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Report: EU mulling post-Brexit capital increase plan for EIB

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Report: EU mulling post-Brexit capital increase plan for EIB

The European Investment Bank is evaluating a capital increase plan to enable some of its shareholders to raise their holdings in the institution following Britain's departure from the European Union in March 2019, Reuters reported, citing EU officials.

The EIB stands to lose €3.5 billion of British paid-in capital due to Brexit, with the investment bank's other existing investors set to provide that money on a proportional basis, according to one official. Replacing the U.K. capital post-Brexit will be a priority for the EIB to retain its AAA credit rating, which allows it to borrow on the market and lend on for investment projects.

The official added two or three countries from central and eastern Europe and southern Europe have shown interest in raising their stakes in the lender. Spain has also expressed interest in increasing its holding, however, it has not made clear on how much capital it is willing to contribute on top of that required by the Brexit reshuffle.

Poland, which has been "vocal" in wanting to raise its stake in the EIB, has promised to invest up to €10 billion in the lender, in exchange for a permanent vice-president post at the bank, according to the officials.

Poland has seen substantial growth over the past few years, with its GDP rising to around $614 billion by 2017 from about $217 billion when it entered the EU in 2004. The country is now bigger than Sweden, Denmark, Belgium and Austria, all of which have larger stakes in the EIB, Reuters noted.

Officials familiar with the matter told the FT that Poland was threatening to block the capital increase plan if it were not given more influence and a greater role at the lender.