How the European Investment Bank is key to advancing Juncker's €315-billion plan by attracting private investors and boosting Europe's economy.

Unlocking hidden billions for European growth

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315 billion euros to revive the EU economy,

that's the promise made by the Commission  President Jean-Claude Juncker.

The only problem is that  he only has 21 billion.

So what trick will he use  to conjure up the missing euros?

The magician might be this man  and the bank he represents.

It's not a trick. With the fund which is going  to be a managed account within the bank

we can take up projects with a higher  risk profile and still stay on the clean side.

Its shareholders are  the EU's Member States.

Located in Luxembourg,  the European Investment Bank

aspires to be as modern  as the building housing it.

This is Klaus Trömel, the bank's 'Mr Loans'.

Thousands of investment projects seeking  funding pass through his hands every year.

The label 'EIB' on a file  is a guarantee for potential investors,

at least in the European markets.  The rest must be sought elsewhere.

In addition, the EIB doesn't always  finance 100% of the loans.

More or less 40%, sometimes nearly half  of the funds the EIB raises,

comes from the international world  of finance outside of Europe.

Even during the crisis,  over 40% of the 70-80 billion

came from Asia,  Latin America, the Middle East.

It's clear, the markets want guarantees.

The projects must be viable and ensure  the development of the European economy.

This doesn't always work,  but sometimes it does.

Frédéric Dufour was able to realise  his dream of expanding his company

specialising in transporting wind turbines.

The EIB granted him a loan of €4 million.  The rest was invested in equity.

With this loan we were able  to invest in a plot of 8 hectares

which will allow us to develop our offer  and expand into new markets.

The Dufour group, specialising in areas  from wind energy to waste treatment,

Other SMEs, however,  have not had the same success.

In San Sebastián in the Basque country,  the cooperative bank Luzaro

tries to bring together entrepreneurs  and public financial backers.

as businesses have less cash,  they come up against more problems

and conventional financial institutions  are less able to assume these risks.

It was thanks to the cooperation of  the social financial institutions in Luzaro

that Luzaro was created  to offer this kind of services to SMEs.

Credit access difficulties, however small,  risks associated with commercial projects,

late payments of suppliers  or of public bodies,

Beltrán Ybarra realised his dream  thanks to this bank.

He owns an SME specialising in  transforming industrial mechanical pieces.

He wanted to buy the business in order to  go from salaried work to entrepreneurship.

So he began his uphill battle  to find the necessary funds,

also by applying to the EIB  – without success.

The loan was used to acquire the company,

for the payment of capital and  share transfers from the previous owner,

and to do so we had to  become shareholders.

The loan was for that and nothing else.  It wasn't for working capital or investments.

The trouble was that the EIB doesn't lend  money for buying companies,

In itself the purchase of a company  doesn't create new value.

It changes nothing in the life of a citizen.

We are here really for  socio-economically viable projects.

Since the crisis started  the EIB has often been criticised

for its tendency to often finance  big infrastructure projects

which more easily attract foreign investors.  But the times are changing.

Its shareholders are asking it  for more support to SMEs

which, let's remember,  create 85% of all new jobs.

However,  co-financing remains the bank's rule.

National funds, whether private or public,  must also be released.

Kike Fernández Entenza tried to access  public aids in Spain. It wasn't easy.

In the end, he was able to finance  the launch of his design company

We mainly approached public institutions.

The problem I always had was that I wasn't  of the right age or in the right sector.

I didn't fit any of the categories.  And so I didn't get any loans.

Like many entrepreneurs have been doing,  I self-financed it with from my savings.

Access to credit remains  a nightmare for SMEs.

Even if the money is there,  banks remain cautious.

Risk-taking must be minimal,  so other forms of financing are created.

Indeed, banks are a primary source,  but on top of that there is crowdfunding,

which allows businesses  to develop a new project.

I believe we should increasingly  try to bring together

the project developers and the people  or organisations who have capital.

envisages 315 billion euros in investments  to boost jobs and growth.

But the EU is supposed to invest  the first euros to leverage the funds.

The private sector is supposed to take over.

Every publicly invested euro should,  according to the Commission,

generate a private investment  with no additional costs.

Is this really the breath of air  that the SMEs need? Some believe so.

We have so much liquidity in the markets

that you even don’t even get a decent  interest rate for your savings account.

So in this situation it is necessary  to turn to higher risk projects

in order to attract private money  for the financing of these projects.

You have to give these investors  some reassurance.

The Juncker plan, due to a lack  of resources and a lack of public money,

but what could have been interesting  would have been a massive plan

That could have been  the alternative to this plan.

and create more jobs and  more growth in Europe.

In the European Parliament  the Juncker plan is not non-starter,

it has its supporters,  but the MEPs remain cautious.

Unlocking hidden billions for European growth

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