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}
Date: 2009-06-05
Institutions: European Commission
Subjects: activity report, credit guarantee, financial management, fund (EU)

EN 

EN 

   EN 

 
COMMISSION OF THE EUROPEAN 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 

   EN 

 
 
  
 
 
 
 
TABLE OF CONTENTS 

1. 

1.1. 

1.2. 

Guarantee Fund – Management Report at 31 December 2008 .................................... 4 

Development of the Fund in 2008................................................................................ 4 

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 the 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. 

2.1. 

2.2. 

2.3. 

2.4. 

3. 

3.1. 

3.2. 

Statement of Financial Position of the Fund at 31 December 2008........................... 16 

Economic Outturn Account (Statement of Financial Performance) for the year ended 
31 December 2008 ..................................................................................................... 17 

Balance Sheet (Statement of Financial Position) as at 31 December 2008 ............... 18 

Statement of changes in equity for the year ended 31 December 2008 ..................... 20 

Cash Flow Statement as at 31 December 2008.......................................................... 21 

Notes to the Financial Statements .............................................................................. 22 

General disclosures .................................................................................................... 22 

Significant accounting policies .................................................................................. 22 

3.2.1.  Basis of preparation.................................................................................................... 22 

3.2.2.  Significant accounting and judgments and estimates................................................. 22 

3.2.3.  Summary of significant 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 

2 

   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. 

3.5. 

3.6. 

3.7. 

3.8. 

3.9. 

Short-term Investments – Available For Sale Assets................................................. 28 

Cash and Cash Equivalents ........................................................................................ 29 

Current Liabilities ...................................................................................................... 29 

Financial operations revenues .................................................................................... 29 

Financial operations expenses.................................................................................... 30 

Subsequent events ...................................................................................................... 30 

EN 

3 

   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. 

)
o
r
u
e
n
o

i
l
l
i

m

(

2008

2007

1375

1350

1325

1300

1275

1250

1225

1200

1175

1150

1125

1100

1075

1050

1025

1000

Jan

Mar

May

Jul

Sep

Nov

Fig.1: Development of holdings in 2008 

The decrease of the market value of the Fund’s holdings was mainly 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 Fund’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 

4 

   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 

Repayment of surplus 

Activation of guarantee 

Recovery of amounts guaranteed 

Repayment of Funds (9%) 

+ 

- 

- 

+ 

- 

2,805,005,162.91

0.00 

2,805,005,162.91

(1,775,870,000.00) 

0.00 

(1,775,870,000.00)

(477,860,856.19) 

0.00 

(477,860,856.19)

575,673,913.77

1,031,094.42 

576,705,008.19

(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) representing 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  excluding  accrued 
€ 1,071.8 million as detailed below. The Fund  operates in one currency only, the Euro: 

interest 

totalled  

€ 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 securities (excluding accrued interest), see table in section 1.3.1.). 

EN 

5 

   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: 

Segments 

Fixed rate investments 

Variable rate 
securities 
EUR 

TOTAL 

EUR 

Less than 3 
months 
EUR 

3 months to 1 
year  
EUR 

1 to 10 years 
EUR 

Current accounts 

1,209,530.44 

Cash equivalents 

19,842,008.01 

Short  term  deposits  - 
nominal 

182,557,991.00 

0.00

0.00

0.00

0.00

0.00

0.00

0.00 

1,209,530.44

0.00 

19,842,008.01

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 the 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: 

Interest income on cash & cash equivalents 

Interest income on AFS assets 

Net realised gain on sale of AFS assets 

Income from securities lending activity 

Commission and financial charges 

Total 

January – December 2008 

(in million EUR) 

8.04 

39.62 

1.09 

0.05 

(0.78) 

48.02 

The  performance  of  the  Fund  portfolio  was  monitored  on  a  marked  to  market  basis.  Over 
2008,  the  portfolio  delivered  a  6.42%  MTM  return,  underperforming  its  benchmark  by 
106.95bps. 

