EN    EN EN 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 5.6.2009 
SEC(2009) 745 final 
  
COMMISSION STAFF WORKING DOCUMENT 
accompanying the 
 
 REPORT FROM THE COMMISSION 
 
 Annual Report from the Commission 
 on the Guarantee Fund and its Management in 2008 
  
{COM(2009) 258} 
EN 2   EN TABLE OF CONTENTS 
1. Guarantee Fund – Management Report at 31 December 2008.................................... 4 
1.1. Development of the Fund in 2008................................................................................ 4 1.2. Situation of the Fund.................................................................................................... 5  
1.2.1. The Fund’s resources at 31 December 2008................................................................ 5 1.2.2. The Fund’s assets at 31 December 2008...................................................................... 5 1.3. General and segmental analysis of the Fund................................................................ 6 1.3.1. Liquidity analysis...................................................................................................... ... 6 
1.3.2. General analysis of th e results of the Fund .................................................................. 6 
1.3.3. Analysis by segment .................................................................................................... 7  
1.3.3.1. Analysis of money markets operations ........................................................................ 7 1.3.3.2. Analysis of bond portfolio results................................................................................ 8 1.4. Performance and interest  rate risk analysis................................................................ 13 
1.4.1. Interest rate risk...................................................................................................... .... 14 
1.4.2. Performance ............................................................................................................. .. 15 
2. Statement of Financial Position of the Fund at 31 December 2008........................... 16 2.1. Economic Outturn Account (Statement of Fi nancial Performance) for the year ended 
31 December 2008 ..................................................................................................... 17 
2.2. Balance Sheet (Statement of Financia l Position) as at 31 December 2008 ............... 18 
2.3. Statement of changes in equity for the year ended 31 December 2008..................... 20 2.4. Cash Flow Statement as at 31 December 2008.......................................................... 21 3. Notes to 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 translation ...................................................................................... 23 3.2.3.2. Cash and cash equivalents.......................................................................................... 23 3.2.3.3. Short-term investments .............................................................................................. 23  
3.2.3.4. Taxation.............................................................................................................. ........ 24 
EN 3   EN 3.2.3.5. Capital ............................................................................................................... ......... 24 
3.3. Financial Risk Management....................................................................................... 24 3.3.1. Interest Rate and Liquidity Risks............................................................................... 24 3.3.2. Credit Risk ............................................................................................................. .... 26 
3.4. Short-term Investments – Available For Sale Assets................................................. 28 3.5. Cash and Cash Equivalents ........................................................................................ 29 3.6. Current Liabilities ...................................................................................................... 2 9 
3.7. Financial operations revenues.................................................................................... 29 3.8. Financial operations expenses.................................................................................... 30 3.9. Subsequent events ...................................................................................................... 30 
EN 4   EN 1. GUARANTEE FUND – MANAGEMENT REPORT AT 31 DECEMBER 20081 
1.1. Development of the Fund in 2008 
The total market value of the Guarantee Fund’ s (the “Fund”) holdings (excluding accrued 
interest) stood at € 1,071.8 million at 31 D ecember 2008 as against € 1,131.5 million at 31 
December 2007, a decrease of € 59.7 million. 
1000102510501075110011251150117512001225125012751300132513501375
Jan Mar May Jul Sep Nov(million euro)2008
2007
 
Fig.1: Development of holdings in 2008 
The decrease of the market valu e of the Fund’s holdings was main ly due to a repayment to the 
community budget amounting to €125,750,000. The payment was executed on 31 January 
2008 and represents the difference between the F und’s asset target amount and the net asset 
value of the Fund calculated at the end of the financial year 2006.  
The net operating result amounted to € 48.0 million at 31 December 2008 compared with € 
52.9 million at 31 December 2007. Interest income  on AFS assets (net of the premium / 
discount spread) amounted to € 39.6 million, represen ting 83 % of the total result recorded at 
31 December 2008. Interest income on cash & cash equivalents amounted to € 8.0 million, or 
17% of the total result. In 2008 the sale of AFS assets generated a realised gain of € 1.1 
                                                 
1 Report prepared by EIB. 
EN 5   EN million, representing 2% of the total result of the year. The rest (-2%) reflects commission and 
financial charges. 
1.2. Situation of the Fund  
1.2.1.  The Fund’s resources at 31 December 2008 
The Fund’s resources decreased by € 124.7 million, or 24% from € 527.2 million at 31 
December 2007 to 402.5 € million at 31 December 2008. 
This is explained by the movements shown in the following table: 
Resources  Situation at  Movements Situation at 
   31/12/2007 in 2008 31/12/2008 
      
Provisioning + 2,805,005, 162.91 0.00 2,805,005,162.91
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 + 575,673,913.77 1,031,094.42 576,705,008.19
Repayment of Funds (9%)  - (599,771,526.79) (125,750,000.00) 
 (725,521,526.79)
    
