Prospectus Supplement Filed Pursuant to Rule 424(b)(5)
(To Prospectus Dated September 18, 2002) Registration No. 333-99603
[EUROPEAN
INVESTMENT
BANK LOGO]
EURO AREA REFERENCE NOTE ISSUANCE FACILITY
SERIES NO: 1620/01
EUR 4,000,000,000 4.625 PER CENT. EARNS DUE 2020
Issue Price: 98.958 per cent.
ABN AMRO Citigroup Deutsche Bank
UBM-UniCredit Banca Mobiliare
Barclays Capital ING Financial Markets
BNP PARIBAS JPMorgan
CALYON Lehman Brothers
CDC IXIS Capital Markets Merrill Lynch & Co
Credit Suisse First Boston Morgan Stanley
Dresdner Kleinwort Wasserstein Nomura Securities
Goldman Sachs International Nordea
HSBC CCF SG Corporate & Investment Banking
UBS Investment Bank
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS JULY 8, 2004
This Prospectus Supplement, under which the EARNs described herein (the
"EARNs") are issued, is supplemental to, and should be read in conjunction
with, the Prospectus (the "Prospectus") dated September 18, 2002 issued in
relation to the Euro Area Reference Note Issuance Facility of European
Investment Bank ("EIB"). Terms defined in the Prospectus have the same meaning
in this Prospectus Supplement. The EARNs will be issued on the terms of this
Prospectus Supplement read together with the Prospectus. EIB accepts
responsibility for the information contained in this Prospectus Supplement
which, when read together with the Prospectus, contains all information that is
material in the context of the issue of the EARNs.
This Prospectus Supplement does not constitute, and may not be used for the
purposes of, an offer of, or an invitation by or on behalf of anyone to
subscribe or purchase any of the EARNs unless accompanied by the Prospectus.
This Prospectus Supplement is referred to as a "Prospectus Supplement" for the
purpose of registration with the United States Securities and Exchange
Commission and corresponds to a "Pricing Supplement" under the European Area
Reference Note Issuance Facility of EIB dated January 3, 2002, as defined in
the Agency Agreement dated as of January 3, 2002, between EIB and BNP Paribas
Securities Services, Luxembourg Branch.
Application has been made for the EARNs to be listed on the Luxembourg Stock
Exchange and Euronext Paris.
In connection with this issue, ABN AMRO Bank N.V., or any person acting for it,
may over-allot or effect transactions with a view to supporting the market
price of the EARNs at a higher level than that which might otherwise prevail
for a limited period after the issue date. However, there may be no
obligation on ABN AMRO Bank N.V., or any person acting for it, to do this.
Such stabilising, if commenced, may be discontinued at any time and must be
brought to an end after a limited period.
S-2
The terms of the EARNs and additional provisions relating to their issues are
as follows:
1 Series No: 1620
2 Tranche No: 01
3 ISIN (European Global Note): XS0196448129
4 Common Code (European Global Note) 019644812
5 Common Code (DTC Global Note) N/A
6 ISIN (DTC Global Note) US298785DF01
7 CUSIP (DTC Global Note) 298785DF0
8 Currency: EUR
9 Principal Amount of Tranche: 4,000,000,000
10 Issue Date: July 15, 2004
11 Denomination: EUR 1,000
12 Interest Commencement Date: July 15, 2004
13 Interest rate: 4.625 per cent. per annum
14 Reference Rate (Floating Rate EARNs): N/A
15 Margin Floating Rate EARNs): N/A
16 Relevant Screen Page (Floating Rate N/A
Targeted EARNs):
17 Interest Payment Date(s): April 15 of each year to holders
of EARNs as of the Record Date,
beginning on April 15, 2005.
(First Short Coupon for the
period from and including the
Issue Date to but excluding
April 15, 2005). The Record Date
may be changed by agreement
among EIB, the Fiscal Agent and
all applicable securities
clearing systems
18 Maturity Date: April 15, 2020
19 Details of any other additions or N/A
variations to the Conditions (if
applicable):
20 Details of any additions or variations EARNs are being offered pursuant
to the selling restrictions: to a Registration Statement
filed with the United States
Securities and Exchange
Commission
21 The Agents appointed in respect of BNP Paribas Securities Services,
the EARNs: Luxembourg Branch as Fiscal
Agent, Principal Paying Agent,
Registrar and Luxembourg Listing
Agent
BNP Paribas Securities Services
S.A. as Paris Paying Agent
BNP Paribas, as Paris Listing
Agent
22 Listing: Luxembourg and Euronext Paris
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23 Selling Commission: N/A
24 Management and Underwriting 0.175 per cent. of the principal
Commission: amount of the EARNs
25 Method of issue of EARNs: Syndicated Issue
26 The following Dealers are subscribing
the EARNs:
Joint Lead Managers and Joint ABN AMRO Bank N.V.
Bookrunners:
Citigroup Global Markets Limited
Deutsche Bank AG London
Senior Co-Lead Manager: UniCredit Banca Mobiliare S.p.A.
Co-Lead Managers: Barclays Bank PLC
BNP PARIBAS
CALYON S.A.
CDC IXIS Capital Markets
Credit Suisse First Boston
(Europe) Limited
Dresdner Bank Aktiengesellschaft
Goldman Sachs International
HSBC Bank plc
ING Belgium S.A.
J.P. Morgan Securities Ltd.
Lehman Brothers International
(Europe)
Merrill Lynch International
Morgan Stanley & Co.
International Limited
Nomura International plc
Nordea Bank Danmark A/S
Societe Generale
UBS Limited
Selling Group: N/A
27 Clearing Systems: Euroclear Bank S.A./N.V., as
operator of the Euroclear System
Clearstream Banking, societe
anonyme (Clearstream,
Luxembourg)
The Depository Trust Corporation
("DTC")
Euroclear France
S-4
SEC FILINGS
This Prospectus Supplement incorporates by reference the documents
listed below that EIB previously filed with the Commission. They contain
important information about us.
Annual Reports on Form 18-K......... o For the fiscal year ended December
31, 2003
o For the fiscal year ended December
31, 2002
Amendments on Form 18-K/A........... o Amendment No. 1 to the Annual Report
for the fiscal year ended December
31, 2002 on Form 18-K/A dated July
14, 2003
o Amendment No. 2 to the Annual Report
for the fiscal year ended December
31, 2002 on Form 18-K/A dated
October 1, 2003
EIB incorporates by reference additional documents that it may file
with the Commission between the date of this Prospectus Supplement and the
termination of the offering of the EARNs. These documents include periodic
reports, such as Annual Reports on Form 18-K and amendments on Form 18-K/A.
EXPERTS
The financial statements incorporated in this Prospectus Supplement
by reference to the 2003 Annual Report on Form 18-K, the 2002 Annual Report on
Form 18-K and the Amendment No.1 to the 2002 Annual Report on Form 18-K/A have
been incorporated in reliance on the reports of Ernst & Young, societe
anonyme, independent accountants, given on the authority of such firm as
experts in auditing and accounting.
GENERAL INFORMATION
1. The issuance of the EARNs was duly authorized by EIB pursuant to a
decision of its Board of Directors made on December 17, 2003, and
decisions of its Management Committee made on June 15, 2004 and July 7,
2004.
2. A copy of the current, and any future, annual report of EIB may be
obtained free of charge by the holders of the EARNs at the office of BNP
Paribas Securities Services, Luxembourg Branch or BNP Paribas, Paris. Any
documents filed by EIB with the United States Securities and Exchange
Commission (the "Commission") and incorporated into this Prospectus
Supplement and the accompanying Prospectus by reference are available for
inspection by the holders of the EARNs at the office of BNP Paribas
Securities Services, Luxembourg Branch or BNP Paribas, Paris. Documents
we have filed with the Commission after November 4, 2002 are also
available to the public via the Securities and Exchange Commission's
website at www.sec.gov.
RECENT DEVELOPMENTS
The Member States of the European Union have adopted a directive
regarding the taxation of savings income. Pursuant to the directive each
Member State will be required to provide to the tax authorities of another
Member State details of payments of interest made by a person within its
jurisdiction to an individual resident in that other Member State, subject to
the right of certain Member States to opt instead for a withholding system for
a transitional period in relation to such payments. Investors should rely on
their own analysis of the directive and respective laws and should take advice
from appropriate legal or taxation professionals.
