Annual Report from the Commission on the Guarantee Fund and its Management in 2000
Date: 2001-06-21
Institutions: European Commission
Subjects: EIB loan, activity report, balance sheet, credit guarantee, financial management, financial year, fund (EU), legal basis

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 21.06.2001
COM(2001) 305 final

ANNUAL REPORT FROM THE COMMISSION

on the Guarantee Fund and its Management in 2000

CONTENTS

Annual Report from the Commission on the Guarantee Fund and its Management in 2000 .... 1

1.

2.

3.

3.1.

3.2.

3.3.

4.

4.1.

4.2.

Legal bases............................................................................................................... 4

Position of the Fund at 31 December 2000................................................................ 4

Payments into the Fund ............................................................................................ 5

Payments from the general budget in the course of the financial year........................ 5

Interest from financial investment of the Fund’s liquid assets ................................... 6

Recovery from defaulting debtors............................................................................. 7

The Fund’s liabilities................................................................................................ 7

Default payments...................................................................................................... 7

EIB remuneration ..................................................................................................... 7

ANNEX I: Legal bases for payments to the Guarantee Fund from the general budget ............ 9

1.

2.

3.

Decisions covered by Transfer 6/2000 ...................................................................... 9

Decisions covered by Transfer 69/2000 .................................................................. 10

Decisions covered by Transfer 74/2000 .................................................................. 10

ANNEX II: EIB Status Report on the Fund and its management revenue and expenditure
account and balance sheet at 31 December 2000 .................................................................. 11

1.

2.

2.1.

2.2.

2.3.

3.

3.1.

3.2

Development of the Fund in 2000........................................................................... 11

Situation of the Fund .............................................................................................. 11

Resources at 31 December 2000 ............................................................................. 11

The Fund’s assets at 31 December 2000 ................................................................. 12

Liquidity risk.......................................................................................................... 12

Guarantee Fund investments: Analysis of results and performance in 2000............. 13

General analysis ..................................................................................................... 13

Sectoral analysis..................................................................................................... 14

3.2.1.

Treasury operations ................................................................................................ 14

3.2.2.

Investment portfolio ............................................................................................... 16

ANNEX III: Consolidated financial balance sheet of the Guarantee Fund at 31 December
2000..................................................................................................................................... 22

2

1. LEGAL BASES

Council Regulation (EC, Euratom) No 2728/94 of 31 October 1994 set up a
Guarantee Fund for external operations in order to repay the Community’s creditors
in the event of default by beneficiaries of loans granted or guaranteed by the
Community.

In accordance with Article 6 of the Regulation, the Commission entrusted financial
management of the Fund to the European Investment Bank (EIB) under an
Agreement signed between the Community and the EIB on 23 November 1994 in
Brussels and on 25 November 1994 in Luxembourg.

Under Article 8.2 of the Agreement, by 1 March each year the Bank must send the
Commission a status report on the Fund and its management, the revenue and
expenditure account and the financial statement for the Fund for the preceding year.
An extract from the report covering 2000 is in Annex II.

In addition, Article 7 of
the Regulation establishing the Fund requires the
Commission to send the European Parliament, the Council and the Court of Auditors
a report on the situation of the Fund and its management for each financial year by
31 March of the following year.

2. POSITION OF THE FUND AT 31 DECEMBER 2000

At the close of the 2000 financial year, the Fund totalled EUR 1 432 248 964.36
(Annex II). This is the sum, since the Fund was established, of all:

–

–

–

–

–

budget payments to the Fund (EUR 1 824 703 500.00);

successive yearly net results (EUR 210 473 626.02) and interest received on
late recoveries;

late repayments from non-member countries (EUR 326 997 369.48);

debts corresponding to the repayments not made to the Bank (EUR
689 783.78);

less: calls on the Fund’s resources (EUR 458 915 314.92) and successive
repayments to the budget of the surplus in the Fund (EUR 471 700 000.00).

After the Bank’s remuneration is deducted, the Fund total at 31 December 2000
comes to EUR 1 431 559 180.58.

