WRITTEN QUESTION E-3664/00

by Piia-Noora Kauppi (PPE-DE) to the Commission

(27 November 2000)

Subject: The European Investment Bank's operations on the Finnish loan market

According to newspaper reports, the European Investment Bank's operations on the Finnish loan market have begun to cause problems for Finnish banks. Banks find the EIB competing with them, granting loans to the same recipients but on more favourable terms. According to Finnish banks, the EIB can grant loans on easier terms because it does not need to worry about economic principles and its own costs are low. Representatives of Finnish banks stress that they would not criticise the EIB if it only financed projects which would not obtain commercial funding. However, Finnish banks are not happy about the EIB's granting loans for normal business activity.

Finnish banks are afraid that the loan market may be distorted.

1. How will the Commission ensure that the EIB's operations do not distort competition on the market for loans to industry?

2. How will the Commission ensure that, when the EIB's operations are reformed, its terms of reference are amended so as to prevent those operations from encroaching upon the individual loan market?

Answer given by Mr Solbes Mira on behalf of the Commission

(31 January 2001)

The European Investment Bank (EIB) is a Community institution, established by the EC Treaty and owned by the Member States, which provide its capital. The EIB's ultimate governing body is the Board of Governors, composed of the ministers of Finance of the Member States. All loans made by the Bank are approved by the Board of Directors, of which 24 are nominated by the Member States and the Commission nominates one.

According to the EC Treaty, EIB's task is to contribute to the balanced and steady development of the common market in the interest of the Community. The EIB is also bound by the principles of the EC Treaty, including those regarding free competition. In its financing activities, in line with Community policies, projects for regional development have remained the foremost priority since its creation in 1958. More than two thirds of EIB lending in Member States is for projects located in assisted areas with Finland being no exception. Other priority areas are trans-European networks (TENs) and small and medium sized enterprises (SMEs). The EIB's Amsterdam Special Action Programme (ASAP) notably emphasises the financing of SMEs, health and education, urban renewal, environment and trans-European networks. The EIB Innovation 2000 Initiative, implemented after the Lisbon European Council, aims to support the capacity to innovate in the Community, by orienting the EIB's lending resources towards investments in information and communication technologies, in research and development (R&D) or other intangibles.

The Statute of the EIB stipulates that EIB shall grant loans to the extent that funds are not available from other sources on reasonable terms and that loans shall be granted, as far as possible, only on condition that other sources of finance are also used. In line with the Statute, EIB limits its share of financing to maximum 50 % of the cost of a project. When financing major projects in Finland in recent years, EIB's share of the total cost was below that limit. These transactions usually involve the active participation by commercial financial institutions as guarantors or co-financiers. Furthermore, EIB is committed to pursuing a dialogue and co-operation with local financial institutions with the aim of achieving the best use of each party's comparative advantages.