Balance  527,176,693.70 (124,718,905.58) 402,457,788.12
According to EC instructions an amount of € 125,750,000 was paid to the Community budget 
on 31 January 2008. In addition, on 12 December 2008 the fund received an amount of € 1,031,094 (equivalent to $ 1,371,356) repr esenting the recovery of an  intervention related to a 
loan agreement with Argentina. 
1.2.2.  The Fund’s assets at 31 December 2008 
The Fund’s holdings at 31 December 2008 ex cluding accrued interest totalled  
€ 1,071.8 million as detailed below. The Fund operates in one currency only, the Euro: 
€ 182.6 million in the monetary portfolio (nominal value of  interbank term deposits); 
€ 19.8 million in other cash equivale nts (commercial paper at cost); 
€ 1.2 million in the current accounts;  € 868.2 million in the Available For Sale (AFS) investment portfolio (the market value of 
fixed rate and variable rate s ecurities (excluding accrued intere st), see table in section 1.3.1.). 
EN 6   EN 1.3. General and segmental analysis of the Fund 
1.3.1.  Liquidity analysis 
The distribution of the Fund’s holdings at 31 December 2008 (market value excluding 
accrued interest) was as follows: 
Fixed rate investments TOTAL 
EUR 
  Segments 
Less than 3 
months 
EUR 3 months to 1 
year  
EUR 1 to 10 years 
EUR Variable rate 
securities 
EUR 
  
Current accounts 1,209,530.44 0.00 0.00 0.00 1,209,530.44
Cash equivalents 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 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% 4.45% 100.00%
1.3.2.  General analysis of th e results of the Fund 
Overall, during the reporting period 1 January 2008 to 31 December 2008 the Fund produced 
€ 48.02 million in net revenue. Investment in come at 31 December 2008 was as follows: 
 
  January – December 2008 
(in million EUR) 
   
Interest income on cash & cash equivalents  8.04 
Interest income on AFS assets  39.62 Net realised gain on sale of AFS assets  1.09 
Income from securities lending activity  0.05 
Commission and financial charges  (0.78)    
Total  48.02 
The performance of the Fund portfolio was mon itored on a marked to market basis. Over 
2008, the portfolio delivered a 6.42% MTM return, underperforming its benchmark by 
106.95bps. 
EN 7   EN 1.3.3.  Analysis by segment 
1.3.3.1.  Analysis of money markets operations 
Money-market investments (excluding accrued interest) amounted to € 202.4 million at 31 
December 2008, to be compared wi th € 246.6 million a year before. 
The € 44.2 million decrease mainly resulted from the 2008 investment strategy where the 
approved updated and amended guidelines prevailed. In order to achieve the new target allocation of at least 12% (or EUR 125 million) of the nominal am ount of the portfolio to be 
held in Money market instruments, nominal EUR 41 million were taken out of the money market subportfolio and were invested  in fixed coupon bonds above 1 year.  
• Evolution of money-market rates in 2008 
While the ECB reference rate remained unchanged  at 4% during the firs t half year, it rose by 
25bp in July, reflecting the growing concerns of  new inflationary risk. Unfortunately the 
enormous aversion to risk and reluctance amongst banks to lend to each other has been exacerbated after Lehman Brother’s collapse. Th en the monetary policy turned the other way 
round when ECB decided to drop successive ly three times (October, November and 
December) the reference rate to reach 2.50% at  the end of the year. On 15 October ECB 
decided to further expand the collateral framew ork and enhance the provision of longer-term 
refinancing. These measures as well as thos e taken by the major central banks aimed to 
minimize the impact of the financ ial crisis that finally evolved into an economic crisis and a 
confirmed recession for the vast ma jority of developed countries. 
The table below shows the evolution of the one- and three-month Euribid reference rates (i.e. 
Euribor -12.5bp). 
 
Money market rates (% )
22.533.544.555.5
01/01/08 01/04/08 01/07/08 30/09/08 30/12/08Eu ib i d 1M
E uribid 3M
 
Fig. 2: Evolution of Money Market rates during 2008 
• Profile of counterparties 
EN 8   EN In accordance with the agreemen t between the Community and the EIB on the management of 
the Fund, all banks with which deposits are pl aced should have a minimum short-term credit 
rating of P-1 (Moody's or equivalent). The breakdown, including accrue d interest, is as 
follows: 
Aa1/P-1
27%
Aa2/P-1
38%Aa3/P-1
35%
 
Fig. 3: Short term interbank investments by type of counterpart y at 31 December 20082 
• Geographical breakdown 
As regards the diversification of counterparty location, the EIB is pursuing its objective of a 
better geographical distribution throughout the countries of the European Union by placing 
the short term deposits in a number of banks lo cated in the main EU financial centers. This 
allows to search for better market conditions  and to maintain the highest degree of 
competitiveness of the yield obtained. 
1.3.3.2.  Analysis of bond portfolio results 
The bond portfolio, seen as a long-term investment  portfolio, is made up of euro-denominated 
securities initially acquired with the intent ion of holding them until maturity. Under IFRS 
(IAS), these securities are classified in the Fi nancial Statements as Available For Sale (AFS). 
At 31 December 2008, the market va lue (excluding accrued interest ) of fixed rate securities 
with a residual period to maturity of less than three months amounted to € 15.6 million, 
between 3 months and one year € 58.9 million and between one and 10 years € 746.1 million. 
The starting value of the securities in this portfolio is the acquisition cost. The difference 
between the entry price and the redemption valu e is the premium/discount spread, which is 
divided pro rata temporis  over the remaining life of each of the securities using the effective 
interest rate method as  specified under IFRS. 
At 31 December 2008, the nominal value of th e investment portfolio was € 861.1 million, 
against a clean market value of € 868.2 million. 
                                                 
2 As at 31 December 2008 short term interbank investme nts including accrued interest  amount to € 203.3 million. 
€ 183.4 million are invested in short term deposits and € 19.9 million in one discount paper. The discount paper has a rating o f Aa2/P-1.  
EN 9   EN The global (modified) duration of the bond portfo lio increased over 2008 to reach 4.0 years at 
the end of the year. As of 31 December 2008 the market value (excluding accrued interest) of 
the investment portfolio came to € 868.2 m illion compared with a book value of € 856.7 
million (including premiums/discounts), which gi ves an unrealised gain of € 11.5 million, 
compared with an unrealised loss of € 3.9 m illion and a market value (excluding accrued 
interest) of € 883.7 million at 31 December 2007.  
During 2008 the euro area 2- to 10-year yield cu rve spread steepened by 84 basis points to the 
level of 118 basis points. The movement occurred as a result of short-te rm yields declining 
more than long-term yields as shown in figure 4.  
 