S-5
PROSPECTUS
[EUROPEAN
INVESTMENT
BANK LOGO]
100, Boulevard Konrad Adenauer
L-2950 Luxembourg
Grand Duchy of Luxembourg
(352) 4379-1
--------------------------------------------
European Investment Bank may offer and sell:
EURO AREA REFERENCE NOTES ("EARNs")
under the EARN ISSUANCE FACILITY
--------------------------------------------
o The European Investment Bank from time to time may offer its EARNs
(as defined above) denominated in euro.
o The EARNs will be offered from time to time in amounts and at prices
and on terms to be determined at the time of sale and to be set
forth in supplements to this Prospectus.
o The EARNs will be unconditional, direct and general obligations of
EIB in accordance with their terms for their payment and
performance.
o We will provide specific terms of the EARNs in supplements to this
Prospectus. You should read this Prospectus and any supplement
carefully before you invest.
o This Prospectus may be used to offer and sell EARNs only if
accompanied by the Prospectus Supplement for those EARNs.
--------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the securities to be issued
under this Prospectus or determined that this Prospectus is accurate or
adequate. Any representation to the contrary is a criminal offense.
The date of this Prospectus is September 18, 2002
TABLE OF CONTENTS
Page
ABOUT THIS PROSPECTUS......................................................3
WHERE YOU CAN FIND MORE INFORMATION........................................3
THE EUROPEAN INVESTMENT BANK...............................................5
ADMINISTRATION.............................................................6
LEGAL STATUS...............................................................6
USE OF PROCEEDS............................................................6
SUMMARY OF THE FACILITY....................................................7
DESCRIPTION OF SECURITIES..................................................9
BOOK-ENTRY SYSTEM.........................................................13
CURRENCY CONVERSIONS AND FOREIGN EXCHANGE RISKS...........................17
UNITED STATES TAXATION....................................................18
VALIDITY OF THE SECURITIES................................................21
EXPERTS...................................................................21
ADDITIONAL INFORMATION....................................................22
AUTHORIZED AGENT IN THE UNITED STATES.....................................26
2
In recent years there have been significant changes in the relative values of
the euro and other currencies. To date such changes in relative currency
values have not had an adverse effect on EIB's financial condition. EIB is
unable to predict any future effect of such currency conditions on its
financial condition. For additional information regarding exchange rates, see
"Currency Conversions and Foreign Exchange Risks" and Notes to the Financial
Statements in Exhibit I to EIB's Annual Reports on Form 18-K referred to
below.
References in this Prospectus to "euro" and "EUR" are to the lawful currency
of the member states of the European Union who are participants in the third
stage of economic and monetary union. References in this Prospectus to "U.S.
Dollars", "U.S.$", "dollar" or "$" are to the lawful currency of the United
States.
ABOUT THIS PROSPECTUS
This Prospectus is part of a Registration Statement (the "Registration
Statement") that we filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933 (the "Securities Act")
utilizing a "shelf" registration process.
This Prospectus provides you with a general description of the EARNs we may
offer. Each time we sell EARNs, we will provide a Prospectus Supplement that
will contain specific information about the terms of that offering. The
Prospectus Supplement may also add, update or change information contained in
this Prospectus. You should read both this Prospectus and any Prospectus
Supplement together with additional information described under the heading
"Where You Can Find More Information" beginning on page 3 of this Prospectus.
You should rely only on the information provided in this Prospectus and in any
Prospectus Supplement including the information incorporated by reference. We
have not authorized anyone to provide you with different information. We are
not offering the securities in any state where the offer is not permitted.
You should not assume that the information in this Prospectus, any Prospectus
Supplement, or any incorporated document is accurate at any date other than
the date indicated on the cover page of that document.
WHERE YOU CAN FIND MORE INFORMATION
The Registration Statement, including the attached exhibits and schedules,
contains additional relevant information about the EARNs. The rules and
regulations of the Commission allow us to omit certain information included in
the Registration Statement from this Prospectus.
In addition, we file reports and other information with the Commission under
the Securities Exchange Act of 1934. You may read and copy this information at
the following locations of the Commission:
Public Reference Room
450 Fifth Street, N.W.
Room 1024
Washington, D.C. 20549
You may also obtain copies of this information by mail from the Public
Reference Room of the Commission, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, at prescribed rates. You may obtain information on the
operation of the Public Reference Room by calling the Commission at
1-800-SEC-0330.
The Commission allows us to "incorporate by reference" information into this
Prospectus. This means that we can disclose important information to you by
referring you to another document filed separately with the Commission. The
information incorporated by reference is considered to be a part of this
Prospectus, except for any information that is superseded by information that
is included directly in this document.
3
This Prospectus incorporates by reference the documents listed below that EIB
previously filed with the Commission. They contain important information about
us.
SEC Filings
Annual Reports on Form 18-K..... o For the fiscal year ended December 31, 2001
o For the fiscal year ended December 31, 2000
EIB incorporates by reference additional documents that it may file with the
Commission between the date of this Prospectus and the termination of the
offering of the securities. These documents include periodic reports, such as
Annual Reports on Form 18-K and amendments on Form 18-K/A.
You can obtain any of the documents incorporated by reference in this document
through us, or from the Commission. Documents incorporated by reference are
available from us without charge, excluding any exhibits to those documents
incorporated by reference in this Prospectus, by requesting them in writing or
by telephone from us at the following address and telephone number: Capital
Markets Department
European Investment Bank
100, Boulevard Konrad Adenauer
L-2950 Luxembourg,
Grand Duchy of Luxembourg
Telephone: (352) 4379-1
If you request any incorporated documents from us, we will mail them to you by
first class mail, or another equally prompt means, within one business day
after we receive your request.
4
THE EUROPEAN INVESTMENT BANK
INTRODUCTION
European Investment Bank ("EIB") is an autonomous public institution
established by the Treaty (as defined below). EIB's capital is subscribed by
the Member States of the European Union (the "EU"). EIB grants loans and
guarantees to finance investment projects, utilizing its own capital resources
and borrowings on capital markets. EIB is situated at 100, Boulevard Konrad
Adenauer, L-2950 Luxembourg, Grand Duchy of Luxembourg.
"Treaty" means the Treaty of Rome of March 25, 1957 establishing the European
Economic Community as amended and supplemented by the Treaty of Maastricht of
February 7, 1992 establishing the European Union and the Treaty of Amsterdam
of October 2, 1997.
MISSION
Under the Treaty, the purpose of EIB is to contribute to the balanced and
steady development of a common market among Member States. To that end,
operating on a non-profit-making basis, EIB is required by the Treaty to grant
loans and give guarantees for projects which develop the less-developed
regions of the EU and, where the projects are of such size or nature that they
cannot be entirely financed from resources available in the individual Member
States, for projects which modernize or develop undertakings or develop new
activities, or which are of common interest to several Member States. In
addition, EIB grants loans and gives guarantees for projects outside the EU,
generally within the framework of agreements between the EU and non-Member
States.
Constitution and Membership
EIB is separate from the EU institutions and it has its own governing bodies,
sources of revenues and financial operations and is solely responsible for its
indebtedness. EIB is governed by the provisions of the Treaty, the Statute of
EIB, as amended, which is annexed as a protocol to the Treaty, and the Protocol
on the Privileges and Immunities of the European Communities.
The members of EIB are the fifteen Member States of the EU and the following
table sets out the share of each Member State in the subscribed capital of EIB
at September 12, 2002.
COUNTRY EUR PERCENTAGE
Germany 17,766,355,000 17.766
France 17,766,355,000 17.766
Italy 17,766,355,000 17.766
United Kingdom 17,766,355,000 17.766
Spain 6,530,656,000 6.531
Belgium 4,924,710,000 4.925
Netherlands 4,924,710,000 4.925
Sweden 3,267,057,000 3.267
Denmark 2,493,522,000 2.494
Austria 2,444,649,000 2.445
Finland 1,404,544,000 1.404
Greece 1,335,817,000 1.336
Portugal 860,858,000 0.861
Ireland 623,380,000 0.623
Luxembourg 124,677,000 0.125
Total 100,000,000,000 100.000
The Board of Directors of EIB may require payment of the balance of the
subscribed capital, to such extent as may be required by EIB to meet its
obligations towards those who have made loans to it. Each Member State shall
make this payment in proportion to its share of the subscribed capital in the
currencies required by EIB to meet these obligations.
5
ADMINISTRATION
EIB is directed and managed by a Board of Governors, a Board of Directors and
a Management Committee.
The Board of Governors consists of government ministers, usually ministers of
finance, appointed by the Member States.
The Board of Directors is composed of 25 Directors and 13 Alternate Directors,
each appointed by the Board of Governors on nomination by the Member States
and the Commission of the European Union.