The total amount of
is EUR
the consolidated balance sheet
1 647 343 813.45, which breaks down into EUR 489 000 000 in deposits, EUR
1 864 299.31 on current account, EUR 919 302 277.87 in the securities portfolio,
EUR 22 082 387.18 in interest accrued and not yet due at 31.12.00 (EUR
4 070 765.00 in interest accrued and not yet due on fixed-term deposits, EUR
18 011 622.18 in coupons accrued and not yet due) and EUR 215 094 849.09 in
receivables from the recipients of loans granted or guaranteed by the Community,
including EUR 164 598 428.11 in principal, interest due and default interest covered

(Annex III)

3

by guarantee payments under the Fund and EUR 50 496 420.98 in default interest
accrued but not received at 31 December 2000.

Article 3 of the Regulation establishing the Fund requires that the amount of the
Fund has to reach an appropriate level (target amount) set at 9% of the total
outstanding capital liabilities arising from each operation, plus unpaid interest due.

Outstanding lending and loan guarantee operations for non-member countries plus
unpaid interest due totalled EUR 14 068,8 million at 31 December 2000, of which
EUR 164.6 million was accounted for by interest due but not yet paid.

The ratio between the Fund’s resources and outstanding capital liabilities within the
meaning of the Regulation was 10.17%. Since this is higher than the target amount of
9%, there had to be a repayment from the Fund to the general budget of the
Communities, as provided for in the third paragraph of Article 3 of the Regulation.
The amount to be repaid to the budget came to EUR 165.36 million.

The following sections describe developments affecting the Fund’s resources and
liabilities in 2000

3. PAYMENTS INTO THE FUND

3.1.

Payments from the general budget in the course of the financial year

Article 1 of the Regulation of 25 May 1999 amending the Regulation establishing the
Fund stipulates that the Fund is to be endowed by payments from the general budget
equivalent to 9% of the capital value of loan and loan guarantee operations until the
target amount is reached. This Article also lays down that the provisioning rate is to
be raised to 10% for new operations if the Fund’s resources fall below 75% of the
target amount as a result of guarantees being activated to cover any default.

The legal bases for the provisioning arrangements are described in Annex I.

The Council Decision of 31 October 1994 concerning budgetary discipline
authorised the entry in the general budget of a reserve for loan and loan guarantee
operations. This item, which was allocated provisions of EUR 203 million in 2000, is
used for endowing the Fund by transferring amounts into the budget
item for
payments into the Fund.

On these legal bases, three transfers totalling EUR 186 290 500 were adopted by the
budgetary authority in 2000 to endow the Guarantee Fund.

–

–

Transfer 6/2000: EUR 150 403 000 This first transfer at the beginning of the
year was for payments into the Fund in respect of the Council Decisions of 24
January 1994, 14 April 1997, 19 May 1998, 14 December 1998, 29 November
in accordance with the
1999, 22 December 1999, and 21 March 1994,
arrangements set out in the Annex to the Regulation establishing the Fund.

Transfer 69/2000: EUR 15 412 500 This second transfer was for payments into
the Fund in respect of loan operations adopted by the Council on 20 March
2000, 10 July 2000 and 7 November 2000. The decisions covered by this
transfer are given in Annex I.

4

–

Transfer 74/2000: EUR 20 475 000. This third transfer was for payments into
the Fund in respect of loan operations adopted by the Council on 4 December
2000.The decisions covered by this transfer are given in Annex I.

The first of the three annual transfers to the Fund was made in April, and the
remaining two in December 2000.

3.2.

Interest from financial investment of the Fund’s liquid assets

The Fund’s liquid assets are invested in accordance with the management principles
laid down in the Annex to the Community/EIB Agreement.

These principles state that during the Fund’s first years of operation it will be treated
as a money-market investment fund dealing solely in short-term instruments up to
one year, as long as the total amount invested does not exceed ECU 300 million. As
the amount of the Fund exceeded this ECU 300 million threshold in 1995, the
Commission agreed with the EIB to amend the investment principles early in 1996.

The new management procedures are based in principle on a ratio of one third
invested for one year and two thirds for a maximum of 10 years, although at least
EUR 150 million has to be short-term investments. The average term of investments
from the Fund’s assets must not exceed five years.

