(The following was released by the rating agency)
-- On Dec. 5, 2011, Standard & Poor's placed the ratings on
15 of the 17 European Economic and Monetary Union (EMU or
eurozone) member states on CreditWatch with negative
implications. As a result, the ratings on 16 European Union
members are now on CreditWatch with negative implications.
-- We are therefore placing the 'AAA' long-term issuer
credit rating on the European Investment Bank (EIB) on
CreditWatch negative. At the same time, we are affirming the
'A-1+' short-term rating.
-- The CreditWatch placement on the EIB reflects our
concerns about the potential effect on the EIB of what we view
as deepening political, financial, and monetary problems within
-- We expect to conclude our review as soon as possible
after the European summit on Dec. 9, 2011. Depending on the
outcome of our review of the ratings on eurozone member states,
we could lower the long-term rating on the EIB by one notch, if
LONDON (Standard & Poor's) Dec. 8, 2011--Standard & Poor's
Ratings Services today placed its 'AAA' long-term issuer credit
rating on the European Investment Bank (EIB) on CreditWatch
negative. At the same time we affirmed our 'A-1+' short-term
issuer credit rating on the EIB.
On Sept. 28, 2011, Standard & Poor's said the EIB's rating
could come under downward pressure if its 'AAA' callable capital
decreased significantly as a result of declines in the
creditworthiness of key shareholders (see related research
The CreditWatch placement is prompted by similar CreditWatch
placements that we made on 15 eurozone sovereigns on Dec. 5,
2011, which included CreditWatch placements on the long-term
sovereign ratings on key 'AAA' rated EIB shareholders such as
Germany and France. Both own 16.2% of the bank's subscribed
capital, followed by The Netherlands with a 4.5% share.
EIB's capital ratios, as measured according to our
methodology for rating supranational entities, fall below those
of almost all other 'AAA' rated multilateral lending
EIB had adjusted shareholders' equity (own funds) of nearly
EUR40 billion at year-end 2010. As a consequence, its ratio of
adjusted shareholders' equity plus provisions for losses (narrow
risk-bearing capacity; NRBC) to loans, equity investments, and
off-balance sheet items (which is EIB's purpose-related
exposure; PRE) was 10.9%. EIB had almost EUR137 billion in
callable capital from its 'AAA' rated member countries.
Accordingly, its ratio of NRBC plus callable capital from its
'AAA' rated member countries (broad risk-bearing capacity; BRBC)
to PRE was more than 48% at year-end 2010.
At end-2010 the nearly EUR137 billion in callable capital
from 'AAA' rated EIB shareholders represented about 62% of total
callable capital (EUR221 billion). Should the ratings on the
EIB's 'AAA' rated eurozone sovereign shareholders be lowered,
the ratio of its 'AAA' rated callable capital as a percentage of
the total would fall to just under 22%. This would result in a
fall in the EIB's BRBC to PRE, to 24%. As a result we are
placing the EIB's long-term rating on CreditWatch negative.
We currently anticipate that we could lower the rating on
EIB by one notch. Supporting factors for the rating include what
we view as the high quality of EIB's loans and other assets,
underpinned by conservative risk-management policies.
We expect to resolve EIB's CreditWatch placement within 90
days once we complete the review of EIB's eurozone shareholders
currently rated 'AAA'.
In our CreditWatch releases of Dec. 5, 2011, on some of the
EIB's individual 'AAA' rated guarantor members, we indicated
that our ratings on Austria, Finland, Germany, Luxembourg, and
The Netherlands are currently unlikely to fall by more than one
notch, and the ratings on France by no more than two notches, if
at all. Depending on the outcome of our review of the ratings on
EIB's eurozone member states, if we view the reduction in 'AAA'
callable capital as not being sufficiently offset by EIB's asset
quality we could lower the long-term rating on the EIB by one
notch, if any.
RELATED CRITERIA AND RESEARCH
-- European Investment Bank, Sept. 28, 2011
-- Standard & Poor's Puts Ratings On Eurozone Sovereigns On
CreditWatch With Negative Implications, Dec. 5, 2011
-- Credit FAQ: Factors Behind Our Placement Of Eurozone
Governments On CreditWatch, Dec. 5, 2011
-- Criteria For Multilateral Lending Institutions, Oct. 19,
-- Timeliness of Payments: Grace Periods, Guarantees, And
Use Of 'D' And 'SD' Ratings, Dec. 23, 2010
-- Principles of Credit Ratings, Feb. 16, 2011
-- Rating Sovereign-Guaranteed Debt, April 6, 2009
-- Sovereign Government Rating Methodology And Assumptions,
June 30, 2011
Ratings Affirmed; CreditWatch/Outlook Action
European Investment Bank
Issuer Credit Rating
Foreign Currency AAA/Watch Neg/A-1+
Senior Unsecured AAA/Watch Neg
European Investment Bank
Commercial Paper A-1+