Philippe Maystadt, President of the European Investment Bank (centre) - - The European Investment Bank was created by the Treaty of Rome in 1958 as the long-term lending bank of the European Union. The task of the bank is to contribute towards the integration, balanced development and economic and social cohesion of the EU Member States. The EIB raises substantial volumes of funds on the capital markets which it lends on favourable terms to projects furthering EU policy objectives. The EIB continuously adapts its activity to developments in EU policies.

The European Investment Bank said today, that Irish small and medium-sized firms (SMEs) should begin to benefit in the coming weeks from a total of €300m it is making available for loans.

The EIB said three banks - AIB, Ulster Bank and Bank of Ireland - will act as intermediaries, passing on the funds to companies with projects"which further EU policy objectives."

The new loans are in addition to €50m recently made available to Bank of Scotland (Ireland) to finance investment projects.

Finance Minister Brian Lenihan, speaking at the launch in Dublin this morning, described it as a "significant facility" for small businesses.

The EIB's Plutarchos Sakellaris said ensuring access to finance for small firms was a crucial element of the bank's strategy to help Europe through the current crisis.

The Director of the Small Firms Association, Patricia Callan, has welcomed the announcement: "Cash flow is the life blood of any business and currently small businesses are facing financial pressures from all angles - restricted access to finance; extension of creditor days taken by customers and reduced spending. It is great news that the EIB and Irish financial institutions are reacting to the real problems which their small business customers are facing, and this specific funding will assist the small business sector with financial pressures to prevent business closures and job losses.”

Callan commented that today’s announcement clearly shows that the SFA’s campaign on behalf of its members in relation to the liquidity crisis in the real economy over the past few months is showing signs of success. "The EIB finance adds to the positive engagements that SFA have held with An Tanaiste, as well as direct meetings with all the major financial institutions and the recently announced Code of Conduct for Business Lending," Callan said.

The SFA Director cautioned that while today’s announcement is very welcomed, the real test of success will be in the speedy delivery of the funding to ensure small business survival at the individual firm level.

Bank of Ireland has today signed a €100m loan facility with the EIB. The purpose of these EIB-supported finance schemes is to allow access to credit lines to fund small and medium-sized enterprises or small scale infrastructure projects, while meeting EU policy objectives. BoI said the €100m Business Investment Fund will further strengthen the bank’s overall SME proposition and reinforces its commitment to the sector. The fund will be available from April 2009.
 
 The aim of the fund is to provide viable businesses with finance to support their short/medium term needs, be it to extend or restructure their existing facilities or introduce new funding into the business. It will be available to new and existing SME customers seeking loans from €50,000 to €300,000 at a variable interest rate. Flexible repayment terms are available. The new facility forms part of a series of initiatives offered by Bank of Ireland in support of the SME sector. 
 
Commenting on today’s launch, Damian Young Head of Small Business Segment, Bank of Ireland Business Banking said: “In the current climate, small businesses are facing significant challenges. We are committed to supporting small businesses and recognise their importance in rebuilding the Irish economy. We have worked in partnership with the EIB for over 20 years to provide funding for SMEs in Ireland and this facility, along with our existing established funds demonstrates our ongoing commitment to developing and supporting this sector”.

Anti-Lisbon Treaty campaigner and aspiring European Union politician Declan Ganley, should take note.

The European Investment Bank said earlier this month, that increased its lending for small and medium-sized enterprises (SMEs) by more than 42 percent in 2008, underscoring its commitment to provide rapid additional support for the European economy in the current crisis.

Total EIB lending rose by 21 percent last year to €57bn, compared to €48bn in 2007. Loan signatures rose sharply towards the end of the year, reflecting the EIB's swift response to help underpin economic recovery at the request of the European Union's Member States. This translated quickly into an increase in disbursements, which rose 12 percent to €48.6bn.

From October 2008 to end-February 2009, signatures across the 27 EU Member States amounted to €31.3bn - 38 percent more than in the same period of 2007-2008.

The EIB committed itself last September to boosting SME finance to help smaller businesses weather the financial and economic storm. As a result, the Bank signed loans for SMEs worth €8.1 bn last year - more than half of this in the fourth quarter alone - against €5.7bn in 2007, while also making the lending process simpler, more flexible and more transparent.

At the same time, the European Investment Fund, the EIB Group's specialised financing arm for small businesses, provided commercial banks with €2bn in loan guarantees for SME lending and invested more than €400m in venture capital funds.

The bank says the speed of implementation bodes well for the broader measures announced by the EIB Group last December under the European Economic Recovery Package. This package is targeted at three key areas: SMEs; climate change (including research, development and production of "clean" cars); and investment in the less well off ‘convergence' regions of the EU.

"The fact that the EIB is responding quickly to the crisis without sacrificing financial prudence shows that we have not over-promised and are performing well in the current challenging climate,"EIB President Philippe Maystadt said.

"Although we cannot work miracles on our own, the EIB stands at the service of Europe, and will continue to play a strong and active role in spurring economic recovery."

Projects to protect the environment and support sustainable communities received loans of some €19bn last year, underlining the EIB's major commitment to these areas. Loans for sustainable, competitive and secure energy in the EU and Accession Countries reached nearly €8.9bn, of which one quarter was for renewable energy.

Lending under the EIB's Knowledge Economy umbrella, which includes funding for research, development and innovation, increased to €12.4bn. Loans for trans-European transport and energy networks rose by one third to €12.6bn, of which nearly €10bn was for more efficient transport links.

One third of the total lending for projects in the European Union went to convergence regions.

As usual, EU countries accounted for the lion's share of EIB lending in 2008, with more than 86 percent of the total volume. The EIB also continued to fulfill its external mandates for lending outside the EU - notably in the Enlargement Countries, the Mediterranean and the Eastern Neighbours, but also in the African, Caribbean and Pacific nations, Asia and Latin America.

In all its lending, the EIB said it has been streamlining its procedures to speed delivery while ensuring that the financial, technical and environmental quality of the projects is not compromised.

Financial strength

To accommodate this higher lending, the EIB significantly increased the volume of its bond issues last year to €59bn from €55bn in 2007. Issuance was generally on very favourable terms, benefiting from the EIB's AAA credit rating, although costs increased towards the end of the year as market conditions tightened.

Borrowing in the first two months of 2009 has already reached €24.1bn - more than one third of the Bank's funding programme for 2009.

The EIB says thanks to its "efficiency and prudent financial management, its unaudited and therefore provisional surplus, or net profit, increased marginally to €1.65bn in 2008 from €1.63bn in 2007."

This surplus is in line with a slow but steady rise over recent years and allows the EIB to build for future growth. The €67bn capital increase planned for this April and currently undergoing formal approval by the Board of Governors will be conducted without raising additional resources from the Member States, using the Bank's own accumulated reserves.

The EIB's capital adequacy ratio stands at 35.5 percent, illustrating what the bank says is its financial strength at a time when it is being asked to increase substantially its financing of projects. The EIB's risk management department is keeping both the borrowing and lending portfolios under careful scrutiny.