The EIB vehemently disputes the criticism that its risk management isn't up to scratch – a criticism contained in Emac's draft report but removed from the final version. At the end of last year, it put all its risk management functions in its risk management directorate, headed by Pierluigi Gilibert.
"Our risk appetite is relatively low," says Gilibert. Everyone at the bank has to work within its credit, market, and operational risk guidelines, as approved by the management committee.
"Unless a counter-party has a very high rating, we require collateral guarantees or financial covenants because we are lending for up to 30 years. Our credit loss history is practically nil."
The sole exception, according to Gilibert, is Eurotunnel. "It has been on our books since 1984. There is a specific provision of e175 million for it, and our exposure has been reduced since the financial restructuring," he says. "There's no need for us to list our bad loans, since we have roughly a 50% provision against Eurotunnel, and it is our only bad loan."
On global loans, the EIB takes risk only on the intermediary, not the final borrower. Some would say it is too risk averse, and that sharing risk with intermediaries would force the EIB to monitor global loans more closely.