By Nick Mann | 19 April 2012

The European Investment Bank needs more capital funding from European Union member states to do more for growth and jobs, the vice-president of the European Commission said yesterday.

Olli Rehn said that although the bank had a lending capacity several times that of the World Bank and was playing a key role in tackling the economic crisis, it was ‘reaching the limits’ of what it could do with its current capital.

The bank, which is owned by EU member states, aims to support the commission’s policy objectives by lending money to public and private sector infrastructure projects inside and outside the EU area. It borrows against its capital base to generate the funds to lend to projects.

According to Rehn, a €10bn increase in the capital base would allow the bank to lend a further €60bn. This, in turn, would attract other financing sources for a total investment of €180bn in other projects, he said.

In 2011, the bank had a €75bn funding programme, but in December said it planned to borrow only €60bn to lend to projects this year, as part of an agreed strategy to return to ‘pre-crisis’ loan levels. Bank activity peaked in 2009/10.

Rehn said the European Commission and EIB were now also looking at ‘innovative solutions’ to reinforce the bank’s lending capital.

‘But let me send a clear and constructive message to all EU member states: for the sake of sustainable growth and job creation, we need more European cross-border and community investment in infrastructure – energy, transport, innovation, research and communications. Therefore, I call on them to provide additional capital to the EIB,’ he said.