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Annual Report 1998
Activities of the institutions and bodies
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199
Annual Report
European
Investment
Bank Key data
(EUR million) 1998 1997
29 526 26 202 Contracts signed
25 116 22 958 Within the European Union
4410 3 244 Outside then Union
• Applicant Countries 2 375 1 541
(1 370) (of which Pre-Accession Facility)
886 1 067 • Mediterranean Countries (excluding Cyprus)
560 60 • Africa, Caribbean, Pacific, OCT
135 199 South Africa
362 • Asia, Latin America 378
• Central and Eastern Europe (Albania, FYROM) 92
Loans approved 34 223 33 369
Within the European Union 28 246 29 748
Outside then Union 5 123 4 475
Disbursements 27 993 23 473
From own resources 27 792 23 346
From other resources 201 127
Resources raised 30 098 23 025
Community currencies 23 395 19 639
Non-Community currencies 6 703 3 387
Outstandings
155 333 142 406 Loans from own resources
347 386 Guarantees
Financing from budgetary resources 2 360 2 334
Short, medium and long-term borrowings 123 767 110 394
14 654 14 310 Reserves and profit for the financial year
Balance sheet total 176 369 157 122
Subscribed capital at 31 December 62 013 62 013
of which paid in and to be paid in 4 652 4 652
95 550* Subscribed capital at 1 January 1999
See Financial Statements, page 96 1998
Annual report
European
Investment
Bank í.hál. ιιιιιι::ιιιι·"!ΙΙΙ1Ι-i
4 Ί st Annual Report of the
European Investment Bank
ISBN 92-828-5975-4
Text finalised 31 March 1998 Page
Message from the President 4
1998: Overview
Strategic guidelines
Promoting European integration 11
Regional development 11
Amsterdam Special Action Programme 16
19 European communications infrastructure
24 Natural and urban environment
26 Energy conservation
30 Industrial competitiveness and SM Es
Supporting cooperation policies with non-member countries 33
Countries applying for accession 34
Euro-Mediterranean Partnership Countries 37
African, Caribbean and Pacific States and OCT 39
South Africa 40
Asia and Latin America 41
Resources raised 43
EIB borrowing operations on the financial markets 43
Liquidity management 52
Liquidityt results 53
Decision-making bodies, administration and staff 55
Decision-making bodies 55
Organisation chart 60
Administration and staff 63
Presentation of the accounts 67
Results for the year 69
Financial statements 70
Report of the Auditor 91
Statement by the Audit Committee 92 Ml
European Investment Bank
Annexes
Lending within the European Union 99
Lending outside then Union 112
Statistical tables 119
1998 page 3| ANNUAL REPORT Message from the President
1998, the Bank's 40th anniversary, was a momentous year for the EIB. The
diversity and volume of the Bank's borrowing and lending was at record levels,
but more significantly the Bank was able to make a key contribution to its main
strategic objective - supporting the successful launch of Monetary Union and the
single currency.
With borrowings on the world's capital markets of more than EUR 30 billion,
over half of which was in euro-denominated or euro-tributary bond issues, the
Bank played a pioneering role in opening up and diversifying the euro market
and helping to create a broad and varied range of instruments denominated in
the new currency.
At the same time the Bank vigorously implemented the programme in support
of growth and employment in Europe launched in late 1997 in response to the
Amsterdam European Summit. Some EUR 600 million has been committed to
providing venture capital for innovative small and medium-sized enterprises,
making the EIB, in close partnership with the Union's banking community and
our affiliated institution, the European Investment Fund, the leading source of
such financing in Europe. In addition, new loans of nearly EUR 7 billion were
allocated for funding some 50 key projects, including many private-public sector
partnerships, in the fields of health, education and urban renewal.
