Page 5 - ePaper
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3. How will the fund work in practice?
The Fund will provide partial risk protection (first loss protection) to the EIB Group (EIB and
EIF). This risk protection will allow the EIB to offer products that absorb more risk than their
traditional products. High added value projects but with higher risks, that currently are not
able to attract finance, will as a result become investible. A part of the risk capacity of the
Fund can also be used together with National Promotional Banks.
4. How is this different from what the EIB is already doing?
The EIB is the largest multilateral lender and borrower in the world. In 2013 its lending
activities were in excess of €75 billion. A capital increase was carried out in 2013 with the
aim of generating an additional € 180 billion of investment over three years (2013-2015).
This important work by the EIB will continue.
The purpose of the new Fund is to complement current activities by focusing exclusively on
strategic investments that are necessary for Europe’s return to growth but have a different
risk profile to the projects currently financed by the EIB. The guarantee by the EU budget will
ensure that investment in such projects will generate interesting returns and should
therefore more easily crowd-in a greater number of private sector investors.
5. What is the added value compared to what exists already?
The EU budget will provide € 16 billion in funding while the EIB will contribute an
additional € 5 billion in risk-bearing capacity. Together this can catalyse at least € 315 billion
in additional investment finance.
However, this is only the beginning. A key element of the new approach is that Member
States and National Promotional Banks will also be able to contribute either at the level of
the Fund or by co-financing various projects.
EFSI Risk Bearing Capacity Multiplier Investment
(averaged) in the real economy
Long-term investments 16 bn 240 bn
SMEs & mid-cap5 bn 15 75 bn
companies
Total 21 bn 315 bn
6. There is enough money in the system. Why should the private sector not
finance these projects alone?
In contrast to some years ago and thanks to the improved economic and financial market
situation, as well as the actions of the European Central Bank (ECB) on monetary policy,
there is ample liquidity available both in financial institutions and in the corporate sector.
Moreover, levels of private savings are high in many Member States.
The problem is that this liquidity does not reach the real economy as efficiently and as
swiftly as it should. This is due to the uncertainty of economic and political developments
4
The Fund will provide partial risk protection (first loss protection) to the EIB Group (EIB and
EIF). This risk protection will allow the EIB to offer products that absorb more risk than their
traditional products. High added value projects but with higher risks, that currently are not
able to attract finance, will as a result become investible. A part of the risk capacity of the
Fund can also be used together with National Promotional Banks.
4. How is this different from what the EIB is already doing?
The EIB is the largest multilateral lender and borrower in the world. In 2013 its lending
activities were in excess of €75 billion. A capital increase was carried out in 2013 with the
aim of generating an additional € 180 billion of investment over three years (2013-2015).
This important work by the EIB will continue.
The purpose of the new Fund is to complement current activities by focusing exclusively on
strategic investments that are necessary for Europe’s return to growth but have a different
risk profile to the projects currently financed by the EIB. The guarantee by the EU budget will
ensure that investment in such projects will generate interesting returns and should
therefore more easily crowd-in a greater number of private sector investors.
5. What is the added value compared to what exists already?
The EU budget will provide € 16 billion in funding while the EIB will contribute an
additional € 5 billion in risk-bearing capacity. Together this can catalyse at least € 315 billion
in additional investment finance.
However, this is only the beginning. A key element of the new approach is that Member
States and National Promotional Banks will also be able to contribute either at the level of
the Fund or by co-financing various projects.
EFSI Risk Bearing Capacity Multiplier Investment
(averaged) in the real economy
Long-term investments 16 bn 240 bn
SMEs & mid-cap5 bn 15 75 bn
companies
Total 21 bn 315 bn
6. There is enough money in the system. Why should the private sector not
finance these projects alone?
In contrast to some years ago and thanks to the improved economic and financial market
situation, as well as the actions of the European Central Bank (ECB) on monetary policy,
there is ample liquidity available both in financial institutions and in the corporate sector.
Moreover, levels of private savings are high in many Member States.
The problem is that this liquidity does not reach the real economy as efficiently and as
swiftly as it should. This is due to the uncertainty of economic and political developments
4
