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Financing RTD and innovation in the European Financing RTD and innovation in the European Union by the EIB Union by the EIB

Financing Growth and Cohesion in the Enlarged EUFinancing Growth and Cohesion in the Enlarged EU

Dr. Guy ClausseDr. Guy Clausse

Operational Lending PoliciesOperational Lending Policies

g. clausse@eib.orgg. clausse@eib.org

http:www.eib.orghttp:www.eib.org

Brussels, 24/11/2005Brussels, 24/11/2005

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PRODUCTIVITYEMPLOYMENT

COMPETITIVENESSGROWTH

Research & Development& Innovation

EU 25; + 100bn p.a.

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Time

Basic Research

Applied Research

Technological developmentPrototyping

IPR

Should RTD activities be financed only through grants ?

Many RTD projects, which are currently undertaken thanks to subsidies, or abandoned for lack of them, have a financial profile

that could give them access to loans

GRANTSGRANTS GRANTS

LOANS LOANS LOANS

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Created by the Treaty of Rome in 1958, to provide long-term finance for projects promoting European integration;

Subscribed capital EUR 163.7bn;

EIB shareholders: 25 Member States of the European Union;

EIB’s lending in 2004: EUR 43 bn, EUR 40 bn within the EU-25;

EIB’s borrowing: EUR 50 bn in 2004;

EIF

Venture capital: 358m in 2004, 2.8 bn invested in 200 funds

SME guarantees: 1.4 bn in 2004, 7.7 bn in 150 operations

EIB - European Union’s financing group:

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STRATEGIC OUTLOOK: Corporate Operational Plan 2005-2007

5 priorities in the EU

economic + social cohesion in the enlarged EU:

- 28bn in 2004 (71% of total EU lending)

- Objective 1 (47%)

- Objective 2 (36%)

- Mixed operations

implementation of i2i – the innovation 2010 initiative: - 7 bn in 2004

TEN, Trans-European Networks;

environmental protection and improvement.

Support to SMEs: EIB global loans, EIF

EIB implements EU policies; a policy driven Bank

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Results of i2i: loan signatures 2000-2005

Signatures Education &

e-learning

RTD I C T Total

M EUR Nr of projects

M EUR Nr of projects

M EUR Nr of projects

M EUR Nr of projects

2000 May-Dec.

482 9 54 1 1 628 8 2 164 18

2001 1 418 11 1 688 12 1 931 17 5 037 40

2002 952 11 2 118 15 547 10 3 616 36

2003 2 711 28 2 130 17 1 378 13 6 219 58

2004 1 678 18 4 131 27 1 257 13 7 065 58

2005Jan-Sep.

1 596 19 4 779 28 950 5 7 585 55

Total 2000-2005

8 987 97 15 009 102 7 691 66 31 687 265

28% 48% 24%

i2i as the EIB’s main contribution to the Lisbon process (50 bn)

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i2i - Geographic distribution of signed loans (2000 –2005)

EU+109%

EU-15 Objective 1

20%

EU-15 Objectives

2 & 1 combined17%

EU-15 Objective 2

25%

EU-15 Non assisted

areas27%

Other countries

2%

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RTD - Geographic distribution for signed loans (2000 –2005)EU+10

7%

EU-15 Objective 1

19%

EU-15 Objectives

2 & 1 combined12%

EU-15 Objective 2

32%

EU-15 Non assisted

areas28%

Other countries

2%

Other countries

2%

EU-15 Non assisted

areas28%

EU-15 Objective 2

32%

EU-15 Objectives

2 & 1 combined12%

EU-15 Objective 1

19%

EU+107%

Few European « centers of excellence » or innovation throughout the Union?The wrong debateKeep a well-balanced « middle of the road » approach« Coordinate, co-finance, compete »

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• Rehabilitation and modernisation of primary and secondary schools

e.g. in Edinburgh, Finland, Romania and Turkey

• Extension and modernisation of university facilities

e.g. in Athens, Brno, Magdeburg, Nicosia, Valencia, Poland

• Student loan schemes in Hungary and Italy

Education and e-learning project types

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• Industrial RTD (research activities, labs, pilot plants) (Boeringer Ingelheim, Advanced Mask House Dresden, VATech)

• Research organisations (Cancer Centre Madrid)

• Large Infrastructures (LHC of CERN, IMEC, FELs)

• Science parks, incubators (EMBL, Turku)

• Specific global loans for innovative SME’s (ICO, SPIMI)

• Projects from Techn Platforms/FP7 (H2, Nanotechs, new mobile telecoms…)

RTD project types

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EIB’s main instrument for increased risk taking: SFF

Total reserves of EUR 750 m; target: operations between EUR 2.3 and EUR 5.0 bn; products:

senior loans and guarantees incorporating pre-completion and early operational risk;

subordinated loans and guarantees ranking ahead of shareholder subordinated debt;

mezzanine finance, including high-yield debt for industrial companies in transition from SME scale or in the course of restructuring;

project-related derivatives;

RTD, Education/PPP, Audiovisual, TENs/PPP, Mediterranean projects.

Structured Finance Facility

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Conclusions of the March 2005 European Council :“The European Investment Bank will have to extend its Structured Finance Facility to R&D projects and, together with the Commission, explore new ways of using Community funds to leverage EIB loans.”

Encouragement for i2i, for more risk taking and for combining grants + loans

EIB is the partner of the Commission :Common policy mandate under Lisbon AgendaEU–institution lending in all EU countriesExperience gathered in R&D through existing i2i and SFFCooperate with financial institutions at national levelLong term strategy and thus medium/long term lending

Risk-sharing finance facility:A Commission-EIB Joint Initiative

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Risk-sharing finance facility:Objectives and added value

An innovative financing mechanism to:Foster increased private investment in research by

improving access to EIB loan finance.Complementarity between FP 7 and EIB lending under SFFRisk-sharing with EIB to allow more lending to risky, but

bankable projects in RTDGenerate a leverage effect so that the volume of extra

lending by EIB is a multiple [3 to 6] of the Community funds allocated to the facility.

Rely on an existing EIB facility, and therefore benefit from EIB experience and management.

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Summing up and Widening the Perspective

i2i : EIB lending + EIF venture capital forinnovation

SFF : EIB lending, also for innovation, to more risky projects

RSFF : EIB lending supported by FP 7 resources for more risky RTD projects

JASPERS: project preparation, also for innovation projects

JEREMIE : EIF to support SMEs, including innovative SMEs

Co-Financing : EU Grants + EIB Loans

EIB moving the regions closer to the Lisbon goal