Mr. Andrew McDowell:

I thank the Chairman and members for the opportunity to address the committee. Some people here may know that I spent five and a half years across the corridor as the Taoiseach's economic adviser, but this is the first time I have had the opportunity to address an Oireachtas committee, so I am thankful for the privilege.

The committee may be aware that in December we opened our first office in Dublin. The EIB has offices in most European countries. With me is Cormac Murphy, our recently appointed head of office. As vice president of the EIB since September 2016, among my responsibilities is oversight of our operations in Ireland. I was nominated by the Government to be one of the eight vice presidents of the EIB last September as part of the constituency that Ireland is involved in at the EIB, alongside Greece, Romania and Denmark.

The EIB was created in 1958 under the Treaty of Rome. The EIB is the European Union’s long term lending institution, owned directly by the 28 EU member states - although the number is an issue that might be revised - and we are often referred to as "the EU bank". Our mission is to use loans and other financial instruments, such as equity-type instruments and funds, to finance long-term investment projects that support EU policy. We are headquartered in Luxembourg. We also have a subsidiary, the European Investment Fund, which was created in 1992 to further support Europe’s small and medium-sized enterprises to access finance. We are self-financing in that we do not raise our money through government budgets or EU budgets but rather on the international capital markets. The EIB is the largest international public bank and the largest non-state borrower in the world. We are approximately twice the size of the World Bank by lending volumes each year. On average, we finance approximately 500 projects each year in over 160 countries. During 2016, we provided €83.8 billion in total financing via the EIB and the European Investment Fund, of which 90% was in the EU itself. Approximately 10% is invested outside the EU and that percentage is growing. Our financing supported a total of €280 billion in investment. This is an important principle for the EIB. Our financing of projects is intended to mobilise other financiers to also provide financing. Our success is measured not by how much we lend ourselves but by how much we catalyse in terms of total investment.

Our ability to support the European economy was significantly enhanced in 2015 when the European Council and Parliament agreed on a new joint European Commission and EIB initiative, known as the investment plan for Europe or the Juncker plan. The aim is to use €16 billion of budget guarantees from the EU budget together with €5 billion of our own capital, which forms the €21 billion European Fund for Strategic Investments. Using that capital, we can significantly expand our own lending and our own investments. The aim is to catalyse a total of €315 billion of additional investments in Europe between the middle of 2015 and the middle of 2018. The EIB is not just concerned with lending more, it is also concerned with being involved in higher-risk lending. We are seeking to move into market gaps for higher risk projects which would otherwise not be financed, particularly in areas such as transport, broadband, energy, innovation, energy efficiency and SME financing.

The EIB has been a long-term financing partner for Ireland since the country's accession and has provided nearly €15.5 billion of financing for investments since it joined the EU. Our lending activities here significantly increased during the financial crisis, with annual lending almost double the engagement before 2008. During the crisis years we significantly expanded our support to Ireland at a time when other commercial banks and private sector financing partners were pulling out of Ireland. In the past five years, EIB lending in Ireland totalled €4.2 billion, supporting among other projects the motorways programme, the Dublin Port expansion, Dublin Airport's terminal 2, the LUAS extension, university campus expansions - we have been involved with university loans for every single university in Ireland except one, which we are about to sign - schools, primary care centres and social housing, to name a few, at a time when other sources of financing for enterprise and infrastructure investment were being cut back significantly.

Before the banking crisis, the EIB lending in Ireland averaged around €400 million per year. This year we expect to provide more than €1 billion. The EIB is also diversifying its engagement, last year financing 13 initiatives across a range of sectors compared with just three in 2008. Part of the reason for the expansion in our lending is the strength of our relationships with new entities in Ireland, which is something that was absent before the crisis. In particular, our relationship with the National Development Finance Agency, which is part of the NTMA, and the SBCI, continues to strengthen. During 2014, the EIB provided a €400 million facility to the newly-established SBCI, representing 50% of the initial funding for the SBCI at low-cost conditions, all aimed at kick-starting increased lending to SMEs through the SBCI. More recently, the European Investment Fund and the SBCI signed the first EU programme for the competitiveness of enterprises and small and medium-sized enterprises, COSME, agreement in Ireland. This transaction, guaranteed by the European Fund for Strategic Investments, allows the SBCI to support €100 million of agriculture-related loans to 2,000 small and medium-sized enterprises by commercial banks in Ireland over the next three years. In fact, the facility, as Mr. Ashmore will attest, has been fully drawn down at this stage.

In addition, the European Investment Fund has supported a number of equity funds in Ireland. The EIB is primarily concerned with debt financing, but the European Investment Fund has also supported a number of equity funds for high-tech sectors. It has also supported a €20 million Business Angels co-investment instrument with Enterprise Ireland and a guarantee in favour of Microfinance Ireland issued under the EU programme for employment and social innovation to support very small businesses.

To further support Ireland’s strong economic recovery, particularly in the context of the growing infrastructure bottlenecks here, as well as out of recognition that Ireland is uniquely exposed to the economic effects of Brexit, the EIB hopes to increase its level of support for Irish projects to an even greater degree.

With this aim in mind, as well as opening a permanent office in Dublin, we established with the Irish Government last December an Ireland-EIB financing group. The group, which is chaired by the Minister for Finance, Deputy Noonan, includes senior management from the EIB, led by the president and myself, alongside the Minister the Public Expenditure and Reform, Deputy Donohoe, and other Ministers from the Irish Government, as well as senior officials from relevant Irish Government Departments and agencies, including Mr. Nick Ashmore. To support the financing group, a number of thematic working groups have been created covering financing connectivity, financing social infrastructure and financing enterprise.

Without prejudging the outcome of the detailed and constructive discussions currently taking place, areas where we have signalled the potential for greater EIB financing include increased lending to the Irish sovereign for Exchequer capital projects to be identified in the revised capital programme; increased mobilisation of private finance, under PPPs and similar structures, for infrastructure investment including in roads, public transport, social housing and other areas, consistent with the Government’s need to expand infrastructure investment while staying within the EU fiscal rules; direct lending support for the investment programmes of Irish semi-State companies; increased direct investment in mid-sized Irish corporates, including through equity-type products; credit guarantees to Irish commercial banks to increase their lending into key sectors, such as agribusiness, residential and business energy saving projects and the SME sector, consistent with the commercial banks’ own needs to preserve scarce capital while financing a growing economy and supporting those sectors particularly exposed to Brexit. To have maximum effect, such initiatives will often combine EU and national budget resources, as well as EIB and Strategic Banking Corporation of Ireland, SBCI, funding and capital; and increased project finance for the renewable energy sector in Ireland, including solar.

The Ireland-EIB financing group has committed to meet at least twice a year and the next meeting, planned for late May in Luxembourg, will review progress with the objective of producing a strong pipeline of projects across multiple sectors.

I will conclude my opening remarks and am happy to answer any questions.