But Ireland has never tapped the world’s largest bank capitalised by EU member states as much as most other countries.
It signed agreements worth over €60 billion, of which €53bn was for projects in the EU. €475m went to Ireland. They agreed to provide €150m to AIB, which they must match with the same sum for lending to SMEs. The EIB half of any loans must be 1.5% cheaper than the bank’s normal lending rate.
Another €150bn is expected to be approved shortly for Bank of Ireland.
EIB president, Werner Hoyer said, “We are not going to forget that Ireland still needs partners in finance. We appreciate the efforts taken in Ireland are showing fruit and we should have a somewhat closer look at Ireland in these times”.
But the bank is to reduce its lending this year to €50bn from to maintain its financial strength. Through agreement with the member states it has retained its profits, which were €2.3bn last year and has subscribed capital of €232.4bn, giving it a capital adequacy ratio of 24.9%.
It increased its lending from 2009, following a request from EU leaders to support growth and the creation of jobs. It says that it is ready to increase lending targets if it receives additional funding.
The bank has maintained its Triple A rating but Mr Hoyer rejected suggestions that, with its slew of experts in all areas, it should become a rating agency. Asked if the Bank’s rating was under pressure, he said, “When it comes to rating you are never relaxed but we feel on very safe ground”.
The bank provides long-term finance for infrastructural projects and targeted green energy projects to the value of €18bn last year. SMEs were another target and they provided €13bn to more than 120,000 SMEs all over Europe.
They term themselves as conservative lenders, checking out proposed projects to ensure they are sustainable, green and provide lasting benefits. To date the Bank has failed to get its money back for just 0.1% of its total loan portfolio.