The list of banks authorised to receive deposits is agreed by the Commission and the
EIB. The original list has been revised several times in the light of the latest changes
in bank ratings. Most of the banks are members of the euro clearing system. They all
have a Moody’s rating of at
long-term and P1 for short-term
investments, and investments made with them are governed by rules to ensure a good
spread and avoid the concentration of risk.

least A1 for

In 2000 interest on deposits, the Guarantee Fund current account and securities
totalled EUR 62 728 173.51, broken down as follows:

–

–

–

deposits: EUR 18 996 521.08. This represents the situation at 31 December
including interest received on bank deposits (EUR 17 082 335.80) and changes
in interest accrued (EUR 1 914 185.28)
in 2000. The interest accrued
corresponds to interest which has not been received by the Fund at the end of
the year but will be paid at the dates fixed for maturity of the investments. The
interest accrued at 31 December 2000 (EUR 4 070 765.00) is reduced by the
accrued interest entered in the accounts for 1999 but received in 2000 (EUR
2 156 579.72).

Current accounts: EUR 157 806.60, comprising interest recorded on the current
account.

Securities portfolio: EUR 43 573 845.83. The interest on securities is generated
by investments placed in the form of securities in accordance with the
investment principles laid down in the Agreement giving the EIB the task of
managing the Fund’s liquid assets. From this figure must, however, be
subtracted the EUR 4 521 285.47 charged in the course of the year as the
difference between the entry price and the redemption value divided pro rata
temporis over the remaining life of the securities held (corresponding to the
spread of the premium or discount entered in the profit-and-loss account).

5

The interest received is entered in the results for the financial year.

3.3.

Recovery from defaulting debtors

Any late repayments by defaulting countries on operations where the Fund has
honoured the guarantee are paid into the Fund. The running total now comes to EUR
326 997 369.48 (see point 2.1 of Annex II).

4. THE FUND’S LIABILITIES

4.1.

Default payments

The Fund’s guarantee was called in on three occasions in 2000, involving a total of
EUR 17 355 629.49 (see point 2.1 of Annex II).

4.2.

EIB remuneration

Article 6 of the management Agreement between the Commission and the EIB sets
an annual commission of 0.125% calculated on the Fund’s average monthly
balances. The figure is to be reviewed at the end of any year in which the Fund’s
liquid assets reach ECU 300 million and no later than three years following the date
of the first payment into the Fund, taking into account such things as the growth of
the Fund’s activities.

the end of 1995,
the EIB’s
As the Fund had reached ECU 300 million at
remuneration was reviewed. Taking into account
the Bank’s experience of the
workload involved in its management, a supplementary Agreement dated 17
September and 23 September 1996 to the Agreement on the financial management of
the Fund reduced the annual payment to 0.05% of the Fund’s assets; this rate was
applied retrospectively to 31 December 1994.

For 2000 the Bank’s remuneration was fixed at EUR 689 783.78, entered in the
profit-and-loss account and as accruals (liabilities) on the balance sheet. This
payment was made to the EIB on 13 February 2001.

6

ANNEX I
Legal bases for payments to the Guarantee Fund from the general budget

The Annex to the Regulation, which concerns the arrangements for payments under the
Guarantee Fund, stipulates that, for borrowing/lending operations or guarantees to financial
bodies under a framework facility spread over several years and with a micro-economic and
structural purpose, payments will be made in annual tranches calculated on the basis of the
annual amounts indicated in the financial statement attached to the Commission proposal,
adapted, where appropriate, in the light of the Council decision.

In the case of other borrowing/lending operations such as balance-of-payments loans to non-
member countries, irrespective of whether they are made in one or more than one tranche, the
amount to be paid into the Fund will be calculated on the basis of the total amount for the
operation decided on by the Council.

Three transfers were made under this procedure in 2000.

1.

DECISIONS COVERED BY TRANSFER 6/2000

As part of the financial cooperation with the Mediterranean countries:

–

–

–

–

–

–

Council Decision of 24 January 1994 for a three-year loan of ECU 115 million
for Syria.

Council Decision of 14 April 1997 granting a Community guarantee to the EIB
against
losses on loans for projects outside the Community (Central and
Eastern European countries, Mediterranean countries, Latin American and
Asian countries and South Africa).

Council Decision of 19 May 1998 granting a Community guarantee to the EIB
against
losses on loans for projects in the former Yugoslav Republic of
Macedonia and amending Decision 97/256/EC granting a Community
guarantee to the European Investment Bank against losses on loans for projects
countries,
outside
Mediterranean countries, Latin American and Asian countries and South
Africa).

and Eastern European

the Community

(Central

Council Decision of 14 December 1998 amending Decision 97/256/EC so as to
extend the Community guarantee granted to the EIB to cover loans for projects
in Bosnia and Herzegovina.

