Jan 23, 2014 - Fort-de-France, Nairobi, Sydney, Pretoria, Dakar ... Support for EU priority objectives .... In UK / Fran
European Investment Bank The bank of the EU Financing infrastructure in Norway and internationally – The EIB way Oslo, 21 January 2014
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The European Investment Bank (EIB) Long-term finance promoting European objectives
European Union’s long-term lending bank set up in 1958 by the Treaty of Rome. Shareholders: 28 EU Member States Governance Board of Governors – EU Finance Ministers Board of Directors - Member States & European Commission Management Committee –EIB’s executive body Audit Committee – independent, non-resident
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EIB Offices European Union Headquarters in Luxembourg 13 external offices in the EU
Outside the European Union Belgrade, Istanbul, Ankara, Kiev, Moscow Cairo, Tunis, Rabat Fort-de-France, Nairobi, Sydney, Pretoria, Dakar Beijing (2013)
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Largest Supranational Lender Gross outstanding loans, equity investments and guarantees
EUR bn 500 450 400 350 300 250 200 150 100 50 0 EIB
World Bank
IADB
ASDB
IFC
EBRD
NIB
AfDB
Source: Standard & Poor’s; Supranationals -Special Edition 2011 Data as of 31.12.2010 (World Bank, IFC as of 30.06.2011) 23/01/2014
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The EIB: capital breakdown at 1st July 2013
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European Investment 5 Bank Group
Signatures and Disbursements from 2008 to 2012 Signatures Disbursements
EUR bn
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Loan signatures in the EU in 2012 (EUR m)
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Value Added
Support for EU priority objectives Project quality and soundness Financial benefits of EIB funds Technical assistance Project assessment
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Benefits of an EIB loan Low cost of funding passed on to clients (non-profit org.) Large amounts (up to 50% of project cost)
Broad range of currencies Long maturities Technical advice Catalyst for participation of other banks 23/01/2014
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Financing Facilities 2 main facilities: Direct Loans Large-scale projects (more than EUR 25m) Intermediated Loans Small and medium-scale projects (particularly to SMEs) via national and regional intermediary banks Lending decision remains with the financial intermediary
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Project Requirements Meet at least one of the EIB’s objectives Be technically sound
Be financially viable Show an acceptable economic return Comply with environmental protection and procurement regulations
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Stages of the Project Cycle Pre-Appraisal – preliminary assessment of the project’s suitability Appraisal – assessment of the soundness of the project, taking into account technical, legal, environmental, social and other impacts of the projects
Negotiation – signature of the contract Monitoring – verification of compliance with the contract and possible due diligence requirements 23/01/2014
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Infrastructure loans signed 2008-2013 Total: 82,271m Public sector: 65,020m (79% of total) Of which Member States: 61,884m (95%) Private sector: 17,251m (21% of total) Of which Member States: 16,881m (98%)
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Highlights of operations signed 2008 – 2013 Operation
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ATHENS METRO CZECH RAILWAYS REGIONE CAMPANIA TRAMWAY PARIS BERLIN AIRPORT
Year 2008 2008 2008 2009 2009
Loan Amount (M EUR) 300.00 397.00 700.00 500.00 982.00
AUTOSTRADE FIRENZE-BOLOGNA
2009
500.00
ITALY COSTA NEW VESSELS
2009
550.00
ROTTERDAM PORT POLAND A2 AUSTRIAN RAILWAYS STOCKHOLM CITY TRANSPORT
2009 2009 2009 2010
550.00 1,000.00 400.00 590.00
LONDON GATEWAY PORT
2011
333.00
FINLAND WEST METRO HELSINKI URBAN TRANSPORTATION OSLO AIRPORT
2011 2011 2012
450.00 250.00 200.00
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EIB Case Studies I: Port of Southampton Upgrade container berths and marine access to provide infrastructure and access to accommodate ultra-large container ships.
Project will improve the port’s navigation safety and accessibility and is expected to generate up to 350 person-year employment during construction. Project cost: EUR 174 million Bank contribution: EUR 87 million Delivery date: 2015 23/01/2014
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Port of Southampton In the UK, sea ports are estimated to handle about 95% of the country’s international trade. The port of Southampton is UK’s second largest container port.