Fig. 4: Euro area yield curv e flattening during 2008 using German government benchmark 
bonds  
(source Bloomberg) In accordance with the 2008 investment strategy  a total nominal amount of EUR 150 million 
was invested fixed rate bonds, mainly in the 2-  to 10-year sovereign and corporate buckets. 
After an initial immediate investment of  EUR 30 million, a further EUR 60 million was 
invested after the first ta rget zone of 4.15-20% was re ached on 24 April 2008. The second 
trigger point of 4.35-40% was reached on 28 May 2008, which resulted in further EUR 60 
million investments. The highest yield of the 10-year bund was attained on 19 June 2008 at 4.68%. 
EN 10   EN Evolution of 10-year Bund
2.833.23.43.63.844.24.44.64.8
1/01/08
15/01/08
29/01/08
12/02/0826/02/08
11/03/0825/03/08
8/04/08
22/04/08
6/05/08
20/05/08
3/06/08
17/06/08
1/07/08
15/07/08
29/07/0812/08/08
26/08/08
9/09/08
23/09/08
7/10/08
21/10/08
4/11/08
18/11/08
2/12/08
16/12/08
30/12/08TimeBid Yield
 DBR 4 01/04/18  
Fig. 5: 2008 Graph of 10-year Bund YTD yield evolution 
(source Bloomberg) 
As of 1 January 2008, a total of € 129.1 million of  reimbursements (nominal value) on the 
securities portfolio were scheduled for the year, split as follows: 
–  €109.0 million for the fixed rate, and 
–  €20.1 million for the variable rate. 
No investments in Floating Rate Notes were ex ecuted during the year 2008. € 41 million were 
executed in the beginning of 2009 in the newly government guaranteed as set class instead of 
the FRN investments foreseen in the 2008 strategy. 
• Breakdown of the investment portfolio between fixed rate and variable rate securities 
(nominal value) 
EN 11   EN Variable rate
6%
Fixed Rate
94%
 
Fig. 6: Breakdown of the investment portfolio  between fixed and variable rate securities 
at 31 December 2008  
• Redemption profile of investment  portfolio (nominal value) 
020406080100120
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018(million euro)Variable rate
Fixed rate
 
Fig.7: Investment portfolio: Redemption profile at 31 December 2008 
The latest final maturity date for fixed rate securi ties is 4 July 2018. 
• Profile of issuers 
All the securities held in the portfolio are in  line with the management guidelines and meet 
the following criteria for: 
– Securities issued by Member States: minimum rating Baa 
– Securities issued by a Public Company: minimum rating Aa2 
– Covered Bonds: rating Aaa 
EN 12   EN – Securities issued by Banks and Corporates: minimum rating Aa2 
EN 13   EN The profile of issuers at 31 December 2008 is as follows: 
M EM BER STATE Aa1
4.9%ME MBE R S TATE  Aa a
28.7%
M EM BER STATE Aa2
15 . 7 %M EM BER STATE A1
9.4%M EM BER STATE A2
3.7%M EM BER STATE A3
1. 0 %PU BLI C COMPANY Aaa
10 . 3 %BANKS Aaa
8.2%PU BLI C COMPANY Aa1
1. 2 %COVERED BOND Aaa
16 . 3 %CORPORATE Aaa
0.5%
Fig. 8: Investment portfolio: Profile of issuers at 31 December 2008 
1.4. Performance and interest  rate risk analysis 
The performance of the Fund is monitored on  a marked-to-market (MTM) basis against a 
composite index. This index is the result of the combination of the following sub-indices: 
• Euribid 1M for money-market operations 
• Euribid 3M for floating rate notes and fixed ra te bond with less than one year to maturity 
• IBOXX EUR Sovereign indices for fixed rate  bonds issued by sovereign (or similar) 
issuers, split by maturity buckets  
• IBOXX EUR Corporate indices for fixed ra te bonds issued by corporate (or similar) 
issuers, split by maturity buckets 
Index weightings are based on portfolio compos ition and are reviewed every month. The table 
below shows the average weightings over 2008: 
EN 14   EN 1.4.1.  Interest rate risk 
The interest rate risk sensitivity of the MTM valu e of the portfolio mainly stems from its fixed 
rate exposure. A 1bp increase of interest rates reduces the va lue of the portfolio by EUR 
369,936, of which EUR 365,323 is related to th e fixed rate bond exposure. The global 
modified duration of the fund arose,  at the end of 2008, at 3.32 years. 
GF Sub- Portfolios ,Market Value 
(excluding accrued 
interest) Modified 
Duration 
(Years) Interest Rate 
Exposure 
(+/-1bp) 
Floating Rate Notes  51,179,605 0.35 -/+ 1,815 
Fixed Rate Bonds 820,533,308 4.26 -/+ 365,323 
Money Market Deposits  202,670,367 0.14 -/+ 2,798 
Cash account 927,573 (3) 0 0 
Total GF 1,075,310,853 3.32 -/+ 369,936 
 
