The European Investment Bank (EIB) is the world’s largest borrower and lender. Its objectives are to encourage innovation and development; ensure small businesses receive funding; make sure the existing infrastructure is fit for its purposes and safeguard the climate and environment.
Although it is often referred to as the EU bank, it operates in 160 countries worldwide with 90% of its work taking place within Europe. As well as its headquarters in Luxembourg (with a staff of 2,900), it also runs a number of local and regional branches.
The EIB is the only bank fully-owned and operated by the member states of the European Union to further its members’ interests. For that reason, it works in close cooperation with other EU institutions. It abides by regulations covering technological, environmental and social standards. In a sense, it’s accountable to all EU citizens for the way it operates. It has its own European Ombudsman if anyone has a complaint about its services.
The European Investment Bank works in 3 main ways. The first is as a lender. It raises funding through the issue of bonds. Because of its excellent rating, it can raise money on the international capitals markets at much better rates than other borrowers. As its main aim isn’t to make profits, it’s able to pass on these better rates to its clientele. As well as loans, it also offers guarantees, microfinancing, equity investment and so on. Obviously, it doesn’t provide personal loans, but would-be borrowers can access cheap personal loans from an online lender.
The EIB isn’t able to provide full funding for projects, but its involvement can help unlock additional sources of financing for proposed projects, a process which it refers to as ‘blending’. The bank usually provides, on average, a third of funding, but on occasion, it can offer up to 50% of the financing package. Fully aware of its duty towards EU citizens, it has a staff of 300 engineers and economists who analyse and oversee any application for funding – both before approval and during the project.
The third – and equally important – role of the EIB is offering guidelines and advice to borrowers. This covers every aspect from project management to administration and effectively boosts the success of the project.
The EIB website can be checked for which applications have been made or approved according to sector or region by using a search tool. These sectors vary from agricultural projects to transport although many projects funded by, and through, the EIB apply to more than one sector. Let’s take the example of education. There are 34 projects in this sector, of which 22 have been approved, 4 have been signed and 8 are still under appraisal. One example of funding which has been signed is for Trinity College, Dublin. The EIB contribution of 100 million euros (of a total cost of 204 million) will help with the construction of 3 new buildings including adding student accommodation for 300 more undergraduates.