EN 

6 

   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 with € 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 amount 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 first 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. Then the monetary policy turned the other way 
round  when  ECB  decided  to  drop  successively  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 framework and enhance the provision of longer-term 
refinancing.  These  measures  as  well  as  those  taken  by  the  major  central  banks  aimed  to 
minimize the impact of the financial crisis that finally evolved into an economic crisis and a 
confirmed recession for the vast majority 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 (% )

Euibid 1M

Euribid 3M

5.5

5

4.5

4

3.5

3

2.5

2

01/01/08

01/04/08

01/07/08

30/09/08

30/12/08

Fig. 2: Evolution of Money Market rates during 2008 

•  Profile of counterparties 

EN 

7 

   EN 

 
 
In accordance with the agreement between the Community and the EIB on the management of 
the Fund, all banks with which deposits are placed should have a minimum short-term credit 
rating  of  P-1  (Moody's  or  equivalent).  The  breakdown,  including  accrued  interest,  is  as 
follows: 

Aa1/P-1
27%

Aa3/P-1
35%

Aa2/P-1
38%

Fig. 3: Short term interbank investments by type of counterparty 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 located 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  intention  of  holding  them  until  maturity.  Under  IFRS 
(IAS), these securities are classified in the Financial Statements as Available For Sale (AFS). 
At 31 December 2008, the market value (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  value  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  the  investment  portfolio  was  €  861.1  million, 
against a clean market value of € 868.2 million. 

2
As at 31 December 2008 short term interbank investments 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 of Aa2/P-1. 

EN 

8 

   EN 

 
                                                 
 
The global (modified) duration of the bond portfolio 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  gives  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 curve spread steepened by 84 basis points to the 
level  of  118  basis  points.  The  movement  occurred  as  a  result  of  short-term  yields  declining 
more than long-term yields as shown in figure 4.  

Fig.  4:  Euro  area  yield  curve  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  target  zone  of  4.15-20%  was  reached  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 

9 

   EN 

 
Evolution of 10-year Bund

d
l
e
i
Y
d
B

i

4.8

4.6

4.4

4.2

4

3.8

3.6

3.4

3.2

3

2.8

8
0

/

1
0

/

1

8
0

/

1
0

/

5
1

8
0

/

1
0

/

9
2

8
0

/

2
0

/

2
1

8
0

/

2
0

/

6
2

8
0

/

3
0

/

1
1

8
0

/

3
0

/

5
2

8
0

/

4
0

/

8

8
0

/

4
0

/

2
2

8
0

/

5
0

/

6

8
0

/

5
0

/

0
2

8
0

/

6
0

/

3

8
0

/

6
0

/

7
1

8
0

/

7
0

/

1

8
0

/

7
0

/

5
1

8
0

/

7
0

/

9
2

8
0

/

8
0

/

2
1

8
0

/

8
0

/

6
2

8
0

/

9
0

/

9

8
0

/

9
0

/

3
2

8
0

/

0
1

/

7

8
0

/

0
1

/

1
2

8
0

/

1
1

/

4

8
0

/

1
1

/

8
1

8
0

/

2
1

/

2

8
0

/

2
1

/

6
1

8
0

/

2
1

/

0
3

Time

 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 executed during the year 2008. € 41 million were 
executed in the beginning of 2009 in the newly government guaranteed asset 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 

10 

   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) 

)
o
r
u
e

n
o

i
l
l
i

m

(

120

100
80

60
40

20
0

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Variable rate

Fixed rate

Fig.7: Investment portfolio: Redemption profile at 31 December 2008 

The latest final maturity date for fixed rate securities 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 

11 

   EN 

 
 
 
–  Securities issued by Banks and Corporates: minimum rating Aa2 

EN 

12 

   EN 

The profile of issuers at 31 December 2008 is as follows: 

