Treasury wants EIB to take on more risk

LONDON (Reuters) - The government on Tuesday will call on the European Investment bank to shoulder more of its partner commercial banks' risks for lending to small businesses in order to help them bear the brunt of the global credit crunch.

Under the EIB's global loans programme, the lender matches cash from intermediary banks for the finance of small or medium-scale business investment projects. But the risk remains with the commercial bank.

Britain said it would like the EIB to take on the risk for its cash contribution.

"During the international credit squeeze, many of the UK's and Europe's small businesses may be having difficulties in accessing the credit that is vital to their survival," said Yvette Cooper, chief secretary to the Treasury.

"With the EIB we have the possibility to do more to help them through current difficulties, so are working closely with them to offer support to SMEs."

Cooper will be attending the EIB governors' annual meeting before the European Union finance ministers meeting in Luxembourg on Tuesday.