'European Investment Bank (EIB)' is explained in detail and with examples in the Corporate Finance edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.
The European Investment Bank proves to be the bank of the European Union. As such it is the one and only bank which is both representing the EU member states’ interests and also owned by the same member countries. This EIB works hand in glove with the other institutions of the European Union in order to carry out the common EU policies.
This European Investment Bank turns out to be the biggest multilateral lender and borrower on the planet. It delivers finance via loans and joint ventures as well as expertise to support projects of sustainable investments. While over 90 percent of the bank’s projects remain in Europe, they are still a substantially large investor throughout the globe.
The European Investment Bank betters the quality of life for individuals within and without the continent of Europe by offering expertise and finance on projects which encourage SME’s (small to medium enterprises), infrastructure, innovation, and climate action. Their enormous and far flung enterprises in areas of lending, blending, and advisory services work for the good of EU residents and citizens, along with residents of numerous countries which are not a part of the European Union.
Lending is the overwhelming center of activity for the European Investment Bank. By far the greatest share of the bank’s financing occurs via loans. They do also provide microfinance, guarantees, and equity investment, among other types of financing. The bank is able to harness their vast financial resources in order to borrow money on the world markets at extremely competitive rates. They then deliver these cost savings to those projects which they deem to be economically practical and which foster the objectives of EU policy.
Lending accounts for nearly 90 percent of all their financial commitments. The European Investment Bank actually lends money to clients of all sizes and purposes in order to encourage jobs and sustainable growth. The support of this well-regarded institution tends to attract other investors to the projects. Such projects must be over 25 million Euros in order to qualify for a loan. They also facilitate intermediated loans through local area banks.
With their venture capital program, they assist fund managers to invest capital in growth area SME’s and high technology companies. Microfinance they offer for both fund and equity investments as well.
Blending is the tool whereby the European Investment Bank helps to release funding from other financial sources by collaborating on a project. This support especially comes out of the EU budget. When blended along with loans, it helps to ensure a fully financed package of investment in a given project.
The EIB offers structured finance to give support to high priority projects. Guarantees ensure that a good project will be able to bring in sufficient new investment from other partners. Project bonds help to unlock funding for infrastructure projects. The InnovFin initiative delivers innovators EU based finance. The bank also partners with donors in trust funds. They support transport infrastructure and the JEREMIE project which delivers financial engineering and flexible finance to SME enterprises.
Other blending programs include ESIF Financial Instruments, the JESSICA program which supports urban development, the Private Finance for Energy Efficiency (PF4EE) program, and the Mutual Reliance Initiative offering efficient partnerships for development and growth.
Blending programs also include the Natural Capital Financing Facility to combine the bank’s financing with that of the European Commission as part of the LIFE Program to assist climate and environmental actions. An interesting last blending program proves to be the Risk Capital Facility for the Southern Neighborhood. This gives access to debt and equity financing for SMEs found throughout the Mediterranean regions. Its goal is to foster growth which is inclusive, job creation in the private sector, and development in the private sector.
Advising services provide technical assistance and expertise in the form of project and administrative management capabilities. This helps to bring in other investment. Both pubic authorities and private companies are able to rely on the technical and financial experience of the European Investment Advisory Hub to make sure the entity obtains the best people needed for a given project.