                                                 
3 The EUR 0.9 million “cash acc ount” balance reported in this table does not include any payments relating to 
commissions or fees. This explains why it does not matc h the EUR 1.2 million total balance of the “current 
account” balance reported in section 2.2. The “cash account” ba lance is however reset at the beginning of each year 
to match the total balanc e of the current accounts.  
EN 15   EN 1.4.2.   Performance 
Over 2008, the portfolio delivered a 6.42% MTM retu rn. The evolution of the portfolio return 
and excess return vis-à-vis its benchmark is presented in the following table.  
 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 %) 
31/01/2008 1,045,380,958 1.5544 1.5544  -0.0502 -0.0502 
29/02/2008 1,050,967,096 0.5344 2.0971  -0.1174 -0.1698 
31/03/2008 1,047,858,978 -0.2957 1.7951  -0.0094 -0.1790 
30/04/2008 1,045,863,842 -0.1904 1.6013  0.0749 -0.1022 
31/05/2008 1,038,984,826 -0.6577 0.9331  0.0293 -0.0717 
30/06/2008 1,030,971,120 -0.7713 0.1546  -0.0216 -0.0930 
31/07/2008 1,044,447,152 1.3000 1.4565  -0.0637 -0.1581 
31/08/2008 1,054,822,214 0.9934 2.4644  -0.0110 -0.1708 
30/09/2008 1,059,652,957 0.4580 2.9336  -0.0533 -0.2263 
31/10/2008 1,067,254,155 0.7173 3.6720  -0.3405 -0.5792 
30/11/2008 1,085,469,498 1.7067 5.4414  -0.4247 -1.0318 
31/12/2008 1,095,565,552 0.9301 6.4221  -0.0263 -1.0695 
During the first part of the year, the evolutio n of medium and long-term rates resulted in 
rather volatile portfolio monthly returns. 
Starting from the middle of Sept ember, and more precisely as  soon after the collapse of 
Lehman Brothers, a substantial widening of  the yield spreads impacted negatively the 
securities not belonging to the basket of bonds underlying the Eurozone Sovereign Iboxx 
indexes. In particular, the bonds issued by eas tern European governments, in which the GF 
portfolio has positions, suffered significant price declines during the month of October and November.  
As a consequence, the GF portfolio underperfo rmed its composite benchmark during October 
and November by 77.56 basis points. 
In December 2008 the underperformance was less se vere due to the stabilisation of the 
market, and stood at 2.63 basis points delivering a total excess return for the whole year 2008 
of -106.95 basis points. 
EN 16   EN 2. STATEMENT OF FINANCIAL POSITION OF THE FUND AT 31 D ECEMBER  2008 
The Funds’ financial statements have been prepared by the EIB in accordance with 
International Financial Reporting Standards (IFRS) and the accounting rules adopted by the European Commission, in particular “Accounting rule 11 – Financial as sets and liabilities”, 
dated September 2004
4. These financial statements are presen ted in Euro. This is the financial 
statement for the Fund's assets managed by the EIB. The annual accounts of the Guarantee Fund for the year ending of 31
st December 2008 have been audited and certified by an 
Independent Auditor. 
                                                 
4 This is based on the revised standards IAS 32 and 39 as i ssued by the IASB on 18 December 2003 and consequently, does not 
integrate the carved out provisions as set out in the version of IAS 39 endorsed by the European Commission on 19 November 
2004. 
EN 17   EN 2.1. Economic Outturn Account (Statement of Financial Performance) for the year 
ended 31 December 2008 
 Notes31.12.2008 
EUR 31.12.2007 
EUR 
Financial operations revenues 3.7 
Interest income  47,665,167.17 50,810,833.85
Interest income on cash and cash equivalents  8,043,015.28 10,018,308.25
Interest income on AFS assets  39,622,151.89 40,792,525.60
Exchange gains  1,085,236.81 2,900,301.39
Realised gains on sale of AFS assets  0.00 0.00
Reversal of impairment losses on AFS assets  0.00 0.00
Income from securities lending activities  52,156.81 0.00
Financial operations expenses 3.8 
Interest charges  0.00 0.00
Interest charges on cash and cash equivalents  0.00 0.00
Exchange losses  0.00 0.00
Realised losses on sale of AFS assets  0.00 0.00
Impairment losses on AFS assets  0.00 0.00
Other financial charges  (784,325.01) (836,434.05)
Thereof: Management fees  (658,322.32) (678,951.39)
SURPLUS FROM NON OPERATING ACTIVITIES  48,018,235.78 52,874,701.19
SURPLUS FROM ORDINARY ACTIVITIES  48,018,235.78 52,874,701.19
Extraordinary gains  0.00 0.00
Extraordinary losses  0.00 0.00
SURPLUS FROM EXTRAORDINARY ITEMS  0.00 0.00
ECONOMIC RESULT OF THE YEAR  48,018,235.78 52,874,701.19
The notes refer to the Notes to the Financial Statements. 
EN 18   EN 2.2. Balance Sheet (Statement of Financ ial Position) as at 31 December 2008  
ASSETS  Notes31.12.2008 
EUR 31.12.2007 
EUR 
CURRENT ASSETS    
Short-term Investments 3.2.3.3   
AFS Portfolio - cost  857,292,051.50 893,521,021.50
AFS Portfolio – actuarial difference  (633,286.00) (5,928,251.48)
AFS Portfolio – adjustment to fair value  (11,509,579.98) (3,895,732.16)
AFS Portfolio - accruals  18,781,321.92 20,016,186.64
AFS Portfolio – impairment   0.00 0.00
Total Short-term Investments  886,949,667.40 903,713,224.50
Cash and Cash Equivalents 3.2.3.2   
Current accounts  1,209,530.44 1,232,834.25
Short-term deposits – nominal   182,557,991.00 246,600,000.00
Accrued interests on short-term deposits  872,562.49 1,427,886.27
Other cash equivalents – cost  19,842,008.01 0.00
Accrued interests on other cash equivalent s 15,625.58 0.00
Total Cash and cash equivalents  204,497,717.52 249,260,720.52
Total Current Assets   1,091,447,384.92 1,152,973,945.02
TOTAL  1,091,447,384.92 1,152,973,945.02
 
