PROJECTS worth some £200 million are poised to get the green light within weeks from the European Investment Bank (EIB), which has hailed Scotland as an “attractive” investment proposition.
The lender, which is owned by the European Union’s 28 member states, has earmarked about £75m to help fund the relocation of Edinburgh’s Royal Hospital for Sick Children, along with £130m to support the construction of a new general hospital for Dumfries & Galloway.
Jonathan Taylor, one of the EIB’s eight vice-presidents, told Scotland on Sunday that the bank expects to confirm more deals north of the Border in the coming months, having lent in excess of £6 billion across the UK in 2014.
He also insisted that the lender’s activities in Scotland “carried on as normal” during the independence campaign, with Scottish Hydro securing £200m just weeks before the referendum in September to extend and improve its electricity transmission system.
Shortly after the vote, the bank provided Scotia Gas Networks with £400m towards its gas distribution upgrade.
“Some of what we’ve been doing has perhaps been quite low profile, but business carried on as usual throughout the referendum campaign,” said Taylor on a visit to Edinburgh to speak at a MacKay Hannah conference on infrastructure investment.
Describing the two forthcoming hospital deals as “great projects”, he said the current environment in Scotland was positive, but declined to comment on reports that Edinburgh City Council was eyeing European cash as a way to finance an £80m extension to the city’s tram line.
“We don’t comment on preliminary talks with anybody until the point has been reached at which the board has approved it,” he said.
He added: “Scotland is an attractive proposition for us, but we want bankable projects that will pay us back. The fact that we’re doing more deals is a clear sign that the investment environment is good.”
As well as the Scottish Hydro and Scotia Gas deals, other major schemes that have secured EIB backing include the M8 “missing link” and the £745m Aberdeen bypass. It also provided £500m for the Housing Finance Corporation to be lent on to individual housing associations.
Taylor, the former director-general for financial services and stability at the Treasury, said: “We may be a public bank, but we are still a bank. We’re borrowing money on the public markets at AAA rates and have an obligation to pass on the benefits to the people we’re lending to. But these are loans, not grants – we need to get the money back.”
Loan terms depend on the individual deal, but tend to run for 20 to 25 years, and he said this long-term approach means the bank “bring something extra” to the funding environment, while helping to leverage private investment. Projects being funded by the EIB need to find other sources of finance because the bank cannot lend more than 50 per cent of the cost.
Taylor said: “Anything we lend to must support an EU policy, so we have a set of criteria that the projects must be related to growth, or creating employment, innovation or helping the environment.”
He pointed out that requests for EIB loans do not need to come through central government or any other public body, adding that the lender is keen for Scottish companies to contact its team direct to see if help is available.
“However, because we’re a public bank we have to make sure it’s something that’s supporting the public good and not just a handy business proposition,” he said.