While the European Investment Bank wants partnerships with commercial banks to reach SMEs, commercial banks and borrowers can in turn pitch deals to the EIB so long as they are technically and economically viable and support EU policy objectives.
The role governments might play in seeking EIB support is not entirely clear. Nor is the extent to which they might seek to palm off onto the EIB the burden of funding quasi-public works.
The London Underground PPP, where the EIB has lent in support of both the Metronet and Tube Lines winning consortia, give a glimpse of how this works in practice.
The EIB lent £300 million to Tube Lines, wrapped by Ambac. With Metronet, the EIB's £600 million loan went unwrapped and the EIB took project risk.
"I am told that strictly speaking, the Metronet team approached the EIB," says Metronet's company secretary and treasurer, Nigel Edwards. "However, we believe that the EIB made offers on the same terms to all the bidders and that the EIB was already fully informed about the PPP."
The implication is that the public sector – in this case the UK central government – will approach the EIB and sound it out about lending to a project.
London Underground is not a Trans-European Networks (TENs) project, meant to link national transport, energy, and telecoms networks and so promote the internal market. It qualifies for EIB funding under environmental regeneration criteria, according to Tom Barrett, EIB's director for lending operations in the UK, Ireland, Denmark and the Efta countries.
The EIB's involvement necessarily complicates deals. Because it doesn't join syndications, it creates another creditor group. This should stop EIB financing from being used casually. Savings have to be significant to make complex inter-creditor negotiations worthwhile.
As a not-for-profit organization, the EIB can help to bridge the gap between the private and public sectors. "There were points that the commercial banks and sponsors didn't like but felt that raising them might affect their competitive position with the government," says one adviser. "The EIB could sort those out."
On Metronet, this helped secure a sufficiently wide range of termination provisions for the public sector.
While fee-focused commercial banks take an underwriting position, the EIB doesn't sell down its loans. Sponsors appreciate this commitment.
While the likes of Barrett or Cheryl Fisher, head of structured finance and PPPs for the region, are often described as feisty negotiators, you have to be a deal-doer to get on at the EIB.