EIB’s third loan to UK’s private port sector since 2011 to increase container port capacity. Others: London Gateway – a new port facility on the Thames river close to London Container terminal Liverpool with deep water access 23/01/2014
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UK Ports financing EIB is contributing with the use of alternative financing structures across the 3 projects: London Gateway: project finance plus Loan Guarantee for Trans-European Transport (LGTT) instrument Liverpool and Southampton: corporate finance using a structured security package
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Southampton Port – Expected results To contribute to transport sustainability by supporting maritime transport as an alternative to other freight transport modes.
To encourage the use of intermodal transport: The port of Southampton has a higher rail modal share for hinterland transport (about 35%) than competing UK container ports.
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Southampton Port – policy links Category A port in the Trans-European Transport Network (TEN-T) and part of the core TEN-T ports network under the new EC guidelines.
The project supports the Sustainable Inter-urban Transport objective, which promotes port expansion projects that provide extra capacity to accommodate local traffic. It encourages the modal shift from road to rail/maritime, which meets the Climate Action priorities of the Bank.
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EIB Case Study 2: Transport Gothenburg This major multi-modal infrastructure investment programme comprises 10 transport schemes in and around the City of Gothenburg, the second largest city in Sweden. Project purpose: To create a reliable, sustainable, and integrated public transport system in the City and its surrounding region, capable of meeting future levels of transport demand and helping to facilitate economic growth. Project cost: EUR 1,130 million Bank contribution: EUR 452 million Delivery date: December 2020 23/01/2014
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Gothenburg Transport EIB is co-financing a multi-modal urban infrastructure program consisting of four public transport, two rail and three road schemes in and around Gothenburg. Investments include the construction of a new road tunnel and two TENT river crossings, and small scale projects, such as new tram links, intermodal exchanges and dedicated bus lanes. Project purposes: Meeting the expected doubling of demand for public transport by 2025 Reducing environmental impacts currently caused by road congestion facilitating economic cohesion and growth through connecting the urban areas to the hinterland
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Gothenburg Transport – policy links The goal is to increase the public transport share of total number of trips from 24% to at least 40% in 2025. The project supports the strategy agreed in 2009 by local and regional authorities to meet this target for public transport development in the City of Gothenburg. The project contributes to the EU’s objectives on protection and enhancement of the urban environment, and the creation of sustainable cities and communities. It involves two TEN-T priority projects, which form part of the Nordic Triangle railway/road axis linking Sweden and Finland and their capitals to each other, and aims at improving passenger and freight transport from the region to central Europe, the Baltic countries, and Russia. The project specifically contributes to the EIB’s Growth and Employment Facility’s EU Initiative dedicated to “strategic infrastructure” by enhancing the development of integrated and sustainable transport networks in Europe. The project will reduce the reliance on private cars and its negative impact on the environment thus fulfilling EIB’s policy on Climate Change. 23/01/2014
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The Europe 2020 Project Bond Initiative I Initiative of EU-Commission and EIB as part of the Connecting Europe Facility (EUR 50bn 2014 – 2020) Pilot case has been launched in 2012
Purpose: Help infrastructure projects to attract insurance companies and pension funds Instead of relying on bank lending only, companies could issue longterm bonds The participation of the Commission and the EIB will mitigate some of the associated risks
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The Europe 2020 Project Bond Initiative II Limited to 28 EU Member States But: TEN projects connecting to Europe are eligible (e.g. NordLink Interconnector from Norway to Germany) And: Norway’s $820 billion sovereign wealth fund could be an investor as PM Solberg indicated recently
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Infrastructure Financing: Market trends Market becomes more selective Funding is not a problem, especially BBB projects can fund at very competitive rates Any demand risk / green field project is still a problem for financial institutes Any availability fee project is no problem
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Infrastructure financing: Market trends II In UK / France: Insurance companies are entering the markets Pension funds buy in airport and port projects (also overseas, eg. Ontario teachers or California) Not a lot of new investments (prudent decision makers, lack of preparation) Maintenance and extension projects are high on the agenda 23/01/2014
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Infrastructure Finance: Market trends III EIB is currently looking into electrification and extension of railways in UK, France and Spain Motorway networks are more or less complete in Europe People do not want to have more highways being built in their backyard Instead, the Netherlands are investing EUR 700m in «cycling highways»
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