CORP ORA TE A aa
0.5%

COVERED B OND A aa
16.3%

B A NKS A aa
8.2%

M EM B ER STA TE A aa
28.7%

P UB LIC COM P A NY A a1
1.2%
P UB LIC COM P A NY A aa
10.3%

M EM B ER STA TE A 3
1.0%

M EM B ER STA TE A 2
3.7%

M EM B ER STA TE A 1
9.4%

M EM B ER STA TE A a2
15.7%

M EM B ER STA TE A a1
4.9%

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 rate 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  rate  bonds  issued  by  corporate  (or  similar) 

issuers, split by maturity buckets 

Index weightings are based on portfolio composition and are reviewed every month. The table 
below shows the average weightings over 2008: 

EN 

13 

   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  1bp  increase  of  interest  rates  reduces  the  value  of  the  portfolio  by  EUR 
369,936,  of  which  EUR  365,323  is  related  to  the  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) 

Floating Rate Notes  

51,179,605 

Fixed Rate Bonds 

820,533,308 

Money Market Deposits

202,670,367 

Cash account 

927,573 (3) 

0.35 

4.26 

0.14 

0 

Interest Rate 
Exposure 

(+/-1bp) 

-/+ 1,815 

-/+ 365,323 

-/+ 2,798 

0 

Total GF 

1,075,310,853 

3.32 

-/+ 369,936 

3 

The  EUR  0.9  million  “cash  account”  balance  reported  in  this  table  does  not  include  any  payments  relating  to 
commissions  or  fees.  This  explains  why  it  does  not  match  the  EUR  1.2  million  total  balance  of  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 

14 

   EN 

 
 
 
                                                 
1.4.2. 

 Performance 

Over 2008, the portfolio delivered a 6.42% MTM return. 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 

31/05/2008 

1,038,984,826 

-0.6577 

0.9331 

0.0749 

0.0293 

-0.1022 

-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  evolution  of  medium  and  long-term  rates  resulted  in 
rather volatile portfolio monthly returns. 

Starting  from  the  middle  of  September,  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  eastern  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 underperformed its composite benchmark during October 
and November by 77.56 basis points. 

In  December  2008  the  underperformance  was  less  severe  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 

15 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2. 

STATEMENT OF FINANCIAL POSITION OF THE FUND AT 31 DECEMBER 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  assets  and  liabilities”, 
dated September 20044. These financial statements are presented 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  31st  December  2008  have  been  audited  and  certified  by  an 
Independent Auditor. 

4

This is based on the revised standards IAS 32 and 39 as issued 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 

16 

   EN 

                                                 
 
2.1. 

Economic Outturn Account (Statement of Financial Performance) for the year 
ended 31 December 2008 

Financial operations revenues 

31.12.2008 

31.12.2007 

EUR 

EUR 

Notes

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 

Reversal of impairment losses on AFS assets 

0.00

0.00

Income from securities lending activities 

52,156.81

Financial operations expenses 

3.8 

Interest charges 

Interest charges on cash and cash equivalents 

Exchange losses 

Realised losses on sale of AFS assets 

Impairment losses on AFS assets 

Other financial charges 

Thereof: Management fees 

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

(784,325.01)

(836,434.05)

(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 

Extraordinary losses 

SURPLUS FROM EXTRAORDINARY ITEMS 

0.00

0.00

0.00

0.00

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 

17 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.2.  Balance Sheet (Statement of Financial Position) as at 31 December 2008 

ASSETS 

CURRENT ASSETS 

Notes

31.12.2008 

31.12.2007 

EUR 

EUR 

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

Accrued interests on other cash equivalents

15,625.58

0.00

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 

18 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 LIABILITIES 

Notes

31.12.2007 

31.12.2007 

EUR 

EUR 

A. EQUITY 

Capital (Guarantee Fund) 

402,457,788.12 527,176,693.70

Reserves 

First Time application – Fair value reserve

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 

Others 

0.00

0.00

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 

19 

   EN 

 
  
 
  
 
 
  
  
  
 
  
  
  
  
 
 
  
 
  
  
2.3. 

