EU’s bank props up weak countries’ exports

The EIB offers help to exporters in hard-hit eurozone countries to get the recovery going, its president tells Emerging Markets

  • 10 Oct 2013
Email a colleague
Request a PDF

The European Investment Bank (EIB) will launch more trade finance facilities for troubled eurozone countries after the success of the first one it opened in Greece just a few months ago, EIB president Werner Hoyer told Emerging Markets in an interview.

In June, the EIB signed an agreement to provide guarantees to commercial banks in Greece for trade financing, to be used on a revolving basis to support transactions worth E1.5 billion a year.

“Now that we have put this in place, other countries in the EU have shown strong interest in the trade finance facility, including some of those who had been opposed to any trade finance activity of the bank until recently,” Hoyer said.

He added that the EIB would extend the facility to Cyprus and that interest was “very high in Portugal as well as in other countries that are knocking on our door.”

The EIB president, who will travel to Cyprus next month, hopes that a conclusion on the trade finance facility will be reached then.

The bank’s main aim is to lend for long-term projects in the EU, and trade finance products had not featured in its portfolio. However, Hoyer said this kind of instruments really help companies in the eurozone countries most affected by the crisis. “In Greece, even companies that were successful on the export market had problems financing the necessary input imports, because for that you need a letter of credit and if domestic banks don’t qualify to give it, then you have problems,” he said.

The fragmentation of financial markets brought on by the eurozone crisis means small and medium-size enterprises (SMEs) pay significantly higher interest rates on their loans depending on where they are situated in the single currency area. This situation has made the recession worse, with cash-starved small companies laying people off or freezing hiring in the eurozone’s worst-hit countries.

“This leads to undermining the basic idea of the common market. It is the job of the EIB to contribute to the reduction, or at least the mitigation, of this market fragmentation. We take that very, very seriously,” Hoyer said.

He added that there were “good signs of improvement” in the eurozone’s economy and that a “gradual recovery” was ahead, but that a lot of work on structural reforms remains.

“Our indications are that the worst is over in what regards private consumption but our concern is that while the economy in the EU is on a gradual recovery path, investment has remained stubbornly below pre-crisis levels. This part of demand is still in a critical situation,” Hoyer said.

The EIB boosted its lending target for SMEs by 55% this year from 2012. Total lending to SMEs, including the European Investment Fund, is close to E20 billion.

The biggest risk to the recovery in the eurozone comes from external factors, in Hoyer’s opinion. “That’s true for the situation in the US, but we also have geopolitical threats, like Syria, or we might have growth problems in China, which could potentially be destabilizing for the rest of the world,” he said.

  • 10 Oct 2013

All International Bonds

Rank Lead Manager Amount $bn No of issues Share %
  • Last updated
  • Today
1 JPMorgan 164.80 545 9.83%
2 BofA Securities 139.54 459 8.33%
3 Citi 128.00 437 7.64%
4 Goldman Sachs 99.84 283 5.96%
5 Barclays 92.11 342 5.50%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $bn No of issues Share %
  • Last updated
  • Today
1 Deutsche Bank 9.11 38 6.62%
2 UniCredit 7.52 36 5.46%
3 BofA Securities 7.39 29 5.37%
4 BNP Paribas 7.38 42 5.36%
5 Credit Agricole CIB 6.01 35 4.37%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $bn No of issues Share %
  • Last updated
  • Today
1 Credit Suisse 3.10 7 9.18%
2 JPMorgan 3.10 21 9.18%
3 Citi 2.87 19 8.51%
4 Morgan Stanley 2.81 15 8.33%
5 Goldman Sachs 2.43 15 7.19%