
particular ‘Accounting rule 11 — Financial assets and liabilities’
6, dated December 
2004 and updated in October 2006 and December 2009. 
3.2.2.  Significant accounting and judgments and estimates 
Preparation of financial statements in c onformity with the accounting rules adopted 
by the Accounting Officer of the European Co mmission requires use of certain critical 
accounting estimates. It also requires EIB mana gement to exercise its judgment in the 
process of applying the Fund’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements, are indicated. 
The most significant uses of judgments a nd estimates are in the following areas: 
• Fair value of financial instruments  
Where the fair values of financial assets  and financial liabilities recorded on the 
balance sheet cannot be derived from active markets, they are determined using a 
variety of valuation technique s that include use of mathem atical models. The input to 
                                                
 
6 This is based on revised standards IAS 32 and 39, as issued by  the IASB on 18 December 2003, and, consequently, does not integr ate 
the provisions set out in the version of IAS 39 endorsed by the European Commission on 19 November 2004.  
 
EN 23   ENthese models is taken from observable market s where possible, but where this is not 
feasible a degree of judgment is re quired in establishing fair values. 
• Impairment losses on financial instruments  
The Fund reviews its financial instruments at  each reporting date to  assess whether an 
allowance for impairment should be recorded in the economic outturn account. In particular, judgment by EIB management is required in estimating the amount and 
timing of future cash flows when determ ining the level of allowance required. 
3.2.3.  Summary of significant accounting policies 
3.2.3.1.  Foreign currency conversion 
These financial statements are presented in  euro (EUR), which is also the Fund’s 
operating currency. 
Monetary assets and liabi lities denominated in currencies other than euro are 
converted into euro at the exchange rate prevailing on th e date of the balance sheet. 
The gain or loss arising from such convers ion is recorded in the economic outturn 
account. 
The items of the economic outtu rn account are conve rted into euro on the basis of the 
exchange rates prevailing at the end of each month. 
3.2.3.2.  Cash and cash equivalents 
The Fund defines cash equivalents as curren t accounts or short- term deposits with 
original maturities of three months or less. 
3.2.3.3.  Short-term investments 
The bond portfolio, seen as a short-term i nvestment portfolio, is made up of euro-
denominated securities. These securities are classified as available for sale (AFS) in accordance with the accounting rules adopt ed by the Accounting Officer of the 
European Commission and, consequently, are recorded at their fair value through 
equity. Unrealised gains or losses are reporte d in reserves until such security is sold, 
collected or otherwise disposed of or until su ch security is determined to be impaired. 
Impairment losses identified  are recognised in the econom ic outturn account for the 
year. 
On disposal of an available for sale secu rity, the accumulated unrealised gain or loss 
included in equity is transferred to the ec onomic outturn account for the year. Interest 
income on available for sale securities is included in ‘interest income’. 
The fair values of available for sale inve stments are generally determined from quoted 
market rates on active markets. 
These securities are initially measured at their acquisition cost, being their fair value 
at that time. The difference between the entry price and the redemption value, i.e. the premium/discount spread, is amortised ove r the remaining life of each of the 
 
EN 24   ENsecurities using the effective interest rate method, as specified under accounting 
rule 11. 
If, in a subsequent period, the fair value of a debt instrument classified as available for 
sale increases and the increase can be objec tively related to an event occurring after 
the impairment loss was recognised in the economic outturn account, the impairment loss will be reversed and the amount of th e reversal will be recognised in the 
economic outturn account. 
Securities are considered impaired if there is objective evidence of impairment as a 
result of one or more events that occurred  after the initial rec ognition of the security 
(a ‘loss event’) and that loss event has an  impact on the estimated future cash flows 
from the security that can be reliably estimated. 
Evidence of impairment mainly consists of significant financial difficulties on the part 
of the issuer, a breach of contract, restru cturing of the debt of the issuer, a high 
probability of bankruptcy, etc. It must be stressed that disappearance of an active 
market because an entity’s financial instru ments are no longer publicly traded is not 
evidence of impairment. A downgrade of an entity’s credit rating is not, in itself, evidence of impairment, although it may be evidence of impairment when considered 
with other available information. A decline in  the fair value of a financial asset below 
its cost or amortised cost is not necessarily evidence of impairment. 
If, in a subsequent period, the fair value of a debt instrument classified as available for 
sale increases and the increase can be objec tively related to an event occurring after 
the impairment loss was recognised in the economic outturn account, the impairment loss will be reversed and the amount of th e reversal will be recognised in the 
economic outturn account. 
3.2.3.4.  Contributions 
Contributions received from the European Co mmission or paid b ack to the European 
Commission are recognised in the balance sheet on the date when payments are 
received or made. 
3.2.3.5.  Securities lending activity 
In April 2008 the Fund entere d into an automatic securi ties lending programme with 
Euroclear Bank SA/NV to lend assets from  its available for sale bond portfolio. 
Securities lent within the automatic securities lending programme are not 
derecognised from the Fund’s balance sheet as control over the contractual rights that 
these securities confer is still held by the Fund itself. 
Income from securities lending activity is  recorded in the economic outturn account 
on an accrual basis. 
3.2.3.6.  Taxation 
The Protocol on the Privileges and Immunitie s of the European Union, appended to 
the Treaty of 8 April 1965 establishing a Single Council and a Single Commission of 
 