The Management Committee consists of the President and Vice-Presidents
appointed for a period of six years by the Board of Governors on a proposal
from the Board of Directors.
LEGAL STATUS
EIB has a legal personality and possesses in each Member State the most
extensive legal capacity accorded to legal persons under the laws of each such
Member State. It may acquire and transfer property and sue and be sued in its
own name.
EIB and its assets, revenue and other property are exempt from all direct
taxes of the Member States. EIB is also exempt from any fiscal charges in
respect of increases in its subscribed capital or paid-in capital and from any
related formalities in the Member State in which EIB has its seat. The
activities of EIB carried out under the terms of the Statute may not be the
subject of any turnover tax in the Member States.
The Treaty provides that the Court of Justice of the European Communities (the
"Court of Justice") has exclusive jurisdiction in certain cases involving the
fulfilment by Member States of their obligations under the Statute and the
lawfulness of measures adopted by the Board of Governors and EIB's Board of
Directors. Subject to the foregoing exclusive jurisdiction of the Court of
Justice, any litigation between EIB and its creditors or debtors, including
claims based on guarantees made by Member States, may be determined by
competent national courts. The property and assets of EIB within the Member
States are not, except by judicial decision and with the authorization of the
Court of Justice, subject to attachment or to seizure by way of execution.
USE OF PROCEEDS
The net proceeds of the sale of the EARNs will be used in the general
operations of EIB.
6
SUMMARY OF THE FACILITY
The following summary is qualified in its entirety by the remainder of this
Prospectus.
ISSUER: European Investment Bank.
DESCRIPTION: Euro Area Reference Note Issuance Facility.
ARRANGERS: ABN AMRO Bank N.V. and BNP Paribas. EIB may from
time to time terminate the appointment of any
Arranger under the Facility or appoint additional
Arrangers in respect of the whole Facility.
DEALERS: Dealers who have acceded to the Dealer Agreement
dated as of 3rd January, 2002.
FISCAL AGENT: BNP Paribas Luxembourg or such other or further
fiscal agent as appointed from time to time by
EIB.
METHOD OF ISSUE: The EARNs will be issued on a syndicated or
non-syndicated basis or by any other method
agreed by EIB and the relevant dealer(s). The
EARNs will be issued in series (each a "Series")
having one or more issue dates and, other than
the Issue Price and accrued interest, if any, on
terms otherwise identical. Each Series may be
issued in tranches (each a "Tranche") on the same
or different issue dates to be consolidated and
form a single series of EARNs. The specific terms
of each Tranche (which will be supplemented,
where necessary, with supplemental terms and
conditions and, save in respect of issue date,
issue price, accrued interest (if any) and
principal amount of the Tranche, will be
identical to the terms of other Tranches of the
same Series) will be set out in a Prospectus
Supplement to this Prospectus.
ISSUE PRICE: EARNs may be issued at their principal amount or
at a discount or premium to their principal
amount.
FORM OF EARNS The EARNs (other than those EARNs registered
under the Securities Act) may be issued in bearer
form only. Each Tranche of EARNs will be
represented by one or more permanent Global
EARNs. Individual definitive EARNs will not be
issued.
CLEARING SYSTEMS: The Depositary Trust Company, Clearstream,
Luxembourg, Euroclear and, in relation to any
Series, such other clearing system as specified
in the relevant Prospectus Supplement as may be
agreed between EIB, the Fiscal Agent and the
relevant Dealers.
INITIAL DELIVERY OF EARNS: On or before the issue date for each Tranche, a
Global EARN will be deposited with a common
depositary for Euroclear and Clearstream,
Luxembourg, and a registered Global EARN will be
deposited with a custodian for The Depositary
Trust Company. Global EARNs may also be deposited
with any other clearing system as specified in
the relevant Prospectus Supplement.
CURRENCY: The EARNs will only be issued in euro.
MATURITIES: 366 days or over.
DENOMINATIONS: EARNs will be in the denomination of EUR 1,000
unless otherwise specified in the relevant
Prospectus Supplement.
INTEREST: Fixed interest will be payable annually in arrear
on February 15, April 15, or such other date in
each year as shall be specified in the relevant
Prospectus Supplement, EIB may also issue
non-interest bearing and floating rate interest
EARNs.
PURCHASE OF EARNS: EIB may at any time purchase EARNs in the open
market or otherwise at any price. Any EARNs so
purchased may be sold or canceled at EIB's
discretion.
7
STATUS OF EARNS: EARNs will constitute unconditional, direct and
general obligations of EIB all as described in
"Terms and Conditions of the EARNs - Status and
Negative Pledge".
NEGATIVE PLEDGE: See "Terms and Conditions of the EARNs - Status
and Negative Pledge".
CROSS DEFAULT: See "Terms and Conditions of the EARNs -
Default".
GOVERNING LAW: Luxembourg Law.
LISTING: The Luxembourg Stock Exchange and as otherwise
specified in the relevant Prospectus Supplement.
TAXATION: Payments will be subject in all cases to any
fiscal or other laws and regulations applicable
thereto.
8
DESCRIPTION OF SECURITIES
There follows the text of the terms and conditions to which (subject to
completion and amendment by the relevant Prospectus Supplement) the EARNs of
any Series the first Tranche of which is issued after September 13, 2002 will
be subject. The EARNs are issued pursuant to an Agency Agreement dated January
3, 2002 (as amended or supplemented as at the date of issue of the EARNs (the
"Issue Date")) between EIB, BNP Paribas Luxembourg, as Fiscal Agent, and the
other agents named in it (the "Agency Agreement"). Capitalized terms used but
not otherwise defined herein shall have the meanings assigned to those terms
in the Agency Agreement.
The fiscal agent and the paying agents for the time being (if any) are
referred to below, respectively, as the "Fiscal Agent" and the "Paying Agents"
(which expression shall include the Fiscal Agent). Certain statements in this
"Description of Securities" are summaries of, and are subject to, the detailed
provisions of the Agency Agreement. The holders of the EARNs are entitled to
the benefit of, are bound by, and are deemed to have notice of, all the
provisions of the Agency Agreement applicable to them.
Copies of the forms of EARNs and the Agency Agreement with respect thereto are
filed as exhibits to the Registration Statement of which this Prospectus
constitutes a part. Copies of the Agency Agreement are also available for
inspection at the specified offices of each of the Paying Agents.
1. FORM, DENOMINATION AND TITLE
The EARNs are issued in either bearer or registered form in the denomination
of EUR 1,000.
2. INTEREST
(a) INTEREST ON FIXED RATE EARNS
The fixed rate EARNs bear interest on the nominal amount of the EARNs
from the Issue Date at the Interest Rate payable annually in arrear on
each Interest Payment Date.
(b) INTEREST ON FLOATING RATE EARNS
The floating rate EARNs bear interest on the nominal amount of the EARNs
from the Issue Date at the Interest Rate (which shall be the Reference
Rate plus or minus the Margin) payable in arrear on each Interest Payment
Date.
The Reference Rate shall, unless otherwise set out in the relevant
Prospectus Supplement, be EURIBOR.
The Interest Rate per annum payable from time to time in respect of the
EARNs will be determined by the Calculation Agent on the following basis:
(i) The Calculation Agent will ascertain the offered Reference Rate for
the relevant Interest Period of euro deposits which appears on the
Relevant Screen Page as of 11:00 a.m. (Brussels time) on the
relevant Interest Determination Date (as defined below) (or such
other page or service as may be equivalent to it or replace it for
the purpose of displaying interbank offered rates of major banks for
deposits in euro principally in the region comprised of member
states of the European Union that have on the Interest Determination
Date adopted the euro (the "eurozone"));
(ii) if such rate is not available, the Calculation Agent will request
the principal offices of five major banks in the eurozone selected
by it in the interbank market (the "Reference Banks") to provide the
Calculation Agent with their offered quotations (expressed as a rate
per annum) for interbank deposits in euro to leading banks in the
eurozone interbank market for a period equal to the relevant
Interest Period as at approximately 11:00 a.m. (Brussels time) on
the Interest Determination Date. The Interest Rate for such Interest
Period shall be the arithmetic mean (rounded, if necessary, to the
nearest one hundred thousandth of one per cent., with halves being
rounded up) of such offered quotations, plus or minus the Margin, as
determined by the Calculation Agent. All currency amounts that fall
due and payable shall be rounded to the nearest cent, with halves
being rounded up;
(iii) if two or three only of the Reference Banks provide the Calculation
Agent with such quotations, the Interest Rate for the relevant
interest period shall be determined in accordance with (ii) above on
the basis of the quotations of those Reference Banks providing such
quotations. If fewer than two quotations are provided as requested,
the Interest Rate will be the arithmetic mean of the rates quoted by
other major banks in the eurozone, selected by the Calculation
Agent, at approximately 11:00 a.m., Brussels time, on the Interest
Determination Date for loans in euro to leading European banks for
the Interest Period; and
9
(iv) if the Calculation Agent is unable to determine the Interest Rate
for an Interest Period in accordance with (i), (ii), or (iii) above,
the Interest Rate for such Interest Period shall be the Interest
Rate in effect for the last preceding Interest Period to which (i),
(ii), or (iii) above shall have been applied.