EN 19   EN  
 LIABILITIES  Notes 31.12.2007 
EUR 31.12.2007 
EUR 
A. EQUITY    
Capital (Guarantee Fund)   402,457,788.12 527,176,693.70
Reserves   
First Time application – Fair value reserv e  56,045.30 268,318.67
Change in fair value of AFS assets   11,509,579.98 (3,895,732.16)
Accumulated surplus / deficit    
Results brought forward   628,715,763.42 575,841,062.23
Economic result of the year   48,018,235.78 52,874,701.19
Total Equity   1,090,757,412.60 1,152,265,043.63
B. CURRENT LIABILITIES    
Accounts Payable 3.6  
Sundry Payables   0.00 0.00
Others  689,972.32 708,901.39
Total Current Liabilities    689,972.32 708,901.39
TOTAL   1,091,447,384.92 1,152,973,945.02
The notes refer to the Notes to the Financial Statements. 
 
EN 20   EN 2.3. Statement of changes in equity for the year ended 31 December 2008 
Reserves Equity 
(EUR) Capital 
Fair value 
reserve Changes in fair 
value of AFS  Accumulated 
Surplus / Deficit Economic Result of 
the year Total 
Balance as of 01.01.2007 788,116,818.42 341,827.26 14,654,734.60 523,763,636.64 52,077,425.59 1,378,954,442.51
Fair value adjustment – AFS reserve 0.00 0.00 (18,550,466.76) 0.00 0.00 (18,550,466.76)
Fair value reserve 0.00 (73,508.59) 0.00 0.00 0.00 (73,508.59)
Payment from the European Union (260,940,124.72) 0.00 0.00 0.00 0.00 (260,940,124.72)
Result of the year 2006 0.00 0.00 0.00 52,077,425.59 (52,077,425.59) 0.00
Result of the year 2007  0.00 0.00 0.00 0.00 52,874,701.19 52,874,701.19
Balance as of 31.12.2007 527,176,693.70 268,318.67 (3,895,732.16) 575,841,062.23 52,874,701.79 1,152,265,043.63
Fair value adjustment – AFS reserve 0.00 0.00 15,405,312.14 0.00 0.00 15,405,312.14
Fair value reserve 0.00 (212,273.37) 0.00 0.00 0.00 (213,273.37)
Payment to the European Union (125,750,000.00) 0.00 0.00 0.00 0.00 (125,750,000.00)
Allocation of the Economic result o f 
the year 2006 0.00 0.00 0.00 52,874,701.19 (52,874,701.19) 0.00
Result of the year 2007 0.00 0.00 0.00 0.00 48,018,235.78 48,018,235.78
Balance as of 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
 
EN 21   EN 2.4. Cash Flow Statement as at 31 December 2008 
 Year to 2008 
EUR Year to 2007 
EUR 
Investing activities  
 Interest received (current accounts, de posits, commercial 8,043,015.28 10,018,308.25
 Management fee paid during the year (678,951.39) (714,719.38)
 Bank charges paid during the year (124,302.69) (156,062.66)
  Purchase of investments - AFS portfolio (147,585,260.00) (200,355,630.00)
  Proceeds of investments - AFS portfolio 178,329,979.15 214,063,079.41
  Interest received - AFS bond portfolio 40,834,028.61 44,712,208.37
 Realised gains/losses on saleof AFS assets 52,156.81
 Realised gains of AFS assets 1,085,236.81 2,900,301.39
 Net Cash Flows from investing activities 79,955,902.58 70,467,485.38
Financin g activities  
  Capital payment from Euro pean Union 0.00 0.00
  Capital re paid to Euro pean Union (125,750,000.00 )(260,940,124.72 )
  Repayments of financial liabilities 1,031,094.42 0.00
  Proceeds of financial liabilities 0.00 0.00
  Extraordinary items 0.00 0.00
 Net Cash Flows from financin g activities (124,718,905.58 )(260,940,124.72 )
Net increase/(decrease) in cash and cash equivalents (44,763,003.00) (190,472,639.34)
 Cash and cash equivalents at beginning of financial year 249,260,720.52 439,733,359.8 6
 Cash and cash equivalent s at end of financial year 204,497,717.52 249,260,720.52
 
