Brexit would have caused a “disaster” for the European Investment Bank (EIB) if other member states had not agreed to make up almost €40bn (£33.6bn) of capital that it would have lost as Britain leaves.
The UK has a 16 per cent stake in the bank, which focuses on regional development and tackling climate change, and will withdraw €3.5bn in cash when it leaves the EU at 11pm on Friday. The move will also eliminate €38.4bn of so-called callable capital that the EIB can use to raise finance in the capital markets.
Launching its 2019 annual report, EIB president Werner Hoyer said that as the bank uses a gearing ratio (a financial ratio that compares owner equity to funds borrowed by the company) of 2.5, the loss of that money would have led to a cut in financing of almost €100bn. After weeks of negotiations in early 2019 the other EU member states agreed to pay in the missing capital.
He said: “If the Brits had withdrawn without their capital being replaced by the others, we would have had to reduce the maximum lending we could do. That would have been €100bn less and would have been a disaster.
“Not only would we have had to reduce for the next few years by 50 per cent but also those member states that need us most would have suffered. So I am extremely happy and grateful that after long discussions member states decided to replace proportionately the British capital.”
1/22
A man poses for a picture on Parliament Square in a ‘Brexit Day’ t-shirt
Reuters
2/22
Pro EU supporters display a banner ‘ Here to Stay, Here to Fight, Migrants In, Tories Out’ from Westminster bridge
EPA
3/22
A Brexit supports holds a sign in Parliament Square
AP
4/22
A man carries an EU themed wreath
Reuters
5/22
Ann Widdecombe reacts with other members of the Brexit party as they leave en masse from the European Parliament
PA
6/22
Anti-Brexit demonstrators in Parliament Square
PA
7/22
Pro EU supporters let off flares from Westminster Bridge
Getty
8/22
British MEPs Jonathan Bullock, holding the Union Jack flag and Jake Pugh leave the European Parliament, in Brussels on the Brexit day
AFP via Getty
9/22
Newspapers and other souvenirs at a store, near Parliament Square
Reuters
10/22
Brexit supporters hold signs in Parliament Square
AP
11/22
Pro-EU protesters hold placards in Parliament Square
AFP via Getty
12/22
French newspapers
PA
13/22
Sinn Fein leader Mary Lou McDonald with a Border Communities Against Brexit poster before its unveiling in Carrickcarnon on the Irish border
PA
14/22
National growers organisation British Apples & Pears has renamed a British apple to EOS, the Greek goddess of dawn, to commemorate Brexit day
AP
15/22
Pro-EU protesters hold placards in Parliament Square
AFP via Getty
16/22
Britain’s departure from the European Union was set in law on January 29, amid emotional scenes, as the bloc’s parliament voted to ratify the divorce papers. After half a century of membership and three years of tense withdrawal talks, the UK will leave the EU at midnight Brussels time (23.00 GMT) on January 31
Reuters
17/22
A man poses with paintings on Parliament Square
Reuters
18/22
People sporting Union Flags gather in Parliament Square
Getty
19/22
A man walks with a St. George’s flag at Westminster bridge on Brexit day
Reuters
20/22
A British bulldog toy and other souvenirs at a souvenir store
Reuters
21/22
British pro-brexit Members of the European Parliament leave the EU Parliament for the last time
Reuters
22/22
Jonathan Bullock waves the Union Jack as he leaves the European Parliament
EPA
1/22
A man poses for a picture on Parliament Square in a ‘Brexit Day’ t-shirt
Reuters
2/22
Pro EU supporters display a banner ‘ Here to Stay, Here to Fight, Migrants In, Tories Out’ from Westminster bridge
EPA
3/22
A Brexit supports holds a sign in Parliament Square
AP
4/22
A man carries an EU themed wreath
Reuters
5/22
Ann Widdecombe reacts with other members of the Brexit party as they leave en masse from the European Parliament
PA
6/22
Anti-Brexit demonstrators in Parliament Square
PA
7/22
Pro EU supporters let off flares from Westminster Bridge
Getty
8/22
British MEPs Jonathan Bullock, holding the Union Jack flag and Jake Pugh leave the European Parliament, in Brussels on the Brexit day
AFP via Getty
9/22
Newspapers and other souvenirs at a store, near Parliament Square
Reuters
10/22
Brexit supporters hold signs in Parliament Square
AP
11/22
Pro-EU protesters hold placards in Parliament Square
AFP via Getty
12/22
French newspapers
PA
13/22
Sinn Fein leader Mary Lou McDonald with a Border Communities Against Brexit poster before its unveiling in Carrickcarnon on the Irish border
PA
14/22
National growers organisation British Apples & Pears has renamed a British apple to EOS, the Greek goddess of dawn, to commemorate Brexit day
AP
15/22
Pro-EU protesters hold placards in Parliament Square
AFP via Getty
16/22
Britain’s departure from the European Union was set in law on January 29, amid emotional scenes, as the bloc’s parliament voted to ratify the divorce papers. After half a century of membership and three years of tense withdrawal talks, the UK will leave the EU at midnight Brussels time (23.00 GMT) on January 31
Reuters
17/22
A man poses with paintings on Parliament Square
Reuters
18/22
People sporting Union Flags gather in Parliament Square
Getty
19/22
A man walks with a St. George’s flag at Westminster bridge on Brexit day
Reuters
20/22
A British bulldog toy and other souvenirs at a souvenir store
Reuters
21/22
British pro-brexit Members of the European Parliament leave the EU Parliament for the last time
Reuters
22/22
Jonathan Bullock waves the Union Jack as he leaves the European Parliament
EPA
Mr Hoyer also revealed that EIB staff had watched Wednesday’s ceremony in the European parliament as the British MEPs stood down that was marred by a flag protest by Brexit Party leader Nigel Farage.
“We have a similar ceremony with probably the same tears but less expressions of joy tomorrow at the bank in Luxembourg,” he said.
Hoyer said that the EIB had a “surprisingly” good year in 2019 given the uncertainty created by the political turbulence in the UK over Brexit. “It started with a very big difficulty for us as the uncertainty persisted until April or May,” he said.
“We lost almost half a year but at the end of the day it is almost a miracle that we concluded out business plan almost 100 per cent.”
Last year the EIB group, that also includes the European Investment Fund, signed financing worth €72.2bn for more than 1,200 projects, of which €63.4bn were in the EU and €8.8bn outside the union.
It supported a total investment of €280bn, of which 31 per cent was for climate-related projects. The EIB has set a target of ensuring that half of its finance goes towards climate projects by 2025. It has set a target of €1 trillion of climate investment by 2030.
“We will do nothing that is not entirely behind the Paris Agreement. The logic of this is that it would not make very much sense to say that we invest 50 per cent of what we do into climate projects and let the other 50 per cent destroy the positive impacts of our climate action.”