Council Decision of 29 November 1999 granting a Community guarantee to
the European Investment Bank against losses on loans for projects for the
reconstruction of the earthquake-stricken areas of Turkey. These loans are
limited to an overall ceiling of EUR 600 million over a period of three years.

Council Decision of 22 December 1999 granting a Community guarantee to the
European Investment Bank against losses on loans for projects outside the
Community (Central and Eastern Europe, Mediterranean countries, Latin
America and Asia and the Republic of South Africa) which sets an overall loan
to EUR 18 410 million over a period of seven years,
ceiling equivalent

7

beginning on 1 February 2000 for Central and Eastern Europe,
the
Mediterranean countries, Latin America and Asia and on 1 July 2000 for the
Republic of South Africa and ending for all regions on 31 January 2007.

2.

DECISIONS COVERED BY TRANSFER 69/2000

–

–

–

Council Decision of 20 March 2000 amending Decision 97/787/EC providing
exceptional financial assistance for Armenia and Georgia in order to extend it
to Tajikistan. The amount of aid made available to Tajikistan, in the form of
loans, is EUR 75 million.

Council Decision of 10 July 2000 providing supplementary macro-financial
assistance of EUR 15 million to Moldova.

Council Decision of 7 November 2000 amending Decision 2000/24/EC so as to
extend the Community guarantee granted to the European Investment Bank to
cover loans for projects in Croatia. These loans are limited to an overall ceiling
of EUR 250 million over a period of four years.

3.

DECISIONS COVERED BY TRANSFER 74/2000

Council Decision of 4 December 2000 amending Decision 2000/24/EC so as to
establish a European Investment Bank special action programme in support of the
consolidation and intensification of the EC-Turkey customs union. These loans are
limited to an overall ceiling of EUR 450 million.

8

ANNEX II
EIB Status Report on the Fund and its Management Revenue and Expenditure Account
and Balance Sheet at 31 December 2000

1.

DEVELOPMENT OF THE FUND IN 2000

As stated in point 2.2, the total holdings of the Fund stood at EUR 1 410.1 million at
31 December 2000 as against EUR 1 297.8 million at 31 December 1999, an increase
of EUR 112.3 million.

1600

1400

1200

1000

800

600

400

200

0

]
s
n
o

i
l
l
i

m
R
U
E

[

2000

1999

0
0
-
n
a
J

0
0
-
b
e
F

0
0
-
r
a
M

0
0
-
r
p
A

0
0
-
y
a
M

0
0
-
n
u
J

0
0
-
l
u
J

0
0
-
g
u
A

0
0
-
p
e
S

0
0
-
t
c
O

0
0
-
v
o
N

0
0
-
c
e
D

Fig. 1: Changes in assets in 2000

On 18 April 2000 the Fund received EUR 42.5 Million: on the one hand, a surplus of
EUR 107.9 million was repaid to the Commission under Article 7 of the Agreement,
and, on the other, the Fund’s resources were increased by EUR 150.4 million. The
Fund’s resources were again increased by EUR 35.9 million on 29 December 2000.

The operating result came to EUR 57.4 million at 31 December 2000 as against EUR
41.1 million at 31 December 1999. Portfolio income (net of the spread of
premiums/discounts) came to EUR 39.1 million, representing more than 68% of the
revenue recorded at 31 December 2000.

2.

SITUATION OF THE FUND

2.1.

Resources at 31 December 2000

The Guarantee Fund balance increased by EUR 61 million, or approximately 5.3%,
from EUR 1 160 million at 31 December 1999 to EUR 1 221 million at 31 December
2000.

This is due to the movements shown in the following table:

9

Resources

Provisions

Repayment of surplus

Activation of guarantee

Recovery of amounts guaranteed

Balance

Situation at

Movements

Situation at

31/12/99

in 2000

31/12/00

+

-

-

+

1,638,413,000.00

186,290,500.00

1,824,703,500.00

363,800,000.00

107,900,000.00

471,700,000.00

441,559,685.43

17,355,629.49

458,915,314.92

326,997,234.09

135.39

326,997,369.48

1,160,050,548.66

61,035,005.90

1,221,085,544.56

EUR 5.1 million was paid out from the Fund on 12 May 2000, EUR 4.9 million on 5
September 2000 and EUR 7.4 million on 22 December 2000, giving a total of EUR
17.4 million for 2000.

