Explaining projects andnew financing tools, Hoyer comments also on the reunification issue, as a German who lived the reunification of his own country.

The EIB President estimates that the exposure of the Bank in Cyprus is proportionally very high, reaching 16% of Cyprus GDP, contributing decisively to the “success story” of the economy, mainly through restructuring of SMEs in the wake of the collapse and restructuring of the banking system three years ago. Werner Hoyer reveals that he has recently cancelled a scheduled working visit to Nicosia, due to the wildfires, but renewed the appointment for September, when there will be a review of the EIB cooperation with the Cypriot authorities.

He noted that among the projects that the EIB has supported are two pumping stations in Larnaca, the alternative water supply project in Nicosia , a research and development center, the University of Cyprus and the Cyprus Institute of Neurology and Genetics.

At the same time, Hoyer notes that he is optimistic on the reunification process and refers to it as one” huge stabilizing factor for the whole region – not only in relation to national interests.”

The EIB president states that the Bank will not be affected by the Brexit, maintained its AAA credit assessment and that it is now up to the Member States to decide what to do with the percentage of Britain `s share in the banks capital after the withdrawal – appearing confident that nobody in the EU has an interest in weakening the Bank. He notes, however, that the greatest adverse consequences will fall on the British people, who, as he says, did not realize what they have voted.

Finally Werner Hoyer, made an extensive reference to the Greek economy, highlighted the ability of the Greek government to pass the necessary legislation bills through the parliament, hopes for rapid and successful completion of the next review , attributes investment difficulties in the badly put together Greek regulatory framework , but also appears optimistic about the future of the country’s economy , where EIB is going to chip in as well.

The complete interview follows:

Question – So, what is the current outlook of the Cypriot economy, after the end of the program and what is still left to be done?

Werner Hoyer – Cyprus is a case that is completely underestimated here in Luxemburg. The size of our exposure to Cyprus is equivalent to some 16% of the Cypriot GDP. This isan amazing figure. In Greece, it is 10%, which of course is a big percentage, but 16% for Cyprus is really astonishing.

If I look back three years, Cyprus has delivered a true success story, and the Bank can be proud to have been part of that success story. Of course Cyprus does not have mega-companies for huge investments, but investment in the public sector, energy and university education have been very successful. And the cooperation with the restructured Cypriot banks for SMEs is also a real success story.

I was about to travel to Cyprus some weeks ago but unfortunately there were terrible fires with casualties among the fire fighters, so we had to cancel. But the next visit is planned for early September and we are going then to celebrate quite a few years of excellent cooperation.

Question – What is going to be the EIB’s future involvement in Cyprus, what projects are you going to fund?

Werner Hoyer – We have been and we will continue to be a strong partner for Cyprus with the goal to stimulate new investments and support sustainable growth and employment, in particular through our support to SMEs and Mid-Caps.

We also have promising infrastructure projects in the pipeline. For instance, the EIB will shortly support the construction of two main water pumping stations protecting flood sensitive areas in Larnaca. These pumping stations can prevent damages to business and households, similar to the ones experienced recently, in particular in December 2014.

Also, recently the greater Nicosia region was left with no water supply for almost a week due to technical problems to the existing pipes. Following this incident, it became a priority for the Government to implement an additional source of water. The EIB will provide technical assistance to the Ministry of Agriculture for assessing alternative options and improving the existing Feasibility Study. In addition, we are looking into providing financing for this key project.

Two projects, which are very close to my heart, are the Cyprus Institute for Neurology and Genetics, where we aim to support CING’s enhanced R&D activities, and the University of Cyprus in Nicosia, the EIB’s largest ongoing investment on the island. Both operations underpin the bank´s priority to support key investments in Cyprus that will promote growth, support the knowledge economy and help create quality new jobs. Only a few months ago I took part in the Foundation-Stone Laying Ceremony for the construction of the new Faculty of Engineering of the University in April, reiterating the bank’s commitment to an investment in future generations. The project, as well as creating hundreds of new jobs during the construction phase, will enable more young Cypriots to remain in Cyprus and attract other Europeans for their higher education.

Question – Could you also comment on the current Reunification Process?

Werner Hoyer – This goes beyond my comprehension. I have hoped for it for a long time. I know that it is both a highly sensitive, and at the same time a difficult issue after so many years of division of the country. I am always surprised when I go to the Greek part of Cyprus and I see young people who have no relations any more with the north and then I become worried. On the other hand, I was one day talking to the regional cross-border cooperation association and I was sitting in one of those fantastic old churches which are now used as a meeting place and around the table there were people from both sides, businessmen in particular. It was a U-shaped seating arrangement. I was sitting in the middle with my delegation and the locals were on the left and the right side. I wondered which side the Greeks were on and which side the Turks and it turned out that both sides were mixed. When an issue was raised, I was not entirely sure at first, if the speaker was a Greek Cypriotor a Turkish Cypriot. Such experiences are very encouraging, but this is just a glimpse from outside and I should not and will not interfere in this very sensitive domestic matter.

