above as such, the EIB would not be in a position to assume the construction risk
because the belief is that the bank was established as a financing bank (albeit a public
bank) to stand at arm’s length to its borrowers and clients. However, the law does
give the bank much room to manoeuvre. Article 18(2) of the EIB Statute whilst
stipulating generally that the bank shall not acquire any interest in an undertaking or
assume any responsibility in its management, goes on to provide for certain
exceptions:
(a) Involvement or participation is needed to safeguard the bank’s right in seeing to
the recovery of funds lent; or,
(b) Where any equity participation is considered by the Board of Governors of the
bank to be necessary
58 and that equity participation is needed to facilitate the
achievement of the objectives art 309, TFEU,
59 then “the Board of Directors
shall, by a qualified majority, lay down the terms and conditions for taking an
equity participation in a commercial undertaking, normally as a complement to a
loan or a guarantee, in so far as this is required to finance an investment or
programme.”
60
Equity participation, as one might expect, is not common modus operandi of the
EIB but it is argued that where green financing is concerned, a matter where public
policy is vital, there may be good occasion when the EIB might consider such an
option. Indeed, it can be an excellent opportunity for the EIB to innovate even more
in its “blending” offerings as regards green shipping finance. Moreover, from a
practicality standpoint, equity participation and quasi-equity participation schemes
(such as mezzanine financing) have been known to work well in commercial
shipping finance.
It is argued that the EIB green shipping finance programme should also be used to
assist start-ups or to jump-start a green aspect of the shipping business. At present, as
revealed by a survey of the EUB transport projects most projects currently being
funded are one-off projects, even those which are the so-called “wider benefit
58 Powers to be exercised in pursuant to art 7(3)(b), EIB Statute.
59 Supra n. 27; art 309 provides: “The task of the European Investment Bank shall be to contribute,
by having recourse to the capital market and utilising its own resources, to the balanced and steady
development of the internal market in the interest of the Union. For this purpose the Bank shall,
operating on a non-profit-making basis, grant loans and give guarantees which facilitate the
financing of the following projects in all sectors of the economy:
(a) projects for developing less-developed regions; (b) projects for modernising or converting
undertakings or for developing fresh activities called for by the establishment or functioning of the
internal market, where these projects are of such a size or nature that they cannot be entirely
financed by the various means available in the individual Member States; (c) projects of common
interest to several Member States which are of such a size or nature that they cannot be entirely
financed by the various means available in the individual Member States.
In carrying out its task, the Bank shall facilitate the financing of investment programmes in
conjunction with assistance from the Structural Funds and other Union Financial Instruments.”
60 Second paragraph to art 18(2).
148
J. Chuah
because the belief is that the bank was established as a financing bank (albeit a public
bank) to stand at arm’s length to its borrowers and clients. However, the law does
give the bank much room to manoeuvre. Article 18(2) of the EIB Statute whilst
stipulating generally that the bank shall not acquire any interest in an undertaking or
assume any responsibility in its management, goes on to provide for certain
exceptions:
(a) Involvement or participation is needed to safeguard the bank’s right in seeing to
the recovery of funds lent; or,
(b) Where any equity participation is considered by the Board of Governors of the
bank to be necessary
58 and that equity participation is needed to facilitate the
achievement of the objectives art 309, TFEU,
59 then “the Board of Directors
shall, by a qualified majority, lay down the terms and conditions for taking an
equity participation in a commercial undertaking, normally as a complement to a
loan or a guarantee, in so far as this is required to finance an investment or
programme.”
60
Equity participation, as one might expect, is not common modus operandi of the
EIB but it is argued that where green financing is concerned, a matter where public
policy is vital, there may be good occasion when the EIB might consider such an
option. Indeed, it can be an excellent opportunity for the EIB to innovate even more
in its “blending” offerings as regards green shipping finance. Moreover, from a
practicality standpoint, equity participation and quasi-equity participation schemes
(such as mezzanine financing) have been known to work well in commercial
shipping finance.
It is argued that the EIB green shipping finance programme should also be used to
assist start-ups or to jump-start a green aspect of the shipping business. At present, as
revealed by a survey of the EUB transport projects most projects currently being
funded are one-off projects, even those which are the so-called “wider benefit
58 Powers to be exercised in pursuant to art 7(3)(b), EIB Statute.
59 Supra n. 27; art 309 provides: “The task of the European Investment Bank shall be to contribute,
by having recourse to the capital market and utilising its own resources, to the balanced and steady
development of the internal market in the interest of the Union. For this purpose the Bank shall,
operating on a non-profit-making basis, grant loans and give guarantees which facilitate the
financing of the following projects in all sectors of the economy:
(a) projects for developing less-developed regions; (b) projects for modernising or converting
undertakings or for developing fresh activities called for by the establishment or functioning of the
internal market, where these projects are of such a size or nature that they cannot be entirely
financed by the various means available in the individual Member States; (c) projects of common
interest to several Member States which are of such a size or nature that they cannot be entirely
financed by the various means available in the individual Member States.
In carrying out its task, the Bank shall facilitate the financing of investment programmes in
conjunction with assistance from the Structural Funds and other Union Financial Instruments.”
60 Second paragraph to art 18(2).
148
J. Chuah