As used in this Condition "Interest Determination Date" means, in respect of
each Interest Period, the second euro Business Day prior to the commencement of
the Interest Period to which such offered rate will apply. "Interest Period"
means the period starting on and including the Interest Commencement Date and
ending on but excluding the first Interest Payment Date and each subsequent
period starting on and including an Interest Payment Date and ending on but
excluding the next Interest Payment Date.
The Fiscal Agent shall publish the Interest Rate for each Interest Period, the
amount of interest payable in respect of each EARN for such Interest Period and
the relevant Interest Payment Date in accordance with Condition 8, if requested
by the relevant stock exchange. It is expected that publication will be made no
later than the fifth euro Business Day following the relevant Interest
Determination Date.
(c) DAY-COUNT FRACTION
(i) Where interest is to be calculated for fixed rate EARNs in respect of
a period of less than one year, it will be calculated on the basis of
the actual number of days elapsed divided by the actual number of
days in the period from and including the immediately preceding
Interest Payment Date (or, if none, the immediately preceding
anniversary of the first Interest Payment Date) to but excluding the
next scheduled Interest Payment Date.
(ii) Where interest is to be calculated for floating rate EARNs it will be
calculated on the basis of the actual number of days elapsed divided
by 360 days.
Provided that, if EIB determines, with the agreement of the Fiscal Agent (which
shall not be unreasonably withheld), that the then market practice in respect
of euro denominated internationally offered securities, as applicable, is
different from that specified in clauses (i) and / or (ii) above, such clauses
shall be deemed to be amended so as to comply with such market practice and EIB
shall promptly notify the holders of the EARNs, the stock exchange(s) (if any)
on which the EARNs may be listed and the Paying Agents of such amendments.
"euro Business Day" means a day on which the Trans-European Automated Real-time
Gross settlement Express Transfer system ("TARGET") is operating.
(d) INTEREST ACCRUAL
The EARNs will cease to bear interest from the due date for redemption
unless, upon due presentation, payment of principal is improperly withheld
or refused.
3. REDEMPTION AND PURCHASE
Unless previously redeemed or purchased and cancelled as described herein, EIB
will redeem the EARNs at par on the Maturity Date.
EIB shall have the right at any time to purchase EARNs in the open market or
otherwise. Any EARNs so purchased may be resold at EIB's discretion, if not
surrendered to the Fiscal Agent for cancellation.
4. PAYMENTS
Payments in respect of principal and interest will be made against surrender of
EARNs at the specified offices of the Paying Agents for the time being. The
specified offices of the initial Paying Agents appear at the foot of these
Terms and Conditions.
Payments will be made in euro by credit or transfer to a euro account specified
by the payee. Payments will be subject in all cases to any fiscal or other laws
and regulations applicable thereto. Consequently, neither EIB nor any Paying
Agent will make any additional payments in the event of a withholding being
required in respect of any payment under or in connection with the EARNs.
Neither EIB nor any Paying Agent shall be liable to any holder of an EARN or
other person for any commissions, costs, losses or expenses in relation to or
resulting from such payments.
Payment of principal or interest on the EARNs may only be made on a day that is
a euro Business Day. In case of fixed rate EARNs, if any day for payment of
principal or interest on the EARNs is not a euro Business Day such payment
shall be made on the first following day that is a euro Business Day, and the
holders of such EARNs shall not be entitled to any interest or other sums in
respect of such postponed payment.
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In case of floating rate EARNs if any day for payment of principal or interest
on the EARNs is not a euro Business Day, such date shall be postponed to the
next day that is a euro Business Day unless it would thereby fall into the next
calendar month, in which event (i) such date shall be brought forward to the
immediately preceding euro Business Day and (ii) each subsequent such date
shall be the last euro Business Day of the month in which such date would have
fallen had it not been subject to adjustment.
EIB reserves the right at any time to vary or terminate the appointment of the
Fiscal Agent or any other Paying Agent and to appoint another fiscal agent or
additional or other paying agents provided that it will at all times while any
EARN is outstanding maintain (i) a fiscal agent; and (ii) so long as the EARNs
are listed on any stock exchange and if the rules of that stock exchange so
require, a paying agent having a specified office in the city of that stock
exchange. Notice of any such termination or appointment and of any changes in
the specified office of any Paying Agent will be given to the holders of the
EARNs in accordance with Condition 8.
5. STATUS OF THE EARNS AND NEGATIVE PLEDGE
The EARNs will be unconditional, direct and general obligations of EIB in
accordance with their terms for their payment and performance. The EARNs will
rank pari passu with any present or future indebtedness of EIB represented by
any unsubordinated notes, bonds or other securities, except indebtedness (i)
incurred for all or part of the purchase price of property purchased by EIB and
(ii) secured by any mortgage, pledge or other security interest on such
property but otherwise ranking pari passu with the EARNs. If EIB shall in the
future secure any such present or future indebtedness by any mortgage, pledge
or other security interest on any of its present or future assets or revenues
(other than mortgages, pledges or security interests on property purchased by
EIB as security for all or part of the purchase price), the EARNs will be
secured by such mortgage, pledge or other security interest equally and
rateably with such indebtedness, and the instrument creating such mortgage,
pledge or other security interest will expressly so provide.
6. DEFAULT
The holder of any EARN may, by written notice to EIB delivered before all
defaults shall have been remedied, cause such EARN to become due and payable,
together with accrued interest thereon to the date of payment, as of the date
on which the said notice of acceleration is received by EIB in the event that:
(a) EIB shall default in any payment of interest in respect of any of the
EARNs and such default shall not have been remedied by payment thereof
within 30 days; or
(b) EIB shall default in the due performance of any of its other obligations
in respect of the EARNs and such default shall continue for a period of
30 days after written notice thereof shall have been given by the holder
of any EARN to EIB at its office at 100 Boulevard Konrad Adenauer, L-2950
Luxembourg or at such other address as shall be notified to the holders
of the EARNs in accordance with Condition 8; or
(c) any other indebtedness of EIB for borrowed money shall become due and
payable prior to the stated maturity thereof as a result of a default
thereunder or any such indebtedness shall not be paid at the maturity
thereof as extended by any applicable grace period therefor or any
guarantee given by EIB for borrowed money shall not be honoured within 30
days when due and called upon in accordance with its terms.
7. PRESCRIPTION
Interest will cease to be payable after five years from the relevant Interest
Payment Date and principal after ten years from the due date for payment
thereof.
8. NOTICES
Any notice to holders of EARNs shall be validly given if published in the
Luxemburger Wort (Luxembourg) and the Financial Times (United Kingdom) and
such other newspapers or publications as may be required by the rules of the
stock exchanges on which the EARNs may from time to time be listed or, if any
such newspaper or publication shall cease to be published or timely
publication therein shall not be practicable, in such other newspapers as the
Fiscal Agent shall deem necessary to give fair and reasonable notice to
holders of EARNs. Any such notice shall be deemed to have been given on the
date of the last publication provided above.
9. FURTHER ISSUES AND CONSOLIDATION
EIB may from time to time, without the consent of the holders of EARNs, create
and issue further notes so as to be consolidated and form a single issue with
the EARNs. EIB may further, from time to time, without the consent of the
holders of EARNs, consolidate EARNs with one or more issues of other notes
issued by it, whether or not originally issued in euro, provided that
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such other notes have been redenominated in euro (if not originally
denominated in euro) and otherwise have in respect of all periods subsequent
to such consolidation, the same conditions as the EARNs.
10. GOVERNING LAW AND JURISDICTION
The EARNs are governed by, and shall be construed in accordance with, the laws
of the Grand Duchy of Luxembourg. Claims against EIB thereunder may be brought
before any competent court in Luxembourg, Grand Duchy of Luxembourg or any
other country where EIB shall hereafter have its legal seat.