EN 22   EN 3. NOTES TO THE FINANCIAL STATEMENTS  
3.1. General disclosures 
The rules and principles for the management of the Guarantee Fund (the “Fund”) are laid out in the 
Convention between the European Commission (the  “Commission”) and the European Investment 
Bank (the “EIB”) dated 25 November 1994 and th e subsequent amendments dated 17/23 September 
1996, 8 May 2002 and 25 February 2008.  
The main principles of the Fund are as follows: 
• The Fund will operate in one single currency bei ng Euro (EUR). It will exclusively invest 
in this currency in order to avoid any exchange rate risk. 
• Management of the Fund will be based upon th e traditional rules of  prudence adhered to 
for financial activities. It will have to pay particular attention to reducing the risks and to ensuring that the managed assets have a suffi cient degree of liquidity  and transferability, 
taking into account the commitme nts to which the Fund will have. 
3.2. Significant accounting policies 
3.2.1.  Basis of preparation 
The Fund’s financial statements have been prep ared in accordance w ith the accounting rules 
adopted by the Accounting Officer of the Euro pean Commission, in particular “Accounting 
rule 11 – Financial assets and liabilities”
5, dated December 2004 and updated in October 
2006. 
3.2.2.  Significant accounting and judgments and estimates 
The preparation of financial statements in c onformity with the acc ounting rules adopted by 
the Accounting Officer of the European Commi ssion requires the use of certain critical 
accounting estimates. It also requires management to exercise its judgment in the process of 
applying the Fund’s accounting poli cies. The area involving a high er degree of judgment or 
complexity, or areas where assumptions and estimates are significant to the financial 
statements, are disclosed. 
The most significant use of judgmen ts and estimates are as follows: 
• Fair value of financial instruments  
Where the fair values of financial assets and fi nancial liabilities record ed on the balance sheet 
cannot be derived from active markets, they are determined using a variety of valuation 
techniques that include the use of mathematical  models. The input to these models is taken 
from observable markets where possible, but where this is not feasible, a degree of judgement 
is required in establishing fa ir values. The judgments  include considerations of liquidity and 
model inputs such as correlation and vol atility for longer dated derivatives.  
                                                 
5 This is based on the revised standards IAS 32 and 39 as issued by the IASB on 18 
December 2003 and consequently, does not inte grate the carved out provisions as set 
out in the version of IAS 39 endorsed by the European Commission on 19 November 2004.
 
 
EN 23   EN • 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 a ccount. In particular, 
judgment by management is required in the es timation of the amount and timing of future 
cash flows when determining the level of allowance required. 
The Fund shall assess at each bala nce sheet date whethe r there is any objective evidence that a 
financial asset or group of financial assets is impaired. If any such evidence exists, the entity 
shall apply different rules, depending on whether the financial assets is carried at amortised 
cost or classified as availa ble-for-sale, to determine the amount of any impairment loss. 
3.2.3.  Summary of significant accounting policies 
3.2.3.1.  Foreign currency translation 
These financial statements are presented in Eu ro (EUR), which is also the Fund’s functional 
and presentational currency. 
Monetary assets and liabilities denominated in currencies other than in Euro are translated 
into Euro at the exchange rate prevailing at th e balance sheet date. The gain or loss arising 
from such translation is record ed in the economic outturn account. 
The elements of the economic outturn account ar e translated 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 current acc ounts 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 investment portf olio, is made up of euro-
denominated securities. These securities are clas sified as Available For Sale (AFS) according 
to the accounting rules adopted by the Accounti ng Officer of the European Commission and 
consequently, are carried out at their fair valu e through equity. Unrealised gains or losses are 
reported in reserves until such security is sold , collected or otherwise disposed of, or until 
such security is determined to be impaired. If an  available for sale security is determined to be 
impaired, the cumulative unrealis ed gain or loss previously recognised in own funds is 
included in economic outturn account for the year.  
Quoted securities are considered impaired if the decline in market price below cost is of such 
a magnitude that recovery of  the cost value cannot be r easonably expected within the 
foreseeable future. 
On disposal of an available for sale securit y, the accumulated unrealised gain or loss included 
in equity is transferred to the economic ou tturn account for the year. Interest income on 
available-for-sale securities is included in “interest income”. 
The determination of fair values of available fo r sale investments is generally based on quoted 
market rates in active markets. 
 
EN 24   EN These securities are initially measured at their acquisition cost, being thei r fair value at this 
moment. The difference between the entry price and the redemption value, i.e. the premium/discount spread, is amortis ed over the remaining life of each of the securities using 
the effective interest rate method as  specified under Accounting Rule 11.  
The Fund treats available-for-sale fi nancial assets as impaired when a decline in the fair value 
of an available-for-sale asset ha s been recognised directly in equity and there is objective 
evidence that the asset is impaired. A financia l asset is impaired when  its carrying amount is 
greater than its estimated r ecoverable amount. The amount of  the cumulative loss that is 
removed from equity and recognised in profit  and loss shall be the difference between the 
acquisition cost and current fair value, less any impairment loss on that financial asset 
previously recognised in profit and loss. If in a subsequent period, the fair value of a debt 
instrument classified as available-for-sale incr eases and the increase can be objectively related 
to an event occurring after the impairment loss was recognised in profit and loss, the 
impairment loss shall be reversed, with the am ount of the reversal re cognised in profit and 
loss. 
Evidence of impairment is mainly about signi ficant financial difficulties of the issuer, a 
breach of contract, a restructuring of the debt of the issuer, a high probability of bankruptcy, 
etc. It is important to stress that the disappe arance of an active market because an entity’s 
financial instruments are no l onger publicly tr aded is not evidence  of impairment. A 
downgrade of an entity’s credit rating is not, in itself, evid ence 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 it s cost or amortised cost is not necessarily 
evidence of impairment.  
3.2.3.4.  Taxation 
The Protocol on the Privileges and Immunities of  the European Union, appended to the Treaty 
of 8 April 1965 establishing a Single Council  and a Single Commission of the European 
Communities, stipulates that the assets, revenues  and other property of the Institutions of the 
Union are exempt from all direct taxes. 
3.2.3.5.  Capital 
Capital is composed of contributions received  from the budget of th e European Union and 
recovery of previous interven tions made by the Fund with rega rd to defaulted guaranteed 
loans. Deductions of capital represent e ither repayments requested by the European 
Commission or interventions the Fund is paying with regard to defaulted guaranteed loans.  
These cash movements are recognized in the ba lance sheet on the date when payments are 
received or made. 
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 Commission and the EIB, no significant risk is currently taken and therefore hedg ing is not performed. 
 