The payment of EUR 135.39 represents the interest received on late payments in
respect of guaranteed amounts recovered from defaulting debtors in 2000.

2.2.

The Fund’s assets at 31 December 2000

The Fund’s assets at 31 December 2000 came to EUR 1 410.1 million, broken down
as below. The Fund operates in one currency only – the euro.

–

–

–

EUR 489 million invested in short-term monetary deposits, i.e. 34.68%;

EUR 1.8 million on current account, i.e. 0,13%;

EUR 919.3 million in the investment portfolio, i.e. 65.19% (see table in 2.3).

2.3.

Liquidity risk

In accordance with the strategy agreed with the Commission for the management of
Guarantee Fund assets in 2000, the funds available are distributed as follows:

Fixed-rate investments
less than 3 months

3 months to 1 year

1 to 6 years

Variable-rate
securities

TOTALS

Current accounts

Fixed-term deposits

Securities portfolio

TOTALS

%

1,864,299.31

310,000,000.00

179,000,000.00

1,864,299.31

489,000,000.00

36,997,404.28

66,723,419.06

422,027,415.78

393,554,038.75

919,302,277.87

348,861,703.59

245,723,419.06

422,027,415.78

393,554,038.75

1,410,166,577.18

24.74

17.42

29.93

27.91

100.00

Coverage of more than EUR 348 million1 at less than three months is maintained to
correspond to the time within which the Commission must call on the Fund in the
event of defaults on loan repayments.

1 The required minimum as set out in the management principles is EUR 150 million.

10

The remaining assets have been spread over the interest-rate curve for up to six years
so that there is a regular flow of revenue and sufficient liquidity. At 31 December
2000 the target structure – one third short-term and two thirds divided equally into
fixed-rate securities and variable-rate securities – had generally been respected. In
accordance with the investment strategy for 2000, priority was given to the purchase
of fixed-interest securities.

At 31 December 2000 the average term of long-term fixed-rate investments came to
2.3 years, compared with the maximum 2.5 years authorised; the average term for
variable-rate securities was 1.2 months. Except
in exceptional cases, fixed-term
deposits are systematically renewed for between three and six months, in accordance
with the Commission’s instructions on extending the duration of all of the assets
invested in the Fund.

3.

GUARANTEE FUND INVESTMENTS: ANALYSIS OF RESULTS AND PERFORMANCE IN
2000

3.1.

General analysis

Overall, the Guarantee Fund produced EUR 57.4 million in net revenue, an overall
average yield of 4.19%2 as compared to the average three-month Euribid reference
rate of 4.27% for the same period, in a period of rising short-term interest rates (see
point 3.2.1).

Investment income at 31 December 2000 was as follows:

2000 (EUR millions)

Interest on short-term investment

Interest on securities

Interest on current account

Spread of premium or discount

Commissions and financial charges

Total

3.2

Sectoral analysis

3.2.1. Treasury operations

19.0

43.5

0.2

-4.5

-0.8

57.4

Investments in 2000 produced EUR 19 million in interest on capital averaging EUR
450.8 million. The yield on investments in 2000 averaged 4.14%3, as against 2.97 %
at 31 December 1999, because of the rise in short-term rates and the extreme
volatility of the financial markets. The increase in money-market rates was more
pronounced with the euro than with other currencies and thus had a twofold effect:
on the one hand, the yield on investments improved, while on the other, the yield
spread deteriorated (the benchmark three-month Euribid rose significantly). It should

2 The basis for the calculation of overall yield is: act/360.
3 The basis for the calculation of short-term operations on the money market is: act/360.

11

be remembered that the benchmark reflects the rise in rates (immediate effect), while
the effect on the yield of the monetary portfolio is delayed due to the scheduling and
extension of investments.

The spread calculated in this way is 13 basis points below the three-month Euribid
variable reference rate4. This spread does not reflect the margin obtained at the
beginning of operations, and this margin is not
taken into consideration when
calculating yield.

