The first vice president and Minister of Economy, Nadia Calviño , will become the new president of the European Investment Bank (EIB). Calviño will replace the German Werner Hoyer and become the new president of the European Investment Bank (EIB) on January 1, 2024 .
Nadia Calviño received this Friday the support of 18 of the 27 states of the European Union (EU), to become the next president of the European Investment Bank (EIB). Calviño will be the first woman to preside over the EIB and the eighth in total, with a mandate of 6 years. The Spanish candidacy competed with those of the Danish commissioner Margrethe Vestager, the former Italian Finance Minister Daniele Franco, the Polish Teresa Czerwinska and the Swede Thomas Östro. This article will shed some light on two key questions: What is the EIB? because it is important?
The EIB is considered the financial arm of the European Union , since its main mission is to grant financing to contribute to the balanced and stable development of the common market, in projects that contribute to achieving the objectives of the EU, both inside and outside it. This institution is based in Luxembourg. The EIB was created in 1958 within the framework of the Treaties of Rome, specifically in articles 129 and 130 of the treaty.
The EIB was created with the mission of promoting economic development and fostering the bloc's cohesion. In its early years, the European Investment Bank provided financing in the form of loans for large European infrastructure projects.
Starting in the 1970s, the economic crisis that devastated the continent brought about a reorientation of the EIB's mission and objectives. The decline of the economies of the EC member countries made it more difficult for each of them to pursue their own, often disparate, national objectives. At the same time, the enlargement of the EC with the incorporation of the United Kingdom, Denmark, Ireland and other countries in the 1970s, followed by the incorporation of Greece, Spain and Portugal in the mid-1980s, had given the EC a even more diversified economic and infrastructure development.
These factors led the EC to begin taking steps towards the development of a European-wide economic policy. In turn, the EIB began to adopt lending guidelines more closely linked to the EC's economic strategies and objectives.
The EIB also began to provide loans specifically to the increasing number of "associates" of the European Community, in particular to countries aspiring to join the EC. The Mediterranean region became a privileged target for EIB loan projects. In the 1980s the EIB assumed responsibility for helping associated countries such as Greece, Spain and Portugal to meet the requirements for admission to the EC.
In the late 1980s and early 1990s, the EIB began to develop a number of new markets. On the one hand, the EIB began to concentrate a greater part of its loan portfolio on financing the SME market, as well as on telecommunications and urban transport initiatives between EC member countries. Furthermore, in 1989 the EIB began providing financing to the countries of the former Eastern Bloc as they emerged from Soviet rule, lending to Poland, Romania, Hungary, Bulgaria, the Czech Republic and Slovakia.
Following the 2000 Lisbon European Council and the appointment of a new president, former Belgian Finance Minister Philippe Maystadt, the EIB announced a change in its objectives .
The EIB continued to provide infrastructural and political support to the European Union as it had done for more than 40 years, this institution wanted to play a significant role in achieving the objective declared by the Lisbon Summit of turning Europe into a high-tech economy. and knowledge-based technology in the world between now and 2010. Therefore, the EIB quickly reoriented its loan portfolio, shifting an increasing percentage of its loans towards supporting high-tech and venture capital programs, as well as SME market.
Currently the European Investment Bank (EIB) has three key functions : boosting Europe's growth and employment potential , supporting measures to mitigate climate change and promoting EU policies in other countries. It should be mentioned that it is the main European tool to finance aid for Ukraine . It is also a fundamental tool in the management of Next Generation loans . Furthermore, since 2021, it has stopped financing energy projects based on fossil fuels.
The EIB is directly responsible to the Member States. It has no formal reporting obligations to Parliament nor is it accountable to it. However, in a gesture of goodwill, the EIB President accepts invitations to appear before the Plenary and attend meetings of the relevant parliamentary committees. A parliamentary committee monitors the activities of the EIB every year and presents a report to the plenary session, in the presence of the President of the EIB. According to Article 308 of the TFEU , to amend the Statute of the EIB, the European Parliament will be consulted.
The entity obtains its resources mainly in the debt markets, although it also relies on capital contributions made by EU countries as partners of the entity. It then directs the resources both to the companies that need financing and to private banks that then channel them to the final recipients. Nearly 90% of credits are granted in the EU. Not one euro comes from the EU budget.
This institution is the only bank that has EU member states as shareholders . The participation of each Member State in the capital of the bank is a function of its economic weight in the EU (expressed in GDP) upon its entry into the Union (Spain contributes 9.66%).
Graph 1: Capital quota of EU states in the European Investment Bank. Source: https://www.elespanol.com/invertia/economia/macroeconomia/20231208/bei-brazo-armado-financiero-ue-presidira-nadia-calvino-retiro-dorado/815418871_0.html
The EIB has three decision-making bodies : the Board of Governors, the Board of Directors and the Management Committee, and a control body, the Audit Committee.
The Council of Governors made up of ministers (generally of Economy) of the 27 member states. The general guidelines of the European Investment Bank are determined. It should be mentioned that it decides the credit policy, approves the annual accounts and decides on the bank's participation in financing operations outside the EU.
The Board of Directors is made up of one advisor from each EU country and one from the European Commission. It decides on loans, guarantees and credits and controls the management of the EIB.
The Steering Committee is the executive and permanent collegiate body; It is made up of nine members. Under the authority of the President and under the control of the Board of Directors, he is responsible for the day-to-day management of the Bank. The Management Committee is made up of a president and eight vice-presidents appointed for a period of six years.
In practice, the European Investment Bank has become the largest multilateral lender and borrower in the world. It provides its financing and expertise for sustainable investment projects that contribute to EU policy objectives. The EIB concentrates more than 90% in Europe, but invests in the rest of the world. Currently, it collaborates with more than 150 states outside the EU. The EIB signed more than €65 billion of financing last year.
Suggested readings:
El Banco Europeo de Inversiones: Fichas Temáticas sobre la Unión Europea: Parlamento Europeo. Fichas temáticas sobre la Unión Europea | Parlamento Europeo. Available at: https://www.europarl.europa.eu/factsheets/es/sheet/17/el-banco-europeo-de-inversiones
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