1. 1 Financing for Research & Development Luigi Armeli Senior Loan Officer Financial Institutions and Human Capital

2. 2 STRUCTURE OF PRESENTATION 1.Innovation 2010 Initiative: investing in human capital. 2.University financing: the situation in Italy. 3.Big requirement for infrastructure upgrading… 4.… but limited public funds. 5.Considerable potential for raising external resources. 6.Some examples. 7.The EIB, an institutional financial partner. 2

3. 3 The i2i initiative, which was launched by the EIB to meet the objectives laid down by the 2000 Lisbon European Council, focuses on three priorities: 1.Innovation 2010 Initiative: investing in human capital European Investment Bank  education and training;  research and development;  information and communications technology networks with the general aim of raising up to EUR 50bn in financial resources between 2000 and 2010.

4. 4  In the past two years, the EIB has implemented a structural support programme for Italy’s higher education system, targeting both universities and the institutional players concerned (Ministry for Universities and Research, local authorities, banking foundations).  In 2005-2006, the EIB approved loans totalling over EUR 800m in favour of Italian universities, of which EUR 300m have already been signed.  The EIB is now perceived as playing a key role in financing the university system in Italy. 2.University financing: the situation in Italy European Investment Bank

5. 5  Universities are generally located in city centres, in buildings that are of great historical value but often run-down, overcrowded and ill-suited to modern educational standards (student areas, upgrading of IT systems, associated facilities).  Research activities (especially in technical and scientific faculties) require ever more costly laboratories and high-tech equipment as well as infrastructure that complies with the applicable safety and pollution regulations. 3. Big requirement for infrastructure upgrading… European Investment Bank

6. 6  Gradual restriction of public contributions in view of the limits imposed by the Stability Pact.  Ordinary financing (70% of public universities’ revenue on average) primarily used to cover staff costs.  Criteria governing the distribution of resources are still too rigid (despite some recent improvements).  Major delays in receiving ordinary public transfers. 4. … but limited public funds European Investment Bank

7. 7 Own resources…  Enhancing the value of real estate assets (via a change in accounting practices for universities).  Systematic exploitation of the results of research (patents, spin-offs, venture capital).  Partnerships with the private sector. 5. Considerable potential for raising external resources European Investment Bank … and debt-servicing capacity.  Financial autonomy with respect to central institutions (within the statutory prudential limits).  Debt sustainable in the long term in accordance with operating margins.

8. 8  Politecnico di Milano (EUR 150m): example of effective cooperation between the City and the university in the context of a major urban regeneration project in a former industrial area.  Politecnico di Torino (EUR 40m): strategic partnership with General Motors in the field of automotive research.  La Sapienza University (under appraisal) and Bologna University (EUR 120m): Italy’s two largest universities, undergoing decentralisation.  San Raffaele di Milano (EUR 200m): synergies between teaching, scientific research and medical applications. 6.1. Some examples European Investment Bank

9. 9  Trento University (EUR 150m): first bond issue by an Italian university and a partnership with Microsoft for IT applications in the field of biological sciences.  Bocconi University (EUR 120m): establishment of a university campus in the centre of Milan.  Politecnici Italiani Student Loan (EUR 25m): direct support for poorer students with the cooperation of universities and the Banca Intesa network. 6.2. Some examples European Investment Bank

10. 10 The value added of EIB participation:  Long-term support (generally up to 25 years) for universities’ investment plans.  Possibility of fixed-rate financing over long periods at the keenest market terms.  Focus on the quality of projects and the feasibility of investment programmes.  Sharing of financial models with universities and joint assessment of their ability to bear the debt burden.  Capacity for involving other institutional players (e.g. banking foundations). 7. The EIB, an institutional financial partner European Investment Bank

11. 11 http://www.eib.org