Period

Yield

Euribid three-month
reference

Spread

2000

4.14%

4.27%

-0.13%

• Changes in yield and reference rates in 2000

The table below shows the rates obtained for short-term money-market
compared with the three-month Euribid reference rate.

investments as

5.5

5

4.5

4

3.5

3

EURIBID 3-MONTH

YIELD

Fig. 2: Yield in relation to the benchmark rate

In a context of rising short-term interest
the yield of the monetary portfolio
systematically lags behind the benchmark, while in absolute terms the overall yield of the
portfolio followed the market and increased by 1.17% in 2000.

rates,

• Profile of counterparties

In accordance with the Agreement between the Community and the Bank on the management
of the Guarantee Fund, all the securities held have a minimum credit rating of A1.

4 The treasury spread measures the difference between the actual interbank investment rate obtained, and the benchmark

variable, which is the three-month Euribid rate for that day.

12

A1

28 %

AA1

10 %

AA2

14 %

AA3

48 %

term investment by type of counterparty at 31/12/00

Fig. 3: Breakdown of short-

• Geographical breakdown

The geographical breakdown in terms of average capital of the countries with which the Fund
made short-term deposits in 2000 was as follows:

]
s
n
o

i
l
l
i

m
R
U
E

[

140

120

100

80

60

40

20

0

l

y
a
t
I

i

m
u
g
e
B

l

e
c
n
a
r
F

d
n
a
e
r
I

l

a
i
r
t
s
u
A

y
n
a
m
r
e
G

n
e
d
e
w
S

s
d
n
a
l
r
e
h
t
e
N

g
r
u
o
b
m
e
x
u
L

i

n
a
p
S

k
r
a
m
n
e
D

i

m
o
d
g
n
K
d
e
t
i
n
U

Fig. 4: Short-term investments: geographical breakdown of average capital

The EIB is pursuing its objective of a better geographical distribution throughout
the
countries of the European Union while at the same time maintaining the competitiveness of
the yield obtained.

3.2.2. Investment portfolio

The securities portfolio, seen as an investment portfolio, is made up of securities in
euros acquired with the intention of keeping them until maturity: at 31 December
2000 the fixed-interest securities whose residual period to maturity is less than 3
months totalled EUR 37 million. The other fixed-interest securities (with a residual
period to maturity of between 3 months and 6 years) total EUR 488.8 million. The
variable-rate securities total EUR 393.5 million, giving an overall book value of
EUR 919.3 million.

13

The starting value of the securities in this portfolio is the acquisition cost. The
difference between the entry price and the redemption value is divided pro rata
temporis over the remaining life of each of the securities.

At 31 December 2000 the nominal value of the investment portfolio was EUR 914.1
million against a book value of EUR 919.3 million (including the premium and
discounts to be written off).

The portfolio yielded a result of 39.3 million at 31 December 2000. This result
breaks down as follows:

Interest received

43 573 845.83

Spread of premium / discount

-4 521 285.47

39 052 560.36

The book yield on the investment portfolio came to 4.34 % at 31 December 2000
compared with 3.68% at 31 December 1999. In terms of a Salomon index reference
benchmark for fixed-rate securities and the three-month Euribid for variable-rate
securities, the overall spread is negative by 33 basis points compared with the
aggregate benchmark of 4.67% (see Annex 2). This negative yield is the result of the
rise in long-term rates in 2000. The benchmark reflects the actual changes in rates.
while the portfolio’s yield lags behind the market because of phased reinvestments.
The aggregate benchmark stood at 3.23% at 31 December 1999.

The bond portfolio is an investment portfolio which means that it is the intention to
keep the securities in the portfolio until they mature. The managers have decided to
invest a proportion of the Fund’s resources in this type of fixed-rate product (see
page 10, point 2.3), which allows a higher yield than monetary instruments. By way
of information, at 31 December 2000 the market value of the investment portfolio
came to EUR 919.8 million compared with a book value of EUR 919.3 million
(including premiums/discounts), which gives an unrealised gain of EUR 0.5 million.
This unrealised gain is the result of the recovery of long-term rates in 2000. The aim
being to improve the overall yield of the Fund, the investment portfolio has resulted
in an increase in yield from 4.14 % (monetary component) to 4.19 % (overall yield of
the Fund); thus satisfying the objective while protecting the capital on maturity.