EN 25   EN As the transactions and operations are only  denominated in Euro, no other hedging is 
required. 
The distribution of the Fund’s holdings at 31 December 2008 (market value excluding 
accrued interest) is detail ed in the table below: 
 TOTAL
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% 4.45% 100.00%Variable rate 
securities
EURSegm entsFixed rate inves tments
3 months to 1 
year 
EURLes s than 3 
months
EUR1 to 10 years
EUR
 
At 31 December 2008, for the Cash and Cash equi valents (fixed term deposits), the interest 
rate range is between 3.10% and 5.15% (2007: between 4.12% and 4.83%).  
For the Available For Sale (AFS) securities portf olio, the effective interest rate range is 
between 2.94% and 5.52% (2007:  between 2.94% and 5.52%). 
The distribution of the Fund’s holdings at 31 December 2007 (market value excluding 
accrued interest) is detail ed in the table below: 
TOTAL
EUR
Current accounts 1.232.834,25 0,00 0,00 0,00 1.232.834,25
Short term deposits - 
nominal 246.600.000,00 0,00 0, 00 0,00 246.600.000,00
AFS portfolio - at fair 
value 25.484.880,00 83.951.180,00 703.003.924, 86 71.257.053,00 883.697.037,86
TOTAL 273.317.714,25 83.951.180,00 703.003. 924,86 71.257.053,00 1.131.529.872,11
Percenta ge 24,15% 7,42% 62,13% 6,30% 100,00%1 to 10 years
EURVariable rate 
securities EURSegmentsFixed rate investments
Less than 3 months
EUR3 months to 1 
year
EUR
 
• Liquidity position 
The table below provides an analysis of certain assets, liabilities and equity into relevant 
maturity groupings based on the remaining period from the balance sheet date to the contractual maturity date. It is presented under the most prude nt consideration of maturity 
dates. Therefore, in the case of liabilities the earliest possible repayment date is shown, while for assets it is the latest possible repayment date. 
Those assets and liabilities that do not have a contractual maturity date are grouped together 
in the “Maturity undefined” category. 
 
EN 26   EN  Maturity les s  than 3 
months3 mont hs t o 1 
year1 t o 10 yea rs ma turi ty
und efinedTOTAL
As s ets  in EUR
Current account 1,209,530.44 0.00 0.00 0.00 1,209,530.44
Short term deposits 183,430,553.49 0.00 0.00 0.00 183,430,553.49
of  which:
ac crued i nte rest872,562.49 0.00 0.00 0.00 872,562.49
Other cash equivalents 19,857,633.59 0.00 0.00 0.00 19,857,633.59
of  which:
ac crued i nte rest15,625.58 0.00 0.00 0.00 15,625.58
AFS portfolio 21,443,239.07 81,719,321.55 783,787,106.78 0.00 886,949,667.40
of  which:
ac crued i nte rest5,875,040.37 12,906,281.55 0.00 0.00 18,781,321.92
T otal 225,940,956.59 81,719,321.55 783,787,106.78 0.00 1,091,447,384. 92
Equity 0.00 0.00 0.00 1,090,757,412.60 1,090,757,412.60
Accounts Payable 689,972.32 0.00 0.00 0.00 689,972.32
Total 689,972.32 0.00 0.00 1,090,757,412.60 1,091,447,384.92
Net liquid ity
p o siti on a t 31.12.2008 225,250,984.27 81,719,321.55 783,787,106.78 (1,090,757,412.60) 0.00
Cumulativ e liquidity  
p o siti on a t 31.12.2008 225,250,984.27 306,970,305.82 1,090,757,412.60 0.00
Net li quidity position at 
31.12.2007 286,330,155.73 108,684,422.04 754,125,764.86 (1,149,140,342.63) 0.00
Cu mulative liq u idity  
positi on at 31.12.2007 286,330,155.73 395,014,577.77 1,149,140,342.63 0.00Eq uit y and Liabilities in EUR
 
3.3.2.  Credit Risk 
• Fixed Term Deposits - Profile of counterparties 
In accordance with the agreemen t between the Community and the EIB on the management of 
the Guarantee Fund, all interban k investments should have a minimum issuer short term 
rating from Moody's or equivalent of P-1. Th e following table shows the ratings of the 
interbank investments as at 31 Dece mber 2008 including accrued interests. 
 
Aa1 P-1 54,525,499.55 29.73 % 20,214,877.77 8.15 %
Aa2 P-1 58,424,545.44 31.85 % 53,063,919.03 21.40 %Aa3 P-1 70,480,508.50 38.42 % 100,089,040.97 40.35 %
A1 P-1 0.00 0% 74,660,048.68 30.10 %
Total 183,430,553.49 100.00 % 248,027,886.45 100.00 %31.12.2007
EUR EUR Short term 
rating  Long term 
rating 31.12.2008
 
• Other cash equivalents – pr ofile of counterparties 
As at 31 December 2008, the fund invested in one  short term discount paper. The issuer 
profile, including acc rued interest is as follows: 
 
EN 27   EN 31.12.2008 31.12.2007
EUR EUR
Aa2 P-1        19,857,333.59   0.00 Long term 
rating  Short term 
rating 
 