After having been through a unification process in my own country and reaping the benefits of that process, I wish the same could happen for Cyprus as well. It would be a huge stabilising factor also for the whole region – not just with respect to national interests.

Question – Turning to Greece. A year after your decision to Enhance the EIB’s Presence in Athens, could you elaborate on the results?

Werner Hoyer – We always had an office in Athens – but now we also have a dedicated investment team for Greece, headed by Nick Jennett. We sent Nick to Greece at the beginning of the year and he is now permanently based in Athens, leading the investment team of about 30 colleagues, based both in Athens and in Luxembourg. By having a strong presence in Athens, I think, we are making real progress in Greece towards reaching our clients more directly and effectively.

As you know, the EIB is a highly centralised bank. Out of nearly 3000 employees, less than a hundred work outside of Luxembourg. Usually there are one or two colleagues in charge of an external EIB office. But in the case of Greece, we have decided to change our approach, enlarge the team and try to move closer not only to the Greek authorities, but also to our clients, because we are particularly encouraged by the response we get from the private sector and from people who have good ideas or projects but have difficulty in finding appropriate finance. This is exactly the target group we need to address if we want to have a real impact on the real economy in Greece.

Question – Are you worried about the condition of the Greek Banks and market developments? How does that impede the transmission of your funding policy?

Werner Hoyer – The situation of the banks in Greece is indeed difficult and we are aware of that. We were working with them long before the crisis. We also specifically stayed in Greece during the crisis and acquired experience which provides us with a very good basis, but we are now trying to move closer to the non-banking real economy, because this is, where the jobs are created. Look at the Marinopoulos case, for instance, this is also where jobs can be lost. That is why we need to adapt. In order not to be hemmed in by the critical situation of some Greek banks, we need to move closer to our clients, if we want to be helpful to them.

Question – So what exactly are you going to do?

Werner Hoyer – This is not easy under the circumstances, as the situation of the banks is clearly challenging. Local banks and sometimes very solid, viable companies are victims of the collateral damage from a case like Marinopoulos Group. We need to see how we can be helpful here in order to help create as many jobs as possible, because a horrifyingly large number of people are affected. The EIB can only finance investments, but I assume that some of the companies that aim to take over activities from Marinopoulos may need support for their investment programmes. We would be prepared to consider financing these activities but we would, of course, have to look into the details of each and every case and we must assess whether the transactions are bankable.

Question – How can the EIB help on the Marinopoulos case?

Werner Hoyer – We are very much aware of the problems and the unfortunate situation of the 12.500 people involved who risk to lose their jobs. But I prefer to put things positively: the need to rapidly produce a perspective for successor companies in the retail business in order to ensure that further unnecessary damage is avoided.

Question –So potential investor should start filing for EIB Financing…

Werner Hoyer – The important thing is that EIB finance will be available for growing companies. We always finance assets and we will finance them directly where possible. Equally important when we see a company that has potential but is not yet in a position to access EIB finance, we provide advisory assistance to develop a business plan and bring forward a proposal.

Question – Turning to the implications fo Brexit and the EIB, what is your assessment of the impact on both the bank and EU?

Werner Hoyer – First of all I am absolutely stunned by the decision of the majority of the British voters who to a large extent did not seem to be fully aware of what they were voting for or against. The outcome was therefore very unfortunate but we have to respect it. This can only be changed by the British people themselves and we should not try to exert influence here. We have to work on the assumption that the new British leadership will commence the process of the UK’s withdrawal, in accordance with Article 50, by the end of this year. I regret this very much but it is a fact.

Question – Specifically how does it affect the Bank’s operations?

Werner Hoyer – Britain is a very important shareholder of the Bank in addition to being one of the largest andstrongest member states of the European Union. It is also a balancing factor in many ways. If Britain leaves the European Union, it creates a politically different Union and Britain will have to leave the EIB because, according to the Treaty of Rome, only members of the European Union can be shareholders of the Bank. That is the current situation with respect to the Treaty.

This will be a big change for the Bank. At present 16.1% of the Bank’s shares are held by the United Kingdom. The other 27 Member States will have to decide what to do with this 16.1%. Do they want to buy it or do they want the Bank to buy back the British shares, thus reducing EIB’s volume? This is all completely open but one thing is for sure: The Member States, our shareholders, have no interest in weakening the Bank. From that point of view, I think the outlook for the Bank is stable; Standard & Poor’s just affirmed our ‘AAA’ rating with stable outlook. Our portfolio in the UK is strong. We have very good projects in the UK. There is no need to try to dispose of these projects.

