Autumn 2013 Issue
In Pictures: EIB supports construction of high-performance power station in Poland
“The policy choices made during the current crisis will have an impact on the economy for years to come. And we can say that our institutions have coped well under extremely difficult operational circumstances.” This plan was integrated with the IMF and EU macro-financial support programs. In return for the commitment of countries to fiscal consolidation and for financial support from the international financial institutions, large multinational banks active in the region pledged to keep local subsidiaries capitalized so that they could continue lending to businesses and households. The initial pledge by the EIB, World Bank and EBRD – EUR24.5 billion for crisis-related support to the financial sector over 20092010 – was exceeded. By end-2010, the three institutions provided loans of more than EUR33 billion under the Joint IFI Action Plan stemming from the Vienna Initiative. Around that time, economic prospects of the countries in the region
started to improve, with positive implications for the banking sector. The recovery was, however, short-lived. As the sovereign debt crisis intensified in the euro area in 2011, turmoil on the financial markets coupled with anticipation of Basel III led to the implementation of new prudential standards by a number of cross-border financial institutions with significant exposures in Central and South Eastern Europe. This gave rise to a fresh wave of concerns about the level of capitalization of subsidiary banks. At the same time, the paradigm of doing business in the region changed, with the lending by subsidiaries increasingly financed by domestic funds. Faced with these new challenges, the “Vienna
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Initiative” evolved into “Vienna 2.0,” addressing not only a number of specific banking issues such as the alignment between home and host regulators, but also, in a more targeted way, seeking to help rekindle economic growth after five years of sluggish performance. The new Joint Action Plan for Growth in Central and South Eastern Europe launched in November 2012 reaffirmed the commitment of the EIB, World Bank and EBRD to the region. Lending for growth and jobs has been a key mission of the EIB since its inception in 1958 as a public bank of the EU, making it well-placed to take the lead in the action plan. The EIB Group – comprising also the European Investment Fund, a specialist provider of risk finance for SMEs - will contribute two thirds of
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