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BOOK-ENTRY SYSTEM
FORM OF EARNS
The EARNs will be represented by (i) a fully registered global certificate
(the "DTC Global EARN") registered in the name of Cede & Co. as nominee for
The Depositary Trust Company ("DTC" and (ii) a global certificate in bearer
form (the "European Global EARN" and, together with the DTC Global EARN, the
"Global EARNs").
Both the DTC Global EARN and the European Global EARNs will be deposited,
until all obligations of EIB under the EARNs are satisfied, with a custodian
and common depositary (the "EARN Depositary") for DTC, Euroclear Bank
S.A./N.V., as operator of the Euroclear System ("Euroclear") and Clearstream
Banking, societe anonyme, Luxembourg ("Clearstream, Luxembourg"). Your
beneficial interests in the Global EARNs will be represented through accounts
of financial institutions acting on behalf of beneficial owners as direct and
indirect participants in DTC, Euroclear and Clearstream, Luxembourg.
REGISTRATION
When the Global EARNs are issued, EIB expects that Euroclear, Clearstream,
Luxembourg and DTC or its nominee will credit on their book-entry registration
and transfer system the respective principal amounts of the EARNs represented
by the Global EARNs to the accounts of persons that have accounts with
Euroclear, Clearstream, Luxembourg and DTC or its nominee ("participants"),
respectively. The accounts to be credited shall be designated by the primary
dealers and dealers. Ownership of beneficial interests in the Global EARNs
will be limited to participants or persons that may hold interests through
participants. Your beneficial interests will not be held in definitive form.
Ownership of beneficial interests in the Global EARNs will be shown on, and
the transfer of that ownership will be effected only through, records
maintained by Euroclear, Clearstream, Luxembourg, and DTC or its nominee (with
respect to interests of participants) and on the records of participants (with
respect to interests of persons other than participants). If you are an owner
of beneficial interests in the Global EARNs (and you are not a participant)
you will not receive written confirmation from Euroclear, Clearstream,
Luxembourg or DTC of your purchases. Each beneficial owner is entitled to
receive upon request written confirmation providing details of the transaction
as well as periodic statements of its holdings from Euroclear, Clearstream,
Luxembourg and DTC (if the beneficial owner is a participant) or from the
participant through which the beneficial owner entered into the transaction
(if the beneficial owner is not a participant).
The laws of some states of the United States require that certain purchasers
of securities take physical delivery of the securities in definitive form.
These laws may impair the ability to own, transfer or pledge beneficial
interests in the Global EARNs.
PAYMENTS OF INTEREST AND PAYMENTS AT MATURITY
Any payment of principal or interest due on the EARNs on any interest payment
date or at maturity will be made available by EIB to the Fiscal Agent or any
Paying Agent on or before the date on which the holder of an EARN could claim
the relevant payment. On the respective payment date, the Fiscal Agent and/or
any Paying Agent will make such payments to Euroclear, Clearstream, Luxembourg
and DTC or its nominee, as the case may be, in accordance with arrangements
between the Fiscal Agent and/or any Paying Agent and Euroclear, Clearstream,
Luxembourg and DTC or its nominee. Euroclear, Clearstream, Luxembourg and DTC
or its nominee, upon receipt of any payment of principal or interest, will
credit participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the Global EARNs as
shown on the records of Euroclear, Clearstream, Luxembourg and DTC or its
nominee, and such payments will be the responsibility of such clearing
systems. Payments by participants to owners of beneficial interests in the
Global EARNs held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name",
and will be the responsibility of such participants. Interest payments shall
be made on each Interest Payment Date to the holders of EARNs as at the close
of business on the 10th calendar day immediately preceding such Interest
Payment Date (the "Record Date"). The Record Date may be changed by agreement
among EIB, the Fiscal Agent and all applicable securities clearing systems.
Neither EIB nor the Fiscal Agent nor any Paying Agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global EARNs
or for maintaining, supervising or reviewing any records relating to these
beneficial ownership interests.
PROOF OF OWNERSHIP
So long as a depositary, or its nominee, is the registered owner or holder, as
the case may be, of a Global EARN, the depositary or the nominee, as the case
may be, will be considered the sole owner and holder of the EARNs represented
by the Global EARNs for all purposes of the EARNs. If you are an owner of
beneficial interests in the Global EARNs, you will not be entitled to have the
EARNs represented by the Global EARNs registered in your name and you will not
receive or be entitled to receive physical delivery of definitive EARNs in
bearer form. Accordingly, each person owning a beneficial interest in the
Global
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EARNs must rely on the procedures of Euroclear, Clearstream, Luxembourg and
DTC or its nominee and, if the person is not a participant, on the procedures
of the participant through which such person owns its interest, to exercise
any rights of a holder of EARNs.
TRANSFERS OF THE GLOBAL EARNS
The Global EARNs cannot be transferred without the prior written consent of
EIB and except in combination and as a whole by the EARN Depositary to another
custodian and common depositary for the Global EARNs or to a successor of such
other custodian and common depositary, provided that such subsequent custodian
and common depository or successor, as the case may be, expressly agrees to
abide by such restrictions to transfer.
DTC, EUROCLEAR AND CLEARSTREAM, LUXEMBOURG
DTC has informed us that:
DTC is a limited-purpose trust company organised under the laws of the State
of New York, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provision of Section 17A of the Exchange
Act.
DTC was created to hold securities of its participants and to facilitate the
clearance and settlement of securities transactions among its participants in
such securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
brokers and dealers (including underwriters), banks, trust companies, clearing
corporations and certain other organisations, some of whom (and/or their
representatives) own DTC.
Access to the DTC book-entry system is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
DTC agrees with and represents to its participants that it will administer its
book-entry system in accordance with its rules and by-laws and requirements of
law.
Euroclear and Clearstream, Luxembourg have informed us that:
Euroclear and Clearstream, Luxembourg each hold securities for their customers
and facilitate the clearance and settlement of securities transactions by
electronic book-entry transfer between their respective account holders.
Euroclear and Clearstream, Luxembourg provide various services including
safekeeping, administration, clearance and settlement of internationally
traded securities and securities lending and borrowing.
Euroclear and Clearstream, Luxembourg also deal with domestic securities
markets in several countries through established depository and custodial
relationships.
Euroclear and Clearstream, Luxembourg have established an electronic bridge
between their two systems across which their respective participants may
settle trades with each other.
Euroclear and Clearstream, Luxembourg customers are world-wide financial
institutions including underwriters, securities brokers and dealers, banks,
trust companies and clearing corporations. Indirect access to Euroclear and
Clearstream, Luxembourg is available to other institutions which clear through
or maintain a custodial relationship with an account holder of either system.
THE FOLLOWING ARRANGEMENTS WILL APPLY TO THE EARNS:
Initial settlement for the EARNs will be made in immediately available euro
funds (i.e., for value on the date of delivery of the EARNs). Dealers are
prepared to arrange for currency conversions into euro to enable investors to
make payment in euro. See "Currency Conversions and Foreign Exchange Risks".
If you elect to hold your EARNs through DTC, you will have to follow the
settlement practices applicable to U.S. corporate debt obligations. The
securities custody accounts of investors will be credited with their holdings
on the settlement date against payment in same-day funds within DTC, if these
payments are effected in U.S. dollars, or, if these payments are not effected
in U.S. dollars, free of payment (in such case, separate payment arrangements
outside of DTC are required to be made).
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Investors electing to hold their EARNs through Euroclear or Clearstream,
Luxembourg accounts will follow the settlement procedures applicable to
conventional eurobonds.
Your beneficial interests in the Global EARNs will be represented, and
transfers of these beneficial interests will be effected, through book-entry
accounts of financial institutions acting on behalf of beneficial owners as
direct and indirect participants in DTC, Euroclear or Clearstream, Luxembourg.
Investors may elect to hold interests in the EARNs through any of DTC,
Euroclear or Clearstream, Luxembourg if they are participants of these
systems, or indirectly through organisations which are participants in these
systems.
All EARNs will be recorded in a register maintained by the Fiscal Agent. The
Fiscal Agent will be responsible for:
maintaining a record of the aggregate holdings of all outstanding EARNs
evidenced by the DTC Global EARN and the European Global EARN;
registering transfers between DTC, on the one hand, and Euroclear or
Clearstream, Luxembourg, on the other hand;
ensuring that payments of principal and interest in respect of the EARNs
received by the Fiscal Agent from EIB are duly credited to the holders of the
EARNs; and
transmitting to EIB any notices from the holders of the EARNs.