These operations, under the Amsterdam Special Action Programme, were a
priority. But the Bank did not neglect its traditional objectives. Substantial loans
were committed for developing efficient trans-European communications
networks, catering for the Union's energy needs, preserving our environmental
and ecological heritage, and sustaining the competitiveness of European
industry, particularly of small and medium-sized enterprises. At the same time
we maintained overall priority for investment in the less favoured regions of the
Union, in pursuit of the Bank's primary task of promoting economic integration
and the balanced development of the Union. In 1998 over 70% of the Bank's
financing in the Member States was for projects in such regions.
Another key feature of 1998 was the substantial increase in the Bank's support
for projects in the countries applying for membership of the Union. With the
launch of our new Pre-Accession Lending Facility, such lending last year
amounted to over EUR 2.3 billion, concentrated on priority sectors such as
communications infrastructure and the environment, in order to help raise
standards to the level necessary for Union membership.
This activity in the applicant countries formed part of lending of nearly
EUR 4.5 billion in 1998 in support of the European Union's external aid and
cooperation policies in over 120 countries throughout the world. Over
EUR 900 million went to countries of the Mediterranean in support of the Euro-
Med Partnership; a record EUR 700 million to Africa, the Caribbean and the
Pacific; and over EUR 350 million for projects in Asia and Latin America.
I998-ANNUAL REPORT page 4 The sheer volume and diversity of these activities in support of the European
Union's objectives mark a profound development in the Bank's activities over the
past decade. It was particularly satisfying to me, as I come to the end of my six-
year term as President of the Bank, that the confidence of the Member States in
the Bank's achievements was marked by the decision of the Governors last June
to raise the Bank's capital to EUR 100 billion. This gives the Bank, within the new
Strategic Framework also endorsed by the Governors, a solid base on which to
continue its vital role in the coming critical years of consolidation of Monetary
Union and enlargement of the Union itself.
These achievements owe much to the outstanding professionalism and
dedication of the Bank's staff and the support of its governing bodies. I thank
them in particular for the help and encouragement they have given me during
my period of office.
Sir Brian Unwin
President and Chairman of the Board of Directors
The ElB's Management Committee
page·) 1998:
Overview
In accordance with its remit and priorities,
the EIB continued to support, through its
borrowing and lending activity, the building
of a closer-knit, more united and outward-
looking Europe. The Bank thus made a con­
siderable contribution to taking up the chal­
lenges facing the Union as it approaches the
end of the century by focusing its operations
on three major areas: actively assisting intro­
duction of the euro; stepping up its financing
to promote growth, a stronger economic and
social fabric and more integrated economies
within the Union; and preparing the appli­
cant countries for EU membership.
In pursuing its task and objectives, the EIB re­
corded significant growth in its lending activ­
ity in 1998, which totalled EUR 29.5 billion,
up from 26.2 billion the previous year.
Against this background, there was a marked
expansion of financing operations to foster
the internal cohesion of the Union and sup­
port Economic and Monetary Union, as was
also the case with those giving practical
effect to the Resolution on Growth and
Employment adopted by the European
Council meeting in Amsterdam. To this end,
the Bank introduced pioneering financial in­
struments facilitating access to bank credit
and the provision of equity capital for inno­
vative and job-creating SMEs, while extend­
ing its operations to the health, education
and urban renewal sectors.
Pressing ahead with its role of actively promot­
ing the preparation of capital markets for the
euro, the EIB launched new euro and euro­tributary issues in 1998, representing awaiting signature remained steady at
nearly half of its resource raising, as against a 34.8 billion, comparable to the 1997 level.
quarter in 1997. The EIB also started to restruc­
By the close of 1998, total outstanding lend­
ture its debt by exchanging existing bonds de­
ing from own resources and guarantees came
nominated in the currencies of those countries
to 155.6 billion. Aggregate outstanding bor­
participating in the euro for new tributary
rowings amounted to 123.8 billion. The bal­
bonds. Borrowing operations signed grew by
ance sheet totalled 176.4 billion, up by 12%.