EN 25   ENthe European Communities, stipulates that the assets, revenue a nd other property of 
the institutions of the Union are exempt from all direct taxes. 
3.3. Financial risk management 
3.3.1.  Interest rate and liquidity risks 
• Interest rate risk position 
Theoretically, hedging instruments could be used  to manage the interest rate (market) 
risk. However, as agreed between the Comm ission and the EIB, no significant risk is 
currently taken and therefor e hedging is not performed. 
As the transactions and operations are de nominated in euro only, no other hedging is 
required. 
The distribution of the Fund’s holdings  on 31 December 2009 (excluding accrued 
interest) is indicated in the table below: 
Fixed-rate investments TOTAL 
EUR 
  Segments Less than 3 
months 
EUR 3 months to 
1 year  
EUR 1 to 10 years
EUR Floating 
rate bonds 
EUR 
  
Current 
accounts 1 078  498.12 0.00 0.00 0.00 1  078  498.12
Other cash 
equivalents — at cost 36
 554  203.91 0.00 0.00 0.00 36  554  203.91
Short-term 
deposits — nominal 153
 300  000.00 0.00 0.00 0.00 153  300  000.00
AFS 
portfolio — at fair value 15
 164  224.80 73  514  480.00 901  281  274.08 39  255  400.00 1  029  215  378.88
TOTAL 206  096  926.83 73  514  480.00 901  281  274.08 39  255  400.00 1  220  148  080.91
Percentage 16.88  % 6.03  % 73.87  %3 . 2 2  % 100.00  %
On 31 December 2009, the interest rate range for the cash and cash equivalents 
(fixed-term deposits) was between 0.45  % and 0.74  % (2008: between 3.10  % and 
5.15  %).  
The effective interest rate range for the available for sale (AFS) securities portfolio is 
between 2.11  % and 5.52  % (2008: between 2.94  % and 5.52  %). 
 
EN 26   ENThe distribution of the Fund’s holdings  on 31 December 2008 (excluding accrued 
interest) is indicated in the table below: 
Fixed-rate investments TOTAL 
EUR 
  Segments Less than 3 
months 
EUR 3 months to 
1 year 
EUR 1 to 10 years
EUR Floating rate 
bonds EUR 
  
Current 
accounts 1 209  530.44 0.00 0.00 0.00 1  209  530.44
Other cash 
equivalents 
— at cost 19  842  008.01 0.00 0.00 0.00 19  842  008.01
Short-term 
deposits — 
nominal 182  557  991.00 0.00 0.00 0.00 182  557  991.00
AFS 
portfolio — 
at fair value 15  568  198.70 58  890  040.00 746  075  069.78 47  635  037.00 868  168  345.48
TOTAL 219  177  728.15 58  890  040.00 746  075  069.78 47  635  037.00 1  071  777  874.93
Percentage 20.45  % 5.49  % 69.61  %4 . 4 5  %1 0 0 . 0 0  %
 
EN 27   EN 
• Liquidity position 
The table below provides an analysis of asse ts, liabilities and e quity into relevant 
maturity groupings based on the remaining pe riod from the balance sheet date to the 
contractual maturity date. It is based on the most prudent assumptions on maturity 
dates. Therefore, in the case of liabilities the earliest possible repayment date is shown and for assets the latest possible repayment date. 
Assets and liabilities that have no contract ual maturity date are grouped together in 
the ‘Maturity undefined’ category. 
Maturity Less than 3 
months 3 months to 1 
year 1 to 10 years Maturity 
undefined TOTAL 
Assets in           
Current 
receivables 3 626.09 0.00 0.00 0.00 3  626.09 
Current 
accounts 1 078  498.12 0.00 0.00 0.00 1  078  498.12 
Short-term 
deposits 153  413  282.91 0.00 0.00 0.00 153  413  282.91 
of which: 
accrued 113  282.91 0.00 0.00 0.00 113  282.91 
Other cash 
equivalents 36 589  034.32 0.00 0.00 0.00 36  589  034.32 
of which: 
accrued 34 830.41 0.00 0.00 0.00 34  830.41 
AFS 
portfolio 22 772  460.25 86  104  184.86 940  536  674.08 0.00 1  049  413  319.19 
of which: 
accrued 7 608  235.45 12  589  704.86 0.00 0.00 20  197  940.31 
Total 213  856  901.69 86  104  184.86 940  536  674.08 0.00 1  240  497  760.63
 
