LUXEMBOURG, June 4: European Union finance ministers on Tuesday approved a capital increase at the European Investment Bank but told it to curb lending to creditworthy corporates as a condition.
In what amounted to a mild slap on the wrist for the triple-A rated financing arm of the EU, ministers also said the bank should make its new money last “at least” five years.
The decision to increase the EIB’s capital to 150 billion euros from 100 billion euros removed a risk the bank could have run against its lending ceiling — set at 2.5 times its capital.
But ministers expressed frustration they were being asked to approve another capital increase only four years after the last.
“This capital increase should do for at least five years. That’s what we agreed,” acting Dutch Finance Minister Gerrit Zalm said.
Austrian Finance Minister Karl-Heinz Grasser also said ministers emphasised the money should last five years.
Zalm said under Tuesday’s decision, lending to big corporates, which he said accounted for 20 per cent of total lending at the moment, would also be reduced.
Austrian Finance Minister said ministers all agreed that the EIB should take into account the environment in its lending policies but no special conditions were added.
EURO’S REBOUND: European finance ministers cheered the euro’s rally after it hit a 16-month dollar high, saying this would help the European Central Bank keep interest rates on hold while a recovery got safely underway.
Ministers gave an upbeat assessment of the European economy’s prospects, which was backed up by data showing euro zone economic morale is improving, and stressed their desire for the euro to reflect the region’s healthy fundamentals.—Reuters