TRADING BETWEEN EUROCLEAR AND/OR CLEARSTREAM, LUXEMBOURG ACCOUNTHOLDERS
Secondary market sales of book-entry interests in the EARNs held through
Euroclear or Clearstream, Luxembourg to purchasers of book-entry interests in
the EARNs through Euroclear or Clearstream, Luxembourg will be conducted in
accordance with the normal rules and operating procedures of Euroclear and
Clearstream, Luxembourg and will be settled using the procedures applicable to
conventional eurobonds.
TRADING BETWEEN DTC PARTICIPANTS
Secondary market sales of book-entry interests in the EARNs between DTC
participants will occur in the ordinary way in accordance with DTC rules and
will be settled using the procedures applicable to United States corporate
debt obligations in DTC's Same Day Funds Settlement System.
TRADING BETWEEN DTC SELLER AND EUROCLEAR/CLEARSTREAM, LUXEMBOURG PURCHASER
When book-entry interests in EARNs are to be transferred from the account of a
DTC participant holding a beneficial interest in any DTC Global EARN to the
account of a Euroclear or Clearstream, Luxembourg accountholder wishing to
purchase a beneficial interest in any European Global EARN, the DTC
participant will deliver instructions for delivery to the relevant Euroclear
or Clearstream, Luxembourg accountholder to DTC by 3:00 p.m. New York City
time, on the settlement date. On the settlement date, the EARN Depositary, or
any successor custodian and common depositary, will (i) decrease the amount of
EARNs evidenced by the DTC Global EARN, (ii) increase the amount of EARNs
evidenced by the European Global EARN and (iii) advise the Fiscal Agent and
the Registrar accordingly. Book-entry interests will be delivered to Euroclear
or Clearstream, Luxembourg, as the case may be, for credit to the relevant
accountholder on the first business day following the settlement date. The
record date for payment of interest shall be determined in the manner set
forth above under "Description of EARNs-Interest."
TRADING BETWEEN EUROCLEAR/CLEARSTREAM, LUXEMBOURG SELLER AND DTC PURCHASER
When book-entry interests in the EARNs are to be transferred from the account
of a Euroclear or Clearstream, Luxembourg accountholder to the account of a
DTC participant wishing to purchase a beneficial interest in any DTC Global
EARN, the Euroclear or Clearstream, Luxembourg participant must send delivery
instructions to Euroclear by 10:00 a.m. Brussels time for custody exchange
instructions received by telex and by 3:00 p.m. Brussels time for custody
exchange instructions received through SWIFT or Euclid and to Clearstream,
Luxembourg by 7:45 p.m. Luxembourg time, one business day prior to the
settlement date. Euroclear or Clearstream, Luxembourg, as the case may be,
will in turn transmit appropriate instructions to the EARN Depositary, or any
successor custodian and common depositary, and the Fiscal Agent to arrange
delivery to the DTC participant on the settlement date. On the settlement
date, the EARN Depositary, or any successor custodian and common depositary,
will (i) deliver such book-entry interests in the EARNs to the relevant
account of the DTC participant, (ii) decrease the amount of EARNs evidenced by
the European Global EARN, (iii) increase the amount of EARNs evidenced by the
DTC Global EARN and (iv) advise the Fiscal Agent and the Registrar
accordingly. The record date for payment of interest will be determined in the
manner set forth above under "Description of EARNs-Interest."
Although the above sets out the procedures of Euroclear, Clearstream,
Luxembourg and DTC in order to facilitate the transfers of interests in the
EARNs among participants of DTC, Clearstream Luxembourg and Euroclear, neither
of Euroclear, Clearstream, Luxembourg or DTC is under any obligation to
perform or continue to perform such procedures and such procedures may be
discontinued at any time.
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None of EIB, any agent or manager or any affiliate of any of the above, or any
person by whom any of the above is controlled for the purposes of the
Securities Act, will have any responsibility for the performance by DTC,
Euroclear, Clearstream, Luxembourg or their respective direct or indirect
participants or accountholders or their respective obligations under the rules
and procedures governing their operations or for the sufficiency for any
purpose of the arrangements described above.
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CURRENCY CONVERSIONS AND FOREIGN EXCHANGE RISKS
CURRENCY CONVERSIONS
Initial purchasers are required to make payments in euros. Dealers are prepared
to arrange for currency conversions into euros to enable investors to make
payments in euros. Each such conversion will be made by such Dealer on such
terms and subject to such conditions, limitations and charges as such dealer may
from time to time establish in accordance with its regular foreign exchange
practices, and subject to applicable laws and regulations. All costs of
conversion will be borne by such investors. See "-Foreign Exchange Risks".
Notwithstanding the payment provisions described under "Description of
Securities-Payments" above, investors who hold beneficial interests in the
EARNs, directly or indirectly, through DTC will be paid in U.S. dollars
converted from such payments in euros by the Fiscal Agent, unless a registered
holder, on behalf of any such owner of beneficial interests, elects to receive
payments in euros. All costs of conversion, if any, will be borne by holders
of beneficial interests in the DTC Global EARN receiving U.S. dollar payments
by deduction from those payments. The U.S. dollar amount of any payment of
principal or interest to be received by such a registered holder not electing
to receive payments in euros, as the case may be, will be based on the Fiscal
Agent's bid quotation, at or prior to 11:00 a.m., New York time, on the second
New York Business Day (as defined below) preceding the applicable payment
date, for the purchase of U.S. dollars with euros, for settlement on such
payment date. If this bid quotation is not available, all such payments will
be made in euros. As long as EARNs continue to be represented by the DTC
Global EARN, euros converted into U.S. dollars will be paid to Cede & Co. for
payment to participants in DTC (each a "DTC Participant") in accordance with
customary procedures established from time to time by DTC.
An owner of a beneficial interest in the DTC Global EARN may receive payment
in respect of principal of or interest on the EARNs in euros, by notifying the
DTC Participant through which its beneficial interest in the DTC Global EARN
is held on or prior to the Record Date of (i) such investor's election to
receive such payment in euros, and (ii) wire transfer instructions to an
account entitled to receive the relevant payment. The DTC Participant must
notify DTC of such election and wire transfer instructions on or prior to the
second New York Business Day after the Record Date for any payment of interest
and on or prior to the eighth day prior to the payment of principal. DTC will
notify the Fiscal Agent of such election and wire transfer instructions on or
prior to the fourth New York Business Day after the Record Date for any
payment of interest and on or prior to the sixth day prior to the payment of
principal. If complete instructions are received by the DTC Participant and
forwarded by the DTC Participant to DTC and by DTC to the Fiscal Agent on or
prior to such dates, the investor will receive payment in euros, outside DTC;
otherwise only U.S. dollar payments will be made by the Fiscal Agent. All
costs of such payment by wire transfer will be borne by registered holders
receiving such payments by deduction from such payments.
A "New York Business Day" means a day all banking institutions are not
authorized or obligated by law or executive order to be closed in The City of
New York.
Investors may be subject to foreign exchange risks as to payments of principal
and interest that may have important economic and tax consequences to them.
For further information as to such consequences, see "-Foreign Exchange Risks"
below.
FOREIGN EXCHANGE RISKS
An investment in the EARNs entails significant risks not associated with a
similar investment in a security denominated and payable in the currency of
the country in which the purchaser is resident or the currency in which the
purchaser conducts its business or activities or maintains its accounts (the
"home currency"). Such risks include, without limitation, the possibility of
significant changes in rates of exchange between the home currency and the
euro. Such risks generally depend on events over which EIB has no control,
such as economic and political events and the supply of and demand for euros
and the home currency. In recent years, rates of exchange for certain
currencies have been highly volatile and such volatility may be expected to
continue in the future. Fluctuations in any particular exchange rate that have
occurred in the past are not necessarily indicative, however, of fluctuations
in such rate that may occur during the term of the EARNs. For additional
information regarding exchange rates, see the Notes to the Financial
Statements in Exhibit I to EIB's Annual Reports on Form 18-K referred to
above. Depreciation of the euro against the relevant home currency could
result in a decrease in the effective yield of such EARN below its coupon rate
and, in certain circumstances, could result in a loss to the investor on a
home currency basis.
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UNITED STATES TAXATION
General
This section summarizes the material U.S. tax consequences to holders of EARNs.
It represents the views of our counsel, Cravath, Swaine & Moore. However, the
discussion is limited in the following ways:
o The discussion only covers you if you buy your EARNs in the initial
offering at the initial offering price to the public.
o The discussion only covers you if your functional currency is the U.S.
dollar and you hold your EARNs as a capital asset (that is, for
investment purposes), and if you do not have a special tax status.
o The discussion does not cover tax consequences that depend upon your
particular tax situation in addition to your ownership of EARNs. We
suggest that you consult your tax advisor about the consequences of
holding EARNs in your particular situation.
o The discussion is based on current law. Changes in the law may change the
tax treatment of the EARNs.
o The discussion does not cover state, local or foreign law.
o The discussion generally does not apply to you if you are a Non-U.S.
