1 Financing RTD and innovation in the European Union by the EIB Financing RTD and innovation in the European Union by the EIB Financing Growth and Cohesion in the Enlarged EU Financing Growth and Cohesion in the Enlarged EU Dr. Guy Clausse Dr. Guy Clausse Operational Lending Policies Operational Lending Policies g. g. Brussels, 24/11/2005

2 PRODUCTIVITY EMPLOYMENT COMPETITIVENESS GROWTH Research & Development & Innovation EU 25; + 100bn p.a.

3 Time Basic Research Applied Research Technological development Prototyping 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 GRANTS LOANS

4  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:

5 STRATEGIC OUTLOOK: Corporate Operational Plan 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

6 Results of i2i: loan signatures SignaturesEducation & e-learning RTDI C TTotal M EURNr of projects M EURNr of projects M EURNr of projects M EURNr of projects 2000 May-Dec Jan-Sep Total %48%24% i2i as the EIB’s main contribution to the Lisbon process (50 bn)

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

8 RTD - Geographic distribution for signed loans (2000 –2005) Few European « centers of excellence » or innovation throughout the Union? The wrong debate Keep a well-balanced « middle of the road » approach « Coordinate, co-finance, compete »

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10 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

11 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

12 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

13  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 Agenda EU–institution lending in all EU countries Experience gathered in R&D through existing i2i and SFF Cooperate with financial institutions at national level Long term strategy and thus medium/long term lending Risk-sharing finance facility: A Commission-EIB Joint Initiative

14 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 SFF  Risk-sharing with EIB to allow more lending to risky, but bankable projects in RTD  Generate 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.

15 Summing up and Widening the Perspective  i2i:EIB lending + EIF venture capital for innovation  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