14

• Market value compared to book value in 2000

940

920
900

880
860

840
820

800

]
s
n
o

i
l
l
i

m
R
U
E

[

9
9
-
c
e
D

0
0
-
n
a
J

0
0
-
b
e
F

0
0
-
r
a
M

0
0
-
r
p
A

0
0
-
y
a
M

0
0
-
n
u
J

0
0
-
l
u
J

0
0
-
g
u
A

0
0
-
p
e
S

0
0
-
t
c
O

0
0
-
v
o
N

0
0
-
c
e
D

Book value

Market value

Fig. 5: Market value compared to book value in 2000

• Breakdown of the portfolio between fixed-rate and variable-rate securities

57.2%

42.8%

FIXED RATE

VARIABLE RATE

Fig. 6: Breakdown of the investment portfolio between fixed-rate and variable-rate securities at 31/12/2000

15

• Redemption profile of investment portfolio

350

300

250

200

150

100

50

0

]
s
n
o

i
l
l
i

m
R
U
E

[

Variable rate

Fixed rate

2001

2002

2003

2004

2005

2006

2007

2008

Fig. 7: Investment portfolio: Redemption at 31.12.2000

The latest final maturity date for fixed-rate securities is 29 September 2006.

• Profile of issuers

All the securities held meet the following criteria:

–

–

–

either they are issued by States in or by institutions guaranteed by the European
Union, the G10 or supranational bodies;

or they are issued by another sovereign State with a rating of at least AA3;

or they are issued by another issuer with a rating of AAA.

16

The profile of issuers was as follows at 31 December 2000:

Other
issuers/AAA
34 %

Supranational

16%

Gov./Gov. agencies

50%

Fig. 8: Investment portfolio: Profile of issuers at 31/12/2000

17

POSITION OF THE GUARANTEE FUND AT 31 DECEMBER 2000

ASSETS
Receivables with credit institutions
CURRENT ACCOUNT
FIXED-TERM DEPOSITS

Investment portfolio
SECURITIES PORTFOLIO

Other receivables
ACCRUALS

TOTAL
LIABILITIES
Guarantee Fund
GUARANTEE FUND

Other liabilities
ACCRUALS

Result
Result carried over
Result for 2000

TOTAL

PROFIT AND LOSS AT 30/09/2000
1. INCOME
Interest on securities
Interest on investments
Interest on current account
SUB-TOTAL
2. COSTS
Spread of premiums or discounts
Commissions
Financial charges
SUB-TOTAL

NET RESULT

31/12/2000

1 864 299.31
489 000 000.00
490 864 299.31

919 302 277.87
919 302 277.87

22 082 387.18
22 082 387.18
1 432 248 964.36

31/12/2000

1 221 085 554.56
1 221 085 554.56

689 783.78
689 783.78

153 081 422.50
57 392 203.52
210 473 626.02
1 432 248 964.36

43 573 845.83
18 996 521.08
157 806.60
62 728 173.51

- 4 521 285.47
- 689 783.78
- 124 900.74
-5 335 969.99

57 392 203.52

18

Position of the Guarantee Fund

Transfers

Interest

Late payments(**)

Credits

Calls

EIB,
others

Rev. to
the budget

Debits

Annual bal.

Cumulative

a

b

c

d=(a+b+c)

e

f

g

h=(e+f+g)

i=(d-h)

j=(e-c)

defaults (*)