Holder of EARNs (as defined below) and if you are a bank making a loan in
the ordinary course of its business.
o We have not requested a ruling from the IRS on the tax consequences of
owning the EARNs. As a result, the IRS could disagree with portions of
this discussion.
IF YOU ARE CONSIDERING BUYING EARNS, WE SUGGEST THAT YOU CONSULT YOUR TAX
ADVISOR ABOUT THE TAX CONSEQUENCES OF HOLDING THE EARNS IN YOUR PARTICULAR
SITUATION. IN ADDITION, WITH RESPECT TO EACH ISSUE OF EARNS, THE FOLLOWING
DISCUSSION WILL BE SUPPLEMENTED AND/OR REPLACED BY THE DESCRIPTION OF THE
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES SET FORTH IN THE
APPLICABLE PROSPECTUS SUPPLEMENT.
TAX CONSEQUENCES TO U.S. HOLDERS
This section applies to you if you are a "U.S. Holder". A "U.S. Holder" is:
o an individual U.S. citizen or resident alien;
o a corporation, or entity taxable as a corporation, that was created under
U.S. law (federal or state); or
o an estate or trust whose world-wide income is subject to U.S. federal
income tax.
If a partnership holds EARNs, the tax treatment of a partner will generally
depend upon the status of the partner and upon the activities of the
partnership. If you are a partner of a partnership holding EARNs, we suggest
that you consult your tax advisor.
Interest
All holders of EARNs will be taxable on the U.S. dollar value of euros payable
as interest on the EARNs, whether or not they elect to receive payments in
euros. If you receive interest in the form of U.S. dollars, you will be
considered to have received interest in the form of euros and to have sold
those euros for U.S. dollars. For purposes of this discussion, "spot rate"
generally means a currency exchange rate that reflects a market exchange rate
available to the public for euros.
o If you are a cash method taxpayer (including most individual holders),
you will be taxed on the value of the euros when you receive them (if you
receive euros) or when you are deemed to receive them (if you receive
U.S. dollars). The value of the euros will be determined using the "spot
rate" in effect at such time.
o If you are an accrual method taxpayer, you will be taxed on the value of
the euros as the interest accrues on the EARNs. In determining the value
of the euros for this purpose, you may use the average foreign currency
exchange rate during the relevant interest accrual period (or, if that
period spans two taxable years, during the portion of the interest
accrual period in the relevant taxable year). The average rate for an
accrual period (or partial period) is the simple average of the spot
rates for each business day of such period, or other average exchange
rate for the period reasonably derived and consistently applied by you.
When interest is actually paid, you will generally also recognize
exchange gain or loss, taxable as ordinary income or loss, equal to the
difference between (a) the value of the euros received as interest, as
translated into
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U.S. dollars using the spot rate on the date of receipt, and (b) the U.S.
dollar amount previously included in income with respect to such payment.
If you receive interest in the form of U.S. dollars, clause (a) will be
calculated on the basis of the value of the euros you would have received
instead of the U.S. dollars. If you do not wish to accrue interest income
using the average exchange rate, certain alternative elections may be
available.
o Your tax basis in the euros you receive (or are considered to receive) as
interest will be the aggregate amount reported by you as income with
respect to the receipt of the euros. If you receive interest in the form
of euros and subsequently sell those euros, or if you are considered to
receive euros and those euros are considered to be sold for U.S. dollars
on your behalf, additional tax consequences will apply as described in
"Sale of euros".
o If you hold EARNs issued at a price less than their redemption price, you
may be subject to special rules relating to debt instruments bearing
"original issue discount" and you should consult the appropriate
Prospectus Supplement for a discussion of the material United States
federal income tax consequences relating to such EARNs.
Sale or Retirement of EARNs
On the sale or retirement of your EARNs:
o If you receive the principal payment on your EARNs in the form of U.S.
dollars, you will be considered to have received the principal in the
form of euros and to have sold those euros for U.S. dollars.
o You will have taxable gain or loss equal to the difference between the
amount received or deemed received by you and your tax basis in the
EARNs. If you receive (or are considered to receive) euros, those euros
are valued for this purpose at the spot rate of the euros. Your tax basis
in the EARNs is the U.S. dollar value of the euros amount paid for the
EARNs, determined on the date of purchase.
o Any such gain or loss (except to the extent attributable to foreign
currency gain or loss) will be capital gain or loss, and will be long
term capital gain or loss if you held the EARNs for more than one year.
o You will realize foreign currency gain or loss to the extent the U.S.
dollar value of the euros paid for the EARNs, based on the spot rate at
the time you dispose of the EARNs, is greater or less than the U.S.
dollar value of the euros paid for the EARNs, based on the spot rate at
the time you acquired the EARNs. Any resulting foreign currency gain or
loss will be ordinary income or loss. You will only recognize such
foreign currency gain or loss to the extent you have gain or loss,
respectively, on the overall sale or retirement of the EARNs.
o If you sell an EARN between interest payment dates, a portion of the
amount you receive reflects interest that has accrued on the EARNs but
has not yet been paid by the sale date. That amount is treated as
ordinary interest income and not as sale proceeds.
o Your tax basis in the euros you receive (or are considered to receive) on
sale or retirement of the EARNs will be the value of euros reported by
you as received on the sale or retirement of the EARNs. If you receive
euros on retirement of the EARNs and subsequently sell those euros, or if
you are considered to receive euros on retirement of the EARNs and those
euros are considered to be sold for U.S. dollars on your behalf, or if
you sell the EARNs for euros and subsequently sell those euros,
additional tax consequences will apply as described in "Sale of euros".
Sale of euros
O If you receive (or are considered to receive) euros as principal or
interest on an EARN, and you later sell (or are considered to sell) those
euros for U.S. dollars, you will have taxable gain or loss equal to the
difference between the amount of U.S. dollars received and your tax basis
in the euros. In addition, when you purchase an EARN in euros, you will
have taxable gain or loss if your tax basis in the euros is different
from the U.S. dollar value of the euros on the date of purchase. Any such
gain or loss is foreign currency gain or loss taxable as ordinary income
or loss.
Information Reporting and Backup Withholding
Under the tax rules concerning information reporting to the IRS:
o Assuming you hold your EARNs through a broker or other securities
intermediary, the intermediary must provide information to the IRS and to
you on IRS Form 1099 concerning interest and retirement proceeds on your
EARNs, unless an exemption applies.
o Similarly, unless an exemption applies, you must provide the intermediary
with your Taxpayer Identification Number for its use in reporting
information to the IRS. If you are an individual, this is your social
security number. You are also
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required to comply with other IRS requirements concerning information
reporting.
o If you are subject to these requirements but do not comply, the
intermediary must withhold at a rate that is not generally in excess of
31% of all amounts payable to you on the EARNs (including principal
payments). If the intermediary withholds payments, you may use the
withheld amount as a credit against your federal income tax liability.
o All individuals are subject to these requirements. Some holders,
including all corporations, tax-exempt organisations and individual
retirement accounts, are exempt from these requirements.
Tax Consequences to Non-U.S. Holders
This section applies to you if you are a "Non-U.S. Holder." A "Non-U.S.
Holder" is:
o an individual that is a nonresident alien;
o a corporation or entity taxable as a corporation for U.S. federal income
tax purposes organised or created under non-U.S. law; or
o an estate or trust that is not taxable in the U.S. on its worldwide
income.
Withholding Taxes
Payments of principal and interest on the EARNs will not be subject to U.S.
withholding taxes.
Income Taxes
Generally, you will not be subject to U.S. federal income tax on receipt of
interest on the EARNs or on any gain from a sale or disposition of the EARNs.
You will, however, be subject to U.S. federal income tax on such interest and
gains:
o if you conduct a United States trade or business through an office or
fixed place of business in the United States to which the interest or
sale is attributable;
o if you are an individual, you are present in the United States 183 days
during the year in which you dispose of an EARN and certain other
conditions are met; and
o if you are a corporation, you may be subject to an additional "branch
profits tax" on your earnings that are effectively connected with your
U.S. trade or business (including earnings from the EARNs).
Estate Taxes
If you are an individual, your EARNs will not be subject to U.S. estate tax
when you die. However, this rule only applies if, at your death, payments on
the EARNs were not connected to a trade or business that your were conducting
in the U.S. and you did not own 10% or more of the voting stock of EIB.