EN 28   ENEquity and liabilities in EUR         
Equity 0.00 0.00 0.00 1  239  780  221.03 1  239  780  221.03
Accounts 
payable 717  539.60 0.00 0.00 0.00 717  539.60
Total 717  539.60 0.00 0.00 1  239  780  221.03 1  240  497  760.63
Net 
liquidity position on 
31.12.2009 213
 139  362.09 86  104  184.86 940  536  674.08 (1  239  780  221.03) 0.00
Cumulative 
liquidity 
position on 
31.12.2009 213  139  362.09 299  243  546.95 1  239  780  221.03 0.00   
Net liquidity 
position on 
31.12.2008 225
 250  984.27 81  719  321.55 783  787  106.78 (1  090  757  412.60) 0.00
Cumulative liquidity position on 
31.12.2008 225
 250  984.27 306  970  305.82 1  090  757  412.60 0.00   
3.3.2.  Credit risk  
• Fixed-term deposits — Pr ofile of counterparties 
In accordance with the agreement between the Community and the EIB on the 
management of the Guarantee Fund, all interbank investments should have a minimum issuer short-term rating from M oody’s or equivalent of P-1. The following 
table shows the ratings of the interbank investments on 31 December 2009, including 
accrued interest. 
31.12.2009 31.12.2008 Long-
term 
rating  Short-
term 
rating  EUR EUR 
          
Aa1 P-1 0.00 0.00  %5 4  525  499.55 29.73  %
Aa2 P-1 20  007  916.67 13.04  %5 8  424  545.44 31.85  %
Aa3 P-1 93  487  631.85 60.94  %7 0  480  508.50 38.42  %
A1 P-1 18  913  641.39 12.33  % 0.00 0.00  %
A2 P-1 21  004  093.00 13.69  % 0.00 0.00  %
           
Total   153  413  282.91 100.00  %1 8 3  430  553.49 100.00  %
• Other cash equivalents — pr ofile of counterparties 
 
EN 29   ENOn 31 December 2009, the Fund had investments in four short-term discount papers. 
The issuer profile, including accrued interest, is as follows: 
31.12.2009 31.12.2008 
Long-term rating  Short-term 
rating  EUR EUR 
         
Aaa P-1 10  493  735.01 28.68  % 0.00 0.00  %
Aa1 P-1 0.00 0.00  % 0.00 0.00  %
Aa2 P-1 0.00 0.00  %1 9  857  333.59 100.00  %
Aa3 P-1 7  998  681.86 21.86  % 0.00 0.00  %
A1 P-1 18  096  617.45 49.46  % 0.00 0.00  %
A2 P-1 0.00 0.00  % 0.00 0.00  %
         
Total   36 589  034.32 100.00  %1 9  857  333.59 100.00  %
• Available for sale portfolio — Profile of issuers 
All the securities held in the portfolio are in line with the revised management 
guidelines and meet the following criteria: 
– Securities issued or guaranteed by Me mber States: minimum rating Baa3;  
– Securities issued by a supranational instit ution, other States or public companies: 
minimum rating Aa2;  
– Covered bonds: rating Aaa;  
– Securities issued by banks and corporations: minimum rating Aa2.  
 
EN 30   ENOn 31 December 2009, the profile of the availabl e for sale portfolio of issuers and the 
market value excluding accrued interest were as follows: 
Issuer 31.12.2009 31.12.2008 
  EUR EUR 
       
BANKS Aaa  
5 248  441.50 0.51  %7 0  988  004.75 8.18  %
MEMBER STATE Aaa 345  569  222.84 33.58  %2 4 9  412  037.16 28.73  %
MEMBER STATE Aa1 37 671  628.40 3.66  %4 2  717  052.70 4.92  %
MEMBER STATE Aa2 126  846  827.20 12.32  %1 3 6  457  798.10 15.72  %
MEMBER STATE A1 27 683  049.00 2.69  %8 1  631  320.77 9.40  %
MEMBER STATE A2 91 259  008.94 8.87  %3 1  768  236.10 3.66  %
MEMBER STATE A3 0.00 0.00  %8  841  921.00 1.02  %
MEMBER STATE 
Baa1 26 120  568.10 2.54  % 0.00 0.00  %
PUBLIC COMPANY 
Aaa 216  311  016.20 21.02  %8 9  834  136.85 10.35  %
PUBLIC COMPANY 
Aa1 0.00 0.00  %1 0  517  400.00 1.21  %
CORPORATE Aaa 0.00 0.00  %4  456  000.00 0.51  %
CORPORATE Aa1 4 947  500.00 0.48  % 0.00 0.00  %
COVERED BOND Aaa 147  558  116.70 14.34  %1 4 1  544  438.05 16.30  %
       