293.720.000

478.331

294.198.331

0

0

2.699

2.699

294.195.633

250.750.000

23.539.828

35.630.568

309.920.396

235.390.000

19.842.550

55.715.204

310.947.754

286.095.000

34.506.566

45.033.282

365.634.849

272.389.000

50.185.883

185.299.547

507.874.430

300.069.000

48.562.535

5.318.632

353.950.167

186.290.500

62.728.173,51

135

249.018.809

303.072.581

195.618

303.268.198

6.652.197

267.760.010

52.540.497

1.849.279

54.389.775

256.557.979

271.154.609

54.290.854

6.962.746

61.253.600

304.381.249

291.337.822

15.407.951

7.592.489

66.000.000

89.000.440

418.873.990

134.300.629

16.247.803

7.431.441 297.800.000 321.479.244

32.470.923

145.229.800

17.355.629

5.335.970 107.900.000 130.591.599

118.427.209

162.585.294

Credits 1994

Debits 1994

Saldo al 31.12.94

Credits 1995

Debits 1995

Saldo al 31.12.95

Credits 1996

Debits 1996

Saldo al 31.12.96

Credits 1997

Debits 1997

Saldo al 31.12.97

Credits 1998
Debits 1998

Saldo al 31.12.98

Credits 1999
Debits 1999

Saldo al 31.12.99

Credits 2000
Debits 2000

Saldo al 31.12.00

Running total

1.824.703.500

239.843.866

326.997.369 2.391.544.735 458.915.315

29.370.240 471.700.000 959.985.555 1.431.559.180

(*) Actual amount of accumulated defaults at the end of each year.
(**) The amount repaid is made up of the amount called from the Fund plus the interest penalty on late payments.

19

ANNEX III
Consolidated financial balance sheet of the Guarantee Fund at 31 December 2000

The consolidated financial balance sheet at 31 December 2000 is provided to supplement
the position of the Guarantee Fund as set out in Annex II. The consolidated balance sheet
also includes an additional EUR 215 094 849.09 which breaks down as follows:

–

–

on the assets side, receivables from recipients of loans granted or guaranteed by
the Commission totalling EUR 164 598 428.11 for non-member countries’
arrears on the payment of principal, interest due and default interest covered by
the Guarantee Fund and EUR 50 496 420.98 for default interest accrued but not
received at 31 December 2000. This default interest has been calculated in line
with the penalty rates laid down in the loan contracts.

on the liabilities side, the Fund’s resources which have yet to be replenished
(EUR 164 598 428.11), default
received (EUR
50 496 420.98) and interest received on late recoveries (EUR 135.38) entered in
the profit-and-loss account.

interest accrued but not

20

CONSOLIDATED FINANCIAL BALANCE SHEET OF THE GUARANTEE FUND AT 31 DECEMBER 2000

EUR

ASSETS

LIABILITIES

31.12.00

31.12.99

31.12.00

31.12.99

Current account

Fixed-term deposits

Portfolio

Investment portfolio

Receivables from recipients of loans granted or guaranteed by the

Community

Payments from the Fund (1)

Default interest accrued but not received

Other receivables

Accruals

TOTAL ASSETS

1 864 299.31

4 749 649.43 Guarantee Fund

489 000 000.00

480 000 000.00

Payments from the budget (2)

- surplus to be paid to the budget

919 302 277.87

813 073 283.47

Default interest accrued but not received

164 598 428.11

147 242 798.63

Accruals

50 496 420.98

37 289 021.74 Result

Other liabilities

22 082 387.18

15 913 799.93

Result for financial year

Result carried over

1 187 643 500.00

1 166 713 000.00

165 360 000.00

107 900 000.00

50 496 420.98

37 289 021.74

1 403 499 920.98

1 311 902 021.74

689 783.78

604 761.67

185 761 769.79

142 617 676.92

57 392 338.90

43 144 092.87

1 647 343 813.45

1 498 268 553.20 TOTAL LIABILITIES

1 647 343 813.45

1 498 268 553.20

PROFIT AND LOSS AT 31/12/2000

INCOME

COSTS

31.12.00

31.12.99

31.12.00

31.12.99

Interest on securities

Gain on transfer of financial fixed assets

Interest on investments

Interest on current account

Default interest received on late recoveries

TOTAL INCOME (A)

43 573 845.83

34 868 824.65

Spread of premium or discount

0.00

814 384.67

Commissions

18 996 521.08

12 659 514.63

Financial charges

157 806.60

135.38

219 810.68 TOTAL COSTS (B)

2 012 998.97

62 728 308.89

50 575 533.60 RESULT (A - B)

4 521 285.47

6 726 949.63

689 783.78

124 900.74

604 761.67

99 729.43

5 335 969.99

7 431 440.73

57 392 338.90

43 144 092.87

(1) Capital, interest, default interest covered by payments from the Fund.
(2) Reduced by EUR 471.7 million (the overall surplus repaid to the statement of revenue in the budget of the European Communities in accordance with Article 3 of Regulation No 2728/94 establishing the Guarantee Fund).

21