36% compared with the previous year and to­
By decision of the Board of Governors of talled 31.4 billion, including 1.3 billion in tribu­
5 June 1998, the Bank's subscribed capital tary issues floated under the first exchange
was increased from 62 billion to 100 billion offer.
with effect from 1 January 1999, thereby con­
Of aggregate finance contracts signed,
firming the full confidence shown in the Disbursements, contracts
25.1 billion, or 9.4% more than in 1997, tar­
signed and projects approved Bank by the Member States. Paid­in capital,
geted projects within the European Union, (1989 ­ 1998)
set at 6% of subscribed capital, therefore
mainly to further regional development, which
(EUR million) rose from 4.7 billion to 6 billion. The amount
attracted 72% of lending. In the forefront of
to be paid in following this increase was 40 000
priorities were projects involving trans­
drawn from the Bank's Additional Reserves.
European communications networks, those car­
ried out by SMEs and loans to promote human After examining the robustness of the Bank's
welfare, particularly in the fields of health, financial position, the Governors also autho­
education, the environment and urban rised the exceptional payment of a sum of
renewal. 1 billion, divided up among the Member
States according to their contribution to the
Activity outside the Union (4.4 billion) was
Bank's capital.
characterised by the substantial rise in finan­
cing in the applicant countries (2.5 billion) ­ for At the same meeting, the Governors decided
which the EIB launched, at the beginning of that the Bank's accounts would be kept in
1998, a specific additional pre­accession lend­ euro as from 1 January 1999.
89 90 91 92 93 94 95 96 97 98 ing facility funded exclusively from own
resources ­ and the resurgence of operations in
— Disbursements the ACP countries following entry into force of
■ Signatures the Second Financial Protocol to the Lomé
Convention. ■ Approvals
Disbursements totalled 27.8 billion, of which
24.9 billion in the Member States. The 320 or
so capital projects appraised by Bank staff in
1998 resulted in 33.4 billion in loan approv­
als. The stock of projects approved and
OVERVIEW page η A strategic action framework to meet
the challenges of the third millennium
Over the past decade the economic environment within which the European Investment Bank
operates, the extent and nature of the remits entrusted to it in pursuit of the objectives of the
European Union, including support for introduction of the euro and for Economic and Monetary
Union, its activities in favour of growth, employment and human capital in Europe and pro­
active assistance for the applicant countries, have led to changes in both the ways in which it
presents itself on the capital markets and the range of financing instruments it offers.
In order to strengthen the means at the ElB's disposal to cope with the challenges which the
Union will have to face over coming years, at its meeting on 5 June 1998 the Board of
Governors authorised an increase in the Bank's capital to 100 billion, with effect from 1 January
1999. This increase, the largest ever undertaken by a multilateral financial institution, raises the
statutory ceiling for EIB loans, fixed at 250% of subscribed capital, to 250 billion.
At the same meeting, on a proposal from the Board of Directors, the Governors approved a
strategic framework refining the principles governing operational priority setting for the
European Union's financing institution both as a borrower and a source of long-term finance
for projects designed to give tangible expression to Community policy objectives. On the
strength of this strategic framework, the Bank will continue to concentrate its efforts on
developing the Union's peripheral economic areas or those experiencing structural difficulties,
in accordance with its principle mission of supporting economic convergence and integration in
Europe. These activities will focus primarily on the less favoured regions of the present Union.
Futhermore, the EIB will support integration of those countries which have applied for EU
membership, by continuing to act in partnership with the European institutions as well as by
developing its close cooperation with the multilateral institutions and the international banking
community.
While implementing the Amsterdam Special Action Programme, which promotes growth and
job creation in Europe, the Bank will at the same time continue to support, within the Union
and the applicant countries, the key Community policies, in particular establishment of the
trans-European transport, energy and telecommunications networks, industrial competitiveness
The EIB will continue
and development of SMEs, protection of the natural and urban environment, and energy con­
to carry out its servation.
In order to maximise its leverage, the EIB will step up its cooperation with the banking sector specific role of
in Europe. Consequently, the guiding principles confirm the EIB in its policy of close cooperation
supporting capital
with the Union's financial sector in keeping with the principles of subsidiarity and complemen-
investment growth...
1998-ANNUAL REPORTI page8