Total 1  029  215  378.88 100.00  %8 6 8  168  345.48 100.00  %
 
EN 31   EN3.4. Short-term investments — Available for sale assets 
The following tables show the situation of the available for sale assets: 
  EUR 
Amount on 1 January 2008 903  713  224.50
Acquisitions 147  585  260.00
Disposals and withdrawals (original acquisition cost) (183  814  230.00)
Change in carrying amount — actuarial difference 5 294  965.48
Change in accrued interest (1 234  864.72)
Revaluation surplus/(deficit) fair va lue adjustment transfer to equity 15 405  312.14
Amount on 31 December 2008 886  949  667.40
 
  EUR 
Amount on 1 January 2009 886  949  667.40
Acquisitions 228  822  855.00
Disposals and withdrawals (original acquisition cost) (81  328  791.00)
Change in carrying amount — actuarial difference (2 463  198.22)
Change in accrued interest 1 416  618.39
Revaluation surplus/(deficit) fair va lue adjustment transfer to equity 16 016  167.62
Amount on 31 December 2009 1 049  413  319.19
On 31 December 2009, the nominal value of the investment portfolio was 
EUR 1  003.9 million, against a market value of EUR 1  029.2 million, without accrued 
interest. 
Accrued interest totalling EUR 20  197  940.31 on 31 December 2009 (2008: 
EUR 18  781  321.92) breaks down as follows: 
• Fixed-rate notes EUR 20  161  491.94 (2008: EUR 18  461  427.08); 
• Floating rate notes EUR 36  448.37 (2008: EUR 319  894.84). 
On 31 December 2009 the market value of secu rities lent under th e automatic security 
lending agreement with Euroclear excluding accrued interest totalled EUR 30
 316  307.73 (2008: EUR 3  492  077.83). 
 
EN 32   EN3.5. Cash and cash equivalents 
The following table shows the split of cash and cash equivalents (amounts including 
accrued interest): 
31.12.2009 31.12.2008 
Description 
EUR EUR  
Unrestricted cash     
     
Current accounts 1  078  498.12  1  209  530.44 
Short-term deposits 153  413  282.91 183  430  553.49
Other cash equivalents — Discount papers 36  589  034.32 19  857  633.59
Total 191  080  815.35 204  497  717.52
3.6. Contributions 
Contributions are increased by contribu tions received from the budget of the 
European Union and by recovery of previous  payments made by the Fund with regard 
to defaulted guaranteed loans. Contributi ons are either decreased by repayments 
requested by the European Commission or by payments the Fund is making with 
regard to defaulted guaranteed loans. Th ese cash movements are recognised in the 
balance sheet on the date when pa yments are received or made. 
During the 2009 financial year the Fund rece ived one contribution from the European 
Commission totalling EUR 91  960  000.00. By comparison, in the 2008 financial year 
the Fund had to repay EUR 125  750  000.00 to the European Commission. 
3.7. Current liabilities 
Description 31.12.2009 
EUR 31.12.2008 
EUR 
Accounts payable     
Management fees 687  539.60 658  322.32
Audit fees 30  000.00 31  650.00
Total 717  539.60 689  972.32
Management fees are payable to the EIB on an annual basis. They are calculated as a 
percentage per annum of the average of the Fund’s assets. This  percentage is a 
declining rate depending on the Fund’s assets. 
 
EN 33   EN3.8. Financial operations revenue 
2009 2008 Description 
EUR EUR 
     
Total amount, thereof: 41  753  692.10 48  802  560.79
Interest income, thereof:  41  676  644.38 47  665  167.17
Interest income on cash and  
cash equivalents  
3 496  637.06 8  043  015.28
Interest income on available for sale portfolio 38  180  007.32 39  622  151.89
Other financial income, thereof:  77  047.72 1  137  393.62
Realised gain on sale of available for sale 
portfolio  0.00 1  085  236.81
Income from securities lending activity 77  047.72 52  156.81
3.9. Financial operations expenses 
2009 2008 Description 
EUR EUR 
     
Total amount, thereof: (803  818.74) (784  325.01)
Management fees (687  539.60) (658  322.32)
Bank fees (86  279.14) (94  352.69)
Audit fees (30  000.00) (31  650.00)
3.10. Subsequent events 
There have been no material post-balan ce sheet events which would require 
disclosure or adjustment to the 31 December 2009 financial statements.