Statement of changes in equity for the year ended 31 December 2008 

Equity 

(EUR) 

Capital 

Reserves 

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

Fair value reserve 

0.00 

0.00 

Payment from the European Union 

(260,940,124.72)

Result of the year 2006 

Result of the year 2007 

0.00

0.00 

0.00 

(18,550,466.76)

(73,508.59)

0.00 

0.00

0.00 

0.00 

0.00 

0.00

0.00 

0.00

0.00

0.00

0.00 

(18,550,466.76)

0.00 

(73,508.59)

0.00 

(260,940,124.72)

52,077,425.59

(52,077,425.59)

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

Fair value reserve 

0.00 

0.00 

Payment to the European Union 

(125,750,000.00)

Allocation of the Economic result of 
the year 2006 

Result of the year 2007 

0.00 

0.00 

(212,273.37)

0.00 

0.00 

0.00 

0.00

15,405,312.14

0.00 

0.00 

0.00

0.00

0.00

0.00 

0.00 

15,405,312.14

(213,273.37)

0.00 

(125,750,000.00)

0.00

52,874,701.19

(52,874,701.19)

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 

20 

EN 

 
  
2.4. 

Cash Flow Statement as at 31 December 2008 

Year to 2008 

Year to 2007 

EUR 

EUR 

Investing activities 

Interest  received  (current  accounts,  deposits,  commercial 

8,043,015.28

10,018,308.25

  Management fee paid during the year 

  Bank charges paid during the year 

(678,951.39)

(714,719.38)

(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

Financing activities

   Capital payment from European Union

   Capital repaid to European Union

   Repayments of financial liabilities 

   Proceeds of financial liabilities 

   Extraordinary items 

0.00

0.00

(125,750,000.00) (260,940,124.72)

1,031,094.42

0.00

0.00

0.00

0.00

0.00

 Net Cash Flows from financing 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 

249,260,720.52 439,733,359.86

 Cash and cash equivalents at end of financial year 

204,497,717.52 249,260,720.52

EN 

21 

   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 the 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 being 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 the 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 sufficient degree of  liquidity and transferability, 
taking into account the commitments to which the Fund will have. 

3.2. 

Significant accounting policies 

3.2.1.  Basis of preparation 

The Fund’s financial statements 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”5,  dated  December  2004  and  updated  in  October 
2006. 

3.2.2. 

Significant accounting and judgments and estimates 

The  preparation  of  financial  statements  in  conformity  with  the  accounting  rules  adopted  by 
the  Accounting  Officer  of  the  European  Commission  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 policies. The area involving a higher degree of judgment or 
complexity,  or  areas  where  assumptions  and  estimates  are  significant  to  the  financial 
statements, are disclosed. 

The most significant use of judgments and estimates are as follows: 

•  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 
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 fair values. The judgments include considerations of liquidity and 
model inputs such as correlation and volatility 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 integrate the carved out provisions as set 
out in the version of IAS 39 endorsed by the European Commission on 19 November 
2004. 

EN 

22 

   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 account. In particular, 
judgment  by  management  is  required  in  the  estimation  of  the  amount  and  timing  of  future 
cash flows when determining the level of allowance required. 

The Fund shall assess at each balance sheet date whether 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 available-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 Euro (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  the  balance  sheet  date.  The  gain  or  loss  arising 
from such translation is recorded in the economic outturn account. 

The  elements  of  the  economic  outturn  account  are  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  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  investment  portfolio,  is  made  up  of  euro-
denominated securities. These securities are classified as Available For Sale (AFS) according 
to the accounting rules adopted by the Accounting Officer of the European Commission and 
consequently, are carried out at their fair value 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  unrealised  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  reasonably  expected  within  the 
foreseeable future. 

On disposal of an available for sale security, the accumulated unrealised gain or loss included 
in  equity  is  transferred  to  the  economic  outturn  account  for  the  year.  Interest  income  on 
available-for-sale securities is included in “interest income”. 

The determination of fair values of available for sale investments is generally based on quoted 
market rates in active markets. 