The biggest loss, however, will be to the British people themselves because I think that many of those who voted in favour of Brexit were not aware that an easy solution is not at hand. Those who want to curb immigration will not eliminate the problem by adopting the Norwegian model, because Norway has to adhere to the full acquis communautaire of the EU – without having a vote in the European Parliament or the Council but still accepting all their decisions. At the end of the day, the British would even have to pay and accept that people can move freely to the UK and settle there. But this is spilled milk now and we have to live with the new challenge. Regarding the EIB, we need to mention of course the situation of our British colleagues.

Question – What is going to happen to the British working for the EIB?

Werner Hoyer – We have roughly 300 British staff who are understandably devastated. They are in deep shock and we are trying to reassure them as best as we can. There is no doubt that we have plenty of time, because nothing is expected to happen over the next two-and-a-half years but these colleagues who have built careers on the basis of their belief in the future of this bank and are deeply disappointed and must be kept highly motivated, active and professional. We therefore have lot to do internally in this respect.

Question – Now tuning to Juncker’s EFSI, could you describe the linkage with EIB financing and explain how EFSI can be engaged within project applications?

Werner Hoyer – The European Fund for Strategic Investments (EFSI) is a part of the Bank and is managed by EIB staff. This was decided by the European Council in December 2014 when it amended the council conclusions and made EFSI a guarantee mechanism within the Bank and not a separate legal entity. The same colleagues, who work on non-EFSI projects in specific sectors normally handle the EFSI projects in the same sectors, for instance in the transport or SME sectors.

EFSI is a very efficient approach, because it allows us to take higher risks in projects, as a first risk tranche is covered by the EFSI budget guarantee, which makes these projects attractive for private investors. We are well on track with EFSI. After one year – I believe we signed the agreement with the European Commission in July 2015 – progress towards a good third of the targeted additional investments of €315 billion is under way. We are very satisfied. Of course, we need to be diligent when it comes to the character of the project. We have to prove that we generate real valued added, i.e. that we are not just shifting money from our left pocket to the right pocket.

Question – Did you receive any plans form Greek investors?

Werner Hoyer – The key principle of EFSI is to mobilise investments through the private sector. As far as Greece is concerned, we have a pipeline of upcoming corporate sector projects, however we are not able to release the names of customers for confidentiality reasons. The key principle for us is that EFSI is part of the Bank. It is a powerful tool but ultimately what matters is that clients obtain the finance that really corresponds to their needs. There will therefore be a series of operations in Greece over the next year, in the private sector as well as under loans to the public sector

Question – Do you convey these messages to your contacts in Greece, what is the outlook for the Greek economy?

Werner Hoyer – We are in close contact with the Greek authorities. I meet Finance Minister Tsakalotos regularly at ECOFIN. I met Prime Minister Tsipras very recently at the European Council meeting. We are in constant communication. I must say, looking back over the last six months, the Government has managed to push legislation through parliament more successfully than I expected at the beginning of the year. This is a really remarkable achievement. The next hurdle will be, I assume, in September when the labor laws must pass through parliament, which is, of course, a huge challenge for every government. In this case, it is particularly demanding for the Government, but it is a necessity. From that point of view, I hope that the recent Government’s successes in Parliament will be repeated in September. That would be a huge stabilizing factor for the economy and a confidence-building measure for investors.

Question – What is the number one factor hindering investment, in terms of labor legislation?

Werner Hoyer – I think that in many areas Greece does not live fully up to its potential not only due to labor laws, but also to other kinds of regulation. We need more dynamism, even in the field of tourism, which could be one of the strongest parts of Greece’s economic base. I believe that incredible reserves are hidden in the tourism sector in Greece.

Question – Did you receive applications for projects in the tourism industry?

Werner Hoyer – We have been approached by a number of companies from the tourism industry. We finance asset creation. We do not finance the acquisition of assets or re-finance companies. In the tourismindustry, we are particularly interested in investments to increase the energy efficiency of hotels. Companies that have proposals of that sort are very welcome.

Question – So how do you assess them, what are the prerequisites for positive financing decisions?

Werner Hoyer – The criteria that the Bank always applies to projects that it finances include environmental sustainability, technical robustness, financial sustainability and, equally important, economic viability. The economic performance of renewable energy projects is an aspect that we examine very carefully. Strategic decisions by the public sector can have substantial influence on economic performance. For instance, the connection of the island of Crete to the mainland has been discussed for many years. This is a project of great strategic importance to which the Bank would provide access to finance. This is an area we have been discussing with the Government.

Question – How can Greece keep up on the renewable energy race? What is holding them back?

Werner Hoyer – If we exclude grid and connection costs, Greece is classified as a Solar and Wind Tier 1 region, i.e. the best sun and wind locations have reached already grid parity or even below. This means that the so-called levelized cost of energy is at least as good as that of fossil fuels. Offshore energy is different, it is a degree higher than fossil fuels, but it is coming down fast. The main issue, of course, is how much it costs to connect to the grid and how robust the network is.

I think Greece is without doubt one of the best locations for wind and solar energy.

Source: InCyprus