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[...] Sweden, the Netherlands and Austria are part of a group insisting that once Britain withdraws from the EIB, any demands for more capital from remaining EU members should be linked to the institution’s willingness to reform. They also want a “credible” strategy to ensure its lending stays within its means.
The EIB is owned by the EU’s member states and Britain is one of its largest backers, providing €39bn of its €243bn capital base. In a position paper seen by the Financial Times, the seven governments say the UK’s departure brings the bank to a “critical juncture” and say talks are needed “on the extent to which a capital replacement may be justified”.
The discussion over the EIB’s future echoes a broader debate in Brussels over replacing Britain’s contribution to the EU’s budget. But EU diplomats said the note reflected more specific frustrations that the EIB had been slow to enact reforms recommended by its own audit committee, aimed at ensuring better risk management and project selection.
On governance, the paper calls for the “unorthodox combination of responsibilities” of the bank’s vice-presidents to end to avoid potential conflicts of interest.
Noting the need for a “clear supervisory concept”, the countries also hint at growing concerns over the EIB’s status, which leaves it outside most traditional forms of financial oversight.
€39bn Britain’s contribution to the European Investment Bank’s €243bn capital base The EIB took on a heightened role in the aftermath of the 2008 financial crisis, when it was used by governments to stimulate the ailing economy, including funding car scrapping schemes and other projects to support the auto industry.
One diplomat said a number of countries were “annoyed” that the Luxembourg-based bank had not given more consideration to managing with less capital after Brexit, especially given a smaller EU and the fact that the bloc has significantly recovered from the financial crisis. [...]
Full article on Financial Times (subscription required)