§ Mr. Nelson
[holding answer 8 February 1995]: The establishment of a European investment fund, or EIF, was one element of the declaration on promoting economic recovery in Europe, agreed by the European Council at Edinburgh, in December 1992. The new fund was envisaged as a joint venture, with a share capital of 2 becu, £1.55 billion, allocated between the European investment bank, 40 per cent. the EC itself, 30 per cent., and EC financial institutions and banks, 30 per cent. It was proposed that the EIF should provide guarantees for loans to trans-European networks, TENs, and to small and medium-sized enterprises, SMEs, throughout the Community. These guarantees would be a form of insurance to the lender, for which a premium would be charged. It was also envisaged that the EIF could, after two years of operation, take equity stakes in SMEs or TENs, subject to the agreement of its shareholders.
The creation of the fund required an amendment to the statute of the EIB, which is itself a protocol of the treaty of Rome. Therefore it could not be established until the treaty had been amended, and the amendment ratified by all EC member states. This process was concluded, and the amendment came into force, on 1 May 1994, and on the 25 May the governors of the EIB—EC finance Ministers, including the Chancellor of the Exchequer as the UK's representative—took the formal decision to 424W establish the fund. The EC and the financial institutions were then formally invited to become members of the EIF, and its inaugural general meeting was held on 14 June 1994.
The fund began operations in July 1994. By the end of that year, 11 guarantees had been approved, with a total value of some 711 mecu or £551 million. Of these, seven operations, representing 75 per cent. of the total value of guarantees approved, were in the TENs sector, while the remaining four operations involved SMEs.
All figures converted at 1994 average annual £/ecu conversion rate £1=1.289273 ecu.