• Available for Sale portfo lio - Profile of issuers 
All the securities held in the portfolio are in line with the revised management guidelines and 
meet the following criteria for: 
– Securities issued by Member States: minimum rating Baa3  
– Securities issued by a Supranati onal, other States or Public Company: minimum rating Aa2  
– Covered Bonds: rating Aaa  
– Securities issued by Banks and Co rporates: minimum rating Aa2  
As at 31 December 2008, the profile of the available for sale portfo lio of issuers, market value 
excluding accrued intere sts is as follows: 
 31.12.2008 Issuer 
EUR 
BANKS Aaa 70,988,004.75 8.18%
MEMBER STATE Aaa 249,412,037.16 28.73%
MEMBER STATE Aa1 42,717,052.70 4.92%
MEMBER STATE Aa2 136,457,798.10 15.72%
MEMBER STATE A1 81,631,320.77 9.40%
MEMBER STATE A2 31,768,236.10 3.66%
MEMBER STATE A3 8,841,921.00 1.02%
PUBLIC COMPANY Aaa 89,834,136.85 10.35%
PUBLIC COMPANY Aa1 10,517,400.00 1.21%
CORPORATE Aaa 4,456,000.00 0.51%
COVERED BOND Aaa 141,544,438.05 16.30%
Total 868,168,345.48 100.00%
  
As at 31 December 2007 the available for sale portfolio profile of issuers, market value 
excluding accrued intere sts was as follows: 
 
EN 28   EN  Issuer 31.12.2007 
EUR 
Banks Aaa 177,352,215.06 20.08% 
Banks Aa1 4,915,010.00 0.56% 
Government Body Aaa 3,124,701.00 0.35% 
Multi Lateral Development 
Bank Aaa 5,209,261.13 0.59% 
Member States Aaa 86,910,512.46 9.83% 
Member States Aa1 71,605,941.05 8.10% 
Member States Aa3 81,475,980.10 9.22% 
Member States A1 73,552,307.35 8.32% 
Member States A2 121,534,031.96 13.75% 
Member States A3 3,694,547.60 0.42% 
Member States Baa1 9,623,456.00 1.09% 
Other Financial Institutions 
Aaa 40,367,984.10 4.57% 
Public Companies Aaa 109,410,776.75 12.38% 
Public Companies A2 10,088,400.00 1.14% 
Special Purpose Vehicle Aaa 84,831,913.30 9.60% 
Total 883,697,037.86 100.00% 
  
3.4. Short-term Investments – Available For Sale Assets 
The following table shows the situation of the Available For Sale Assets during 2008: 
 EUR
Amount at 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 & change of accrual amount) 4,060,100.76Revaluation surplus/(deficit) fair value adjustment transfer to equity 15,405,312.14
Amount at 31 Decemb er 2008 886,949,667.40
 
At 31 December 2008, the nominal value of th e investment portfolio was EUR 861.1 million, 
against a market value of EUR 868.1 million, without accrued interests. 
Accrued interest at 31 Decem ber 2008 amounting to EUR 18,781,321.92 (2007: 
EUR 20,016,186.64) is split between: 
• Fixed rate notes EUR 18,461,427.08 (2007: EUR 19,572,460.14) 
• Floating rate notes EU R 319,894.84 (2007: EUR 443,726.50) 
 
EN 29   EN 3.5. Cash and Cash Equivalents 
The following table shows the split of cash a nd cash equivalents (amounts including accrued 
interest): 
 31.12.2008 31.12.2007
EUR EUR 
Unrestricted Cash
Current Accounts           1,209,530.44            1,232,834.25 
Short term deposits 183,430,553.49 248,027,886.27
Other cash equivalents - Discount Papers 19,857,633.59 0.00
Total 204,497,717.52 249,260,720.52Description
 
3.6. Current Liabilities 
 Description 31.12.2008
EUR31.12.2007
EUR
Accounts Payable
Management Fees 658,322.32 678,951.39
Audit Fees 31,650.00 29,950.00
Total 689,972.32 708,901.39 
Management fees are payable to the EIB (hereafte r referred to as the management fees) on an 
annual basis. The management fees are calculate d as a percentage per annum of the average 
of Fund’s assets. This percentage is a d eclining rate dependin g on the Fund’s assets. 
3.7. Financial operations revenues 
 2008 2007
EUR EUR
Total amount, thereof: 48, 802,560.79 53,711,135.24
Interest income, thereof: 47,665,167.17 50,810,833.85
Interest income from short-term investments and cash cash equivalents 8,043,015.28 10,018,308.25Interest income on AFS assets 39,622,151.89 40,792,525.60
Other financial income, thereof: 1,137,393.62 2,900,301.39
Net realized gain on sale of financial assets 1,085,236.81 2,900,301.39Income from securities lending activity 52,156.81 0.00Description
 
The net realized gain on sale of financial assets EUR 1,085,236.81 is exclusively made up of a 
total gain of seven sa les during the year.  
In April 2008 the Fund entered in to an automatic security lendi ng agreement with Euroclear. 
Under this agreement all risks and rewards of the securities lent remain within the Fund. Fees 
from security lending are paid on a monthly basis.  
As at 31 December 2008 the market value of the securities lent excluding accrued interest 
amounts to EUR 3,492,078. 
 
EN 30   EN 3.8. Financial operations expenses 
 2008 2007
EUR EUR
Total amount, thereof: ( 784,325.01) (836,434.05)
Other financial charges (784,325.01) (836,434.05)Description
 
3.9. Subsequent events 
There have been no material post-balance shee t events, which would require disclosure or 
adjustment to the 31 December 2008 financial statements.