A growing number of large businesses turned to the EIB for credit last year having been refused loans by commercial banks. At a time when the bank lent more money than ever before, the proportion of cash flowing to corporate clients increased significantly.
In previous years, corporations accounted for around one third of the EIB's loan book, but this has now climbed to 42% – around €12 billion.
Philippe Maystadt, the bank's president, said he hopes the situation will be "temporary" and the bank will pare back its corporate lending in 2011 if commercial banks resume lending to corporate borrowers.
"The EIB had to act as a partial substitute for commercial banks last year," he said.
Maystadt insisted that the EIB's loan book "remains of very high quality" and said the bank has historically had very low loan delinquency rates. However, the financial crisis has seen the bank take greater risks than in the past, which brings a heightened chance of corporate default.
'Watch list' of shaky loans grows
"We have a watch list of loans we are following very closely, but this represents around 0.4% of our loan book. Because of the crisis, some borrowers have been downgraded by credit rating agencies. All of these are corporate clients," he said.
Speaking at the launch of the EIB's annual report for 2009, Maystadt said companies from all business sectors and geographical regions are represented on the watch list.
"We had more requests from corporates last year. Many of these were already clients, while others came to us for the first time. For some, it was only last year that they discovered the EIB exists," he said, adding that some corporations had not realised the EIB could lend to private clients.
The EIB, which has a AAA credit rating, has stepped up its lending since the outbreak of the financial crisis and has been mandated to pump billions of euro into the real economy, with particular emphasis on SMEs, innovation and tackling climate change.
Surge in loans to small business
In 2007, the EIB lent €5.7 billion to small businesses. However, this had more than doubled to €12.7 billion by 2009 in the wake of the bank's new mandate to get credit flowing to SMEs.
"We have sought to offset partially the reluctance of commercial banks to lend to SMEs," said Maystadt, although he noted that the funds are dispersed to small firms through commercial banks.
Last year, the European Investment Fund (EIF), a branch of the EIB, provided loan guarantees worth €2.3 billion for SMEs and also pumped millions of euro into venture capital funds.
However, the credit crunch for small businesses continues unabated, with the European Central Bank (ECB) last week (16 February) reporting a deterioration in lending to SMEs in the second half of 2009.
Funding boost for research and climate
The European Council has also mandated the EIB to take on more risk by backing research projects. The EIB president said the bank will seek to continue its support for R&D through loans and guarantee schemes such as its Risk Sharing Finance Facility (RSFF).
38% of loans in EU countries were for environmental projects, with €4.2 billion spent on renewable energy alone.
A total of €17 billion was provided for climate-related projects, including wind and solar power, along with transport and the auto sector. Electric cars are likely to account for an increased proportion of funding this year, according to EIB officials.
Support for Greece
Maystadt said the EIB would be supportive of projects in Greece which meet the bank's lending criteria, but he stressed that it was not mandated to offer "a bailout" to struggling member states.
"The first and best way to fight speculation is for the Greek government to put their house in order – to restore credibility by implementing measures that have been announced," he said.
He added that member states must "defeat speculators" by pledging to take action to support Greece if needed.