EN 

23 

   EN 

 
These securities  are  initially measured at their acquisition cost, being their fair value  at  this 
moment.  The  difference  between  the  entry  price  and  the  redemption  value,  i.e.  the 
premium/discount spread, is amortised 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 financial assets as impaired when a decline in the fair value 
of  an  available-for-sale  asset  has  been  recognised  directly  in  equity  and  there  is  objective 
evidence that the asset is impaired. A financial asset is impaired when its carrying amount is 
greater  than  its  estimated  recoverable  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 increases 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  amount  of  the  reversal  recognised  in  profit  and 
loss. 

Evidence  of  impairment  is  mainly  about  significant  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  disappearance  of  an  active  market  because  an  entity’s 
financial  instruments  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.  

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  the  European  Union  and 
recovery  of  previous  interventions  made  by  the  Fund  with  regard  to  defaulted  guaranteed 
loans.  Deductions  of  capital  represent  either  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  balance  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 hedging is not performed. 

EN 

24 

   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 detailed in the table below: 

Segments

Current accounts
Other cash equivalents-
at cost
Short term deposits - 
nominal
AFS portfolio - at fair 
value
TOTAL
Percentage

Fixed rate investments

Less than 3 
months
EUR

3 months to 1 
year 
EUR

1 to 10 years
EUR

Variable rate 
securities
EUR

TOTAL

EUR

1,209,530.44

19,842,008.01

182,557,991.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

1,209,530.44

0.00

19,842,008.01

0.00

182,557,991.00

58,890,040.00

15,568,198.70

868,168,345.48
746,075,069.78
219,177,728.15 58,890,040.00 746,075,069.78 47,635,037.00 1,071,777,874.93
100.00%

47,635,037.00

20.45%

69.61%

4.45%

5.49%

At 31 December 2008, for the Cash and Cash equivalents (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  portfolio,  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 detailed in the table below: 

Less than 3 months
EUR

1.232.834,25

246.600.000,00

Fixed rate investments

3 months to 1 
year
EUR

1 to 10 years
EUR

Variable rate 
securities EUR

TOTAL
EUR

0,00

0,00

0,00

0,00

0,00

1.232.834,25

0,00

246.600.000,00

25.484.880,00 83.951.180,00
273.317.714,25 83.951.180,00
7,42%

24,15%

703.003.924,86 71.257.053,00
703.003.924,86 71.257.053,00
6,30%

62,13%

883.697.037,86
1.131.529.872,11
100,00%

Segments

Current accounts
Short term deposits - 
nominal
AFS portfolio - at fair 
value
TOTAL
Percentage

•  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  prudent  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 

25 

   EN 

 
 
 
 
Maturity

les s  than 3  
months

3  months  to 1  
year

1  to 1 0 year s

matur ity
undefine d

TOTAL

As s e ts  in EUR

Cu rren t ac cou n t

1,209,530.44

Sho rt term d ep o sits

183,430,553.49

8 72 ,5 62 .49

19,857,633.59

15 ,6 25 .58

o f w hic h :
a ccrued  in tere st
Oth e r c a sh  e qu iva le nts

o f w hic h :
a ccrued  in tere st
AFS po rtfo lio

o f w hic h :
a ccrued  in tere st
Total

0.00

0.00

0 .0 0

0.00

0 .0 0

0.00

0.00

0 .00

0.00

0 .00

0.00

0.00

0.0 0

0.00

0.0 0

0.00

0.0 0

1,209,530.44

183,430,553.49

8 72 ,56 2 .49

19,857,633.59

15 ,62 5 .58

886,949,667.40

18 ,7 81 ,32 1 .92

21,443,239.07

81,719,321.55

783,787,106.78

5,8 75 ,0 40 .37

1 2,9 0 6,2 81 .5 5

0 .00

2 2 5,9 40 ,9 56 .59

8 1,7 19 ,3 21 .55

7 83 ,7 87 ,10 6 .78

0 .0 0

1,0 91 ,4 47 ,38 4 .9 2

Equity and Liabilities  in EUR

Equ ity

Ac c ou n ts Pay a ble

Total

0.00

689,972.32

6 89 ,9 72 .32

0.00

0.00

0 .00

0.00

0.00

1,090,757,412.60

0.00

1,090,757,412.60

689,972.32

0 .00

1 ,09 0 ,7 5 7,4 12 .6 0

1,0 91 ,4 47 ,38 4 .9 2

Net liquidity
pos ition at 3 1.1 2.2 0 08

Cumulative  liquidity 
pos ition at 3 1.1 2.2 0 08

Net liq u idity  p o sitio n at 
31.12.2007
Cu mula tive  liq u idity  
p os itio n  at 31.12.2007

2 2 5,2 50 ,9 84 .27

8 1,7 19 ,3 21 .55

7 83 ,7 87 ,10 6 .78 (1 ,09 0 ,75 7 ,4 1 2.6 0)

0 .0 0

2 2 5,2 50 ,9 84 .27

3 0 6,9 70 ,3 05 .82 1,0 90 ,7 57 ,41 2 .60

0 .0 0

286,330,155.73

108,684,422.04

754,125,764.86

(1,149,140,342.63)

0.00

286,330,155.73

395,014,577.77

1,149,140,342.63

0.00

3.3.2.  Credit Risk 

•  Fixed Term Deposits - Profile 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  Moody's  or  equivalent  of  P-1.  The  following  table  shows  the  ratings  of  the 
interbank investments as at 31 December 2008 including accrued interests. 

 Long term 
rating 

 Short term 
rating 

31.12.2008
EUR

31.12.2007
EUR

P-1
P-1
P-1
P-1

Aa1
Aa2
Aa3
A1

Total

54,525,499.55
58,424,545.44
70,480,508.50
0.00

29.73 %
31.85 %
38.42 %
0%

20,214,877.77
53,063,919.03
100,089,040.97
74,660,048.68

8.15 %
21.40 %
40.35 %
30.10 %

183,430,553.49

100.00 % 248,027,886.45

100.00 %

•  Other cash equivalents – profile of counterparties 

As  at  31  December  2008,  the  fund  invested  in  one  short  term  discount  paper.  The  issuer 
profile, including accrued interest is as follows: 

EN 

26 

   EN 

 
 
 
 
 
 Long term 
rating 

 Short term 
rating 

31.12.2008
EUR

31.12.2007
EUR

Aa2

P-1

       19,857,333.59   

0.00

•  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 for: 

–  Securities issued by Member States: minimum rating Baa3  

–  Securities issued by a Supranational, other States or Public Company: minimum rating Aa2  

–  Covered Bonds: rating Aaa  

–  Securities issued by Banks and Corporates: minimum rating Aa2  

As at 31 December 2008, the profile of the available for sale portfolio of issuers, market value 
excluding accrued interests is as follows: 

Issuer 

BANKS Aaa 
MEMBER STATE Aaa 
MEMBER STATE Aa1 
MEMBER STATE Aa2 
MEMBER STATE A1 
MEMBER STATE A2 
MEMBER STATE A3 
PUBLIC COMPANY Aaa 
PUBLIC COMPANY Aa1 
CORPORATE Aaa 
COVERED BOND Aaa 

Total 

31.12.2008 
EUR 

70,988,004.75
249,412,037.16
42,717,052.70
136,457,798.10
81,631,320.77
31,768,236.10
8,841,921.00
89,834,136.85
10,517,400.00
4,456,000.00
141,544,438.05
868,168,345.48

8.18%
28.73%
4.92%
15.72%
9.40%
3.66%
1.02%
10.35%
1.21%
0.51%
16.30%
100.00%

As  at  31  December  2007  the  available  for  sale  portfolio  profile  of  issuers,  market  value 
excluding accrued interests was as follows: 

EN 

27 

   EN 

 
 
 
 
 
Issuer 

31.12.2007 
EUR 

Banks Aaa 
Banks Aa1 
Government Body Aaa 
Multi Lateral Development 
Bank Aaa 
Member States Aaa 
Member States Aa1 
Member States Aa3 
Member States A1 
Member States A2 
Member States A3 
Member States Baa1 
Other Financial Institutions 
Aaa 
Public Companies Aaa 
Public Companies A2 
Special Purpose Vehicle Aaa

177,352,215.06 
4,915,010.00 
3,124,701.00 

20.08% 
0.56% 
0.35% 

5,209,261.13 

0.59% 

86,910,512.46 
71,605,941.05 
81,475,980.10 
73,552,307.35 
121,534,031.96 
3,694,547.60 
9,623,456.00 

9.83% 
8.10% 
9.22% 
8.32% 
13.75% 
0.42% 
1.09% 

40,367,984.10 

4.57% 

109,410,776.75 
10,088,400.00 
84,831,913.30 

12.38% 
1.14% 
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: 

Amount at 1 January 2008

Acquisitions

Disposals and withdrawals (original acquisition cost)

Change in carrying amount (actuarial difference & change of accrual amount)

Revaluation surplus/(deficit) fair value adjustment transfer to equity

Amount at 31 December 2008

EUR

903,713,224.50

147,585,260.00

(183,814,230.00)

4,060,100.76

15,405,312.14
886,949,667.40  

At 31 December 2008, the nominal value of the investment portfolio was EUR 861.1 million, 
against a market value of EUR 868.1 million, without accrued interests. 

Accrued 
EUR 20,016,186.64) is split between: 

interest  at  31  December  2008  amounting 

to  EUR  18,781,321.92  (2007: 

•  Fixed rate notes  EUR 18,461,427.08 (2007: EUR 19,572,460.14) 

•  Floating rate notes EUR 319,894.84 (2007: EUR 443,726.50) 

EN 

28 

   EN 

 
 
 
 
 
3.5. 

Cash and Cash Equivalents 

The following table shows the split of cash and cash equivalents (amounts including accrued 
interest): 

Description

Unrestricted Cash

31.12.2008
EUR

31.12.2007
EUR 

Current Accounts
Short term deposits
Other cash equivalents - Discount Papers
Total

          1,209,530.44   
183,430,553.49
19,857,633.59
204,497,717.52

         1,232,834.25 
248,027,886.27
0.00
249,260,720.52

3.6. 

Current Liabilities 

Description

31.12.2008
EUR

31.12.2007
EUR

Accounts Payable

Management Fees

Audit Fees

Total

658,322.32

31,650.00

689,972.32

678,951.39

29,950.00
708,901.39  

Management fees are payable to the EIB (hereafter referred to as the management fees) on an 
annual basis. The management fees are calculated as a percentage per annum of the average 
of Fund’s assets. This percentage is a declining rate depending on the Fund’s assets. 
3.7. 

Financial operations revenues 

Description

Total amount, thereof:

Interest income, thereof: 

Interest income from short-term investments and cash 

cash equivalents

Interest income on AFS assets

Other financial income, thereof: 

2008

EUR

2007

EUR

48,802,560.79

53,711,135.24

47,665,167.17

50,810,833.85

8,043,015.28

10,018,308.25

39,622,151.89

40,792,525.60

1,137,393.62

2,900,301.39

Net realized gain on sale of financial assets

1,085,236.81

2,900,301.39

Income from securities lending activity

52,156.81

0.00

The net realized gain on sale of financial assets EUR 1,085,236.81 is exclusively made up of a 
total gain of seven sales during the year.  

In April 2008 the Fund entered into an automatic security lending 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 

29 

   EN 

 
 
 
 
 
 
3.8. 

Financial operations expenses 

Description

Total amount, thereof:

Other financial charges

3.9. 

Subsequent events 

2008

EUR

2007

EUR

(784,325.01)

(784,325.01)

(836,434.05)

(836,434.05)

There  have  been  no  material  post-balance  sheet  events,  which  would  require  disclosure  or 
adjustment to the 31 December 2008 financial statements. 

EN 

30 

   EN