Since 1958, the European Investment Bank (EIB) has developed into the largest multilateral development bank in the world. However, the increased commitment is associated with considerable risks for the national budgets of the EU member states. Germany alone is liable for at least €46.7 billion. Despite its size, the EIB is not subject to any independent external banking supervision and is only subject to limited external auditing. Together with the Austrian SAI, we therefore speak out for external supervision and a higher level of control in order to ensure the efficient and proper use of public funds.

Today, the EIB is the world's largest multilateral development bank. It funds investments in the EU member states by providing loans and guarantees on favourable terms. However, the increased commitment in recent decades comes with significant risks for the EU member states’ national budgets.

At present, the subscribed capital from member state budgets alone amounts to €248.8 billion. In the last three decades, Germany has increased its share in the EIB almost ninefold to €46.7 billion. However, Germany's liability is not limited to the subscribed capital. Rather, Germany assumed liability for various funds and guarantees in an unquantifiable amount.

Supervisory function falls far short of banking standards

In the EU, banks are subject to independent external (banking) supervision. This is, for example, to ensure that banks actually comply with regulatory requirements, especially when it comes to risk management. Unlike commercial banks of this size, however, the EIB is not subject to external banking supervision. Instead, it supervises itself by means of an internal unit and an internal procedure. However, an internal unit cannot replace independent external banking supervision. It lacks the comprehensive competences, independence and assertiveness vis-à-vis the EIB to adequately counter risks.

The supervision of the EIB thus falls far short of European banking standards. We hold that it is imperative to detect and reduce risks in the EIB's structures and operations at an early stage. It is also not clear why the EU member states should accept a lower level of protection than shareholders of other banks within the EU. The Federal Government should therefore work to ensure that the EIB is also supervised by the Single Supervisory Mechanism.

Extending the independent external audit function

For the major part of its operations, the EIB is not subject to independent external auditing. We estimate that around three quarters of the EIB's financing operations are not audited by an independent external auditor. External auditing would contribute to an efficient and proper use of public funds.

The European Court of Auditors only audits the remaining quarter of funding that is financed or secured via the EU budget. At present, there is also no complementary audit mandate to close this gap for the EU member states’ external audit institutions, e.g. for the Bundesrechnungshof or the Austrian SAI. This audit gap should be closed as swiftly as possible. The Federal Government should engage with the other shareholders to ensure that the legal requirements relative to this challenge are created.

In addition, the Federal Government needs to provide better information to the German Parliament on the developments at the EIB, especially if such information could have an impact on the federal budget.

More information on our audit findings and recommendations can be found here in our special report to the German Bundestag, the German Bundesrat and the Federal Government. (Please note: The report is only available in German.) The English Summary of our Report can be found here.

The joint report can be found here. (Please note: The report is only available in German.)

The national report of the Austrian SAI can be found here. (Please note: The report is only available in German.)

Our press release can be found here.