07 August 2018

Financial Times: European Investment Bank bows to calls for reform

The European Investment Bank has agreed to start talks to become independently supervised by the European Central Bank after EU governments demanded sweeping governance changes at the lender after Brexit.

A group of seven EU member states — including Denmark, Sweden and the Netherlands — are pushing the EIB to overhaul its internal operations and introduce new supervision as a condition of governments’ putting more capital in to the bank after the UK’s departure from the EU.

Britain, which provides €39bn of the lender’s €243bn capital base, is one of the largest backers of the EIB, which is owned by EU member states.

In June Werner Hoyer, EIB president, wrote to EU member states asking them to fill the Brexit gap by increasing their capital contributions. The capital-raising exercise is considered crucial by some governments — including France and smaller central and eastern member states — to maintain the EIB’s triple-A credit rating.

But Brexit has sparked a debate among EU finance ministries about how best to maintain the EIB’s financial firepower, with a group of governments urging reforms at the lender in return for more taxpayers’ money.

In the face of calls from capitals in The Hague, Copenhagen and Stockholm, the EIB has agreed to a series of governance changes, the biggest of which will include steps to introduce independent supervision of its lending operations by the ECB.

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