Information Reporting and Backup Withholding
U.S. rules concerning information reporting and backup withholding are
described above. These rules apply to Non-U.S. Holders as follows:
o Principal and interest payments you receive will be automatically exempt
from the usual rules if you provide the appropriate tax certifications.
The exemption does not apply if the recipient of the applicable
certification knows or has reason to know it is false. In addition,
interest payments made to you may be reported to the IRS on Form 1042-S.
o Sale proceeds you receive on a sale of your EARNs through a broker may be
subject to information reporting and/or backup withholding if you are not
eligible for an exemption. In particular, information reporting and
backup reporting may apply if you use the U.S. office of a broker, and
information reporting (but not generally backup withholding) may apply if
you use the foreign office of a broker that has certain connections to
the U.S. We suggest that you consult your tax advisor concerning
information reporting and backup withholding on a sale.
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VALIDITY OF THE SECURITIES
The validity of the EARNs will be passed upon for EIB by the Legal Affairs
Directorate of EIB and by Cravath, Swaine & Moore, New York, New York, United
States counsel for EIB, and for the Dealers by Arendt & Medernach, Luxembourg
and by Sullivan & Cromwell, New York, New York. All statements in this
Prospectus with respect to the Treaty and the Statute have been passed upon by
the Legal Affairs Directorate of EIB, and are included upon its authority. In
rendering their opinions, Cravath, Swaine & Moore and Sullivan & Cromwell will
rely as to matters of the law of the European Community and the Member States
upon the opinion of the Legal Affairs Directorate of EIB, and as to matters of
the law of the Grand Duchy of Luxembourg upon the opinion of Arendt &
Medernach.
EXPERTS
The financial statements incorporated in this Prospectus by reference to EIB's
Annual Reports on Form 18-K for the years ended December 31, 2000 and December
31, 2001 have been incorporated in reliance on the reports of Ernst & Young,
societe anonyme, independent accountants, given on the authority of such firm as
experts in auditing and accounting.
21
ADDITIONAL INFORMATION
A Registration Statement with respect to the EARNs has been filed by us with
the Commission under the Securities Act and the rules and regulations
promulgated thereunder. Additional information concerning EIB and the EARNs,
including opinions of counsel in respect of the validity of the EARNs, may be
found in the Registration Statement, including various exhibits attached to
it, which may be inspected at the offices of the Commission.
Nothing under "description of Securities-Governing Law and Jurisdiction" shall
serve as a limitation on claims that may be brought under the United States
Federal securities laws. The United States Foreign Sovereign Immunities Act of
1976 may provide an effective means of service and preclude the assertion of
sovereign immunity in actions brought under the United States Federal
securities laws. With respect to execution, such Act provides that commercial
property located in the United States of an agency or instrumentality of a
foreign state may be levied upon for the satisfaction of judgments rendered
against it by United States courts in connection with its commercial
activities. However, the property and assets of EIB within the Member States
are not subject to attachment or to seizure by way of execution without the
authorization of the Court of Justice. Notwithstanding the foregoing, any
claims against EIB under the EARNs may be brought only in the manner set forth
above under "description of Securities-Governing Law and Jurisdiction".
Attention is drawn to the following information, some of which is required by
the rules of the Luxembourg Stock Exchange:
(1) EIB has obtained all necessary consents, approvals and authorisations in
connection with the setting up of the EARNs Facility. Each issue of EARNs
shall be authorized in accordance with the normal procedures of EIB.
(2) EARNs have been accepted for clearance through the Euroclear and
Clearstream, Luxembourg systems and may be accepted for clearance through
such other clearing system as may be provided in the relevant Prospectus
Supplement. The Common Code and the International Securities
Identification Number (ISIN) for each series of EARNs will be set out in
the relevant Prospectus Supplement.
(3) The Luxembourg Stock Exchange has allocated to the facility the number
12146 for listing purposes. Application will be made for the EARNs issued
under the facility to be listed on the Luxembourg Stock Exchange.
Application may also be made to list a series of EARNs on one or more
other stock exchanges in the European Community or elsewhere.
(4) So long as EARNs are capable of being issued under the Facility, copies
of the following documents will, when published, be available from the
registered office of EIB and from the specified office of the Fiscal
Agent for the time being in Luxembourg:
(i) the Statute of EIB;
(ii) the most recently published audited annual financial statements of
EIB and additional financial information, if any , filed by EIB with
securities market authorities;
(iii) the Dealer Agreement and the Agency Agreement;
(iv) a copy of this Offering Circular;
(v) any future information memoranda, prospectuses, offering circulars
and supplements including Pricing Supplements (save that a Pricing
Supplement relating to an unlisted EARN will only be available for
inspection by a holder of such EARN and such holder must produce
evidence satisfactory to the relevant Paying Agent as to its
holding of EARNs and identity) to this Offering Circular and any
other documents incorporated herein or therein by reference.
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(5) The Board of Governors of EIB has decided in the Annual Meeting held on 4
June 2002 as follows:
A. That the capital of EIB be increased as follows:
o the capital subscribed by the Member States shall be raised pro
rata, with effect from 1 January 2003, by 50 percent from EUR
100 000 million to EUR 150 000 million, so as to arrive at the
following amounts:
EUR
Germany 26 649 532 500
France 26 649 532 500
Italy 26 649 532 500
United Kingdom 26 649 532 500
Spain 9 795 984 000
Belgium 7 387 065 000
Netherlands 7 387 065 000
Sweden 4 900 585 500
Denmark 3 740 283 000
Austria 3 666 973 500
Finland 2 106 816 000
Greece 2 003 725 500
Portugal 1 291 287 000
Ireland 935 070 000
Luxembourg 187 015 500
TOTAL 150 000 000 000
o Additional Reserves of EIB in the amount of EUR 3 717 059 887
be considered as free reserves;
o of the free reserves, EUR 1 500 000 000 be transformed into
paid-in capital by way of transfer from EIB's Additional
Reserves to its capital;
o with effect from 1 January 2003 this capital shall be deemed to
be part of the subscribed and paid-in capital, so increasing
EIB's paid-in capital from EUR 6 000 million to EUR 7 500
million;
o of the free reserves, the balance of EUR 2 217 059 887 be
transferred to EIB's Statutory Reserve Fund;
23
B. That EIB's Statute shall be amended as follows:
o As from 1 January 2003, the first subparagraph of Article 4(1)
of EIB's Statute shall read:
"The capital of the Bank shall be one hundred and fifty
thousand million (150,000,000,000) euro, subscribed by the
Member States as follows:
Germany 26 649 532 500
France 26 649 532 500
Italy 26 649 532 500
United Kingdom 26 649 532 500
Spain 9 795 984 000
Belgium 7 387 065 000
Netherlands 7 387 065 000
Sweden 4 900 585 500
Denmark 3 740 283 000
Austria 3 666 973 500
Finland 2 106 816 000
Greece 2 003 725 500
Portugal 1 291 287 000
Ireland 935 070 000
Luxembourg 187 015 500
TOTAL 150 000 000 000
o As from 1 January 2003, Article 5(1) of EIB's Statute shall
read:
"The subscribed capital shall be paid in by Member States to
the extent of 5 percent on average of the amounts laid down in
Article 4(1)".
C. To appropriate the balance of the profit and loss account for the
year ended 31 December 2001, which, after transfer of EUR 145 000
000 to the Fund for general banking risks, amounted to EUR 1 311 444
923, as follows:
o EUR 750 000 000 to the new special supplementary reserve for
venture capital operations and operations under the Structured
Finance Facility. Transfers, in whole or in part, from this
reserve to the funds allocated to venture capital operations
and to the Structured Finance Facility will be effected on a
decision by the Governors, it then being possible, on a
decision by the Governors, to appropriate the amounts not
transferred to these funds to another use and/or to the
Additional Reserves.
o deduction of EUR 908 728 from the funds allocated to venture
capital operations following transfer of the net result on
these operations as at 31 December 2001.
o the balance of EUR 562 353 651 to the Additional Reserves.
(6) The member states of the European Union are considering proposals to
adopt a directive regarding the taxation of savings income. Under the
proposals, member states would be required to provide to the tax
authorities of another member state details of payments of interest made
by a person within its jurisdiction to an individual resident in that
other member state, subject to the right of certain member states to opt
instead for a withholding system for a transitional period in relation to
such payments. These proposals are under discussion and the terms of any
directive actually adopted may differ substantially from such proposals.
Investors should rely on their own analysis of the proposals and should