BELGRADE (Reuters) - Europe’s largest development bank, the EIB, has the ‘strong shoulders’ needed to carry on after Brexit, its vice-president said on Thursday, sounding upbeat about an event that could lead to the loss of a British stake worth up to nine billion euros.
The European Investment Bank EIB.UL, owned by the European Union’s member states, uses their capital deposits as security to fund loans for research, infrastructure and environmental projects in Europe and around the world.
But Brexit is expected to result in Britain taking back its 16 percent stake of shareholder capital in the bank, leaving a hole of up to nine billion euros in its finances.
In an interview, EIB’s Vice-President Dario Scannapieco said that the bank can go on.
“We have strong shoulders to go ahead without this money,” he said. He added that Brexit implied “that the UK will no longer be a shareholder of the EIB”.
He added that the bank was examining how to advance plans announced in December for a new subsidiary focussed solely on non-EU projects that it hopes could also keep some of Britain’s billions in the bank after Brexit.
The proposal, which would initially focus on countries fuelling Europe’s migrant crisis and annually lend about seven billion to eight billion euros, was given to EU finance ministers in December.
“We are studying how to do it and then we will present the project to the shareholders,” Scannapieco said. He did not say when the project would be presented.
Another factor in the plan’s chances of success could also be Brexit negotiations, in which Britain’s ultimate future relationship with the EIB will be determined.
The EIB currently invests between 70 - 80 billion euros a year, with about 10 percent or 7-8 billion of that spent outside of the EU, from central Africa to Argentina in Latin America.
In 2017, EIB’s total disbursements to the Western Balkans countries of Albania, Bosnia, Kosovo, Macedonia, Montenegro and Serbia stood at 548 million euros.
This week, it lent Serbia, an EU membership candidate, 134 million euros to revamp its rail link between the southern city of Nis and the Bulgarian border.
It also lent 30 million euros to the local branch of the Banca Intesa for on-lending to small and medium enterprises. It previously approved two similar loans to Serbian branches of the Erste Bank and Societe Generale, amounting to 60 million euros and 50 million euros, respectively.
Scannapieco said he was confident Serbia’s economy would
continue to grow in 2018, following growth of around two percent last year.
“The fiscal consolidation is going ahead ... the direction is the right one and the growth of the economy is there,” he said.
In 2017, Serbia improved its finances on the back of fiscal consolidation which was a part of a 1.2 billion euro loan-deal with the IMF that expires this month.
The country’s biggest challenge will now be how use the fiscal space it created in the right way, Scannapieco said.
“The higher level of investments ... may have less immediate impact, but will have a higher contribution for the long-term competitiveness of the country,” he said.
Reporting by Aleksandar Vasovic; Editing by William Maclean