France is leading efforts to push Europe’s two main development finance institutions closer together, to increase the continent’s geopolitical influence, GlobalMarkets understands.
In recent months, senior figures in Berlin and Paris have quietly called for the European Bank for Reconstruction and Development and European Investment Bank to join forces, to boost their lending capacity and exert augmented European clout on the world stage.
German and French politicians have called for an expert group to be assembled, to look at a possible “full integration” of the two institutions, according to leaked documents.
A source close to the EBRD, which is headed by Sir Suma Chakrabarti, told GlobalMarkets that while a full merger remained a more distant possibility, France, in particular, was keen to find ways for the two development banks to “work together even more closely”, he said. “We are obviously ready to work with any initiative which is in the best interests of our countries of operations.”
He added that enhanced co-operation and co-ordination was most likely to happen in the countries where the two institutions both work, and where private sector projects have the greatest existing and potential overlap. The most obvious regions are North Africa, where both banks wield significant influence, and sub-Saharan Africa, where they could soon find themselves in more prominent roles.
Werner Hoyer, the president of the EIB, played down suggestions that the outfits would be forcibly merged by apparatchiks in Brussels, Berlin, Frankfurt and Paris.
He pointed out that while the EIB was a pure European Union-owned, -funded and -backed lending institution, its London-based peer was influenced by shareholders from outside the single market. “There is no one from Russia, Kazakhstan or the United States who is fooling around inside our budget,” he said.
He added pointedly that there was a “land grab” going on at the highest level, with agencies and individuals “trying to convince the top EU authorities that they have a strategic and central long term role to play in Europe”.
Others said it was crucial for European agencies and countries to work together to give the region a stronger voice on the world stage. Michael Ellam, global head of public sector banking at HSBC, said China was winning the game of soft financial diplomacy, and that Japan and Korea were championing their own global infrastructure building initiatives.
He added: “Even the Europeans with this idea of more alignment between the EIB and EBRD are looking to scale up their efforts.”
To some bankers and policymakers, Europe is a region that has lost its sense of direction and purpose, and which struggles to restore growth, permanently exit quantitative easing (QE) and normalise interest rates.
German finance minister Olaf Scholz said that if Europe was to remain relevant, it had to work together, “otherwise we will not be successful in a world of 10bn people, which is where we’ll be in this century. Discussions about Europe can be childish. In real democracies and real life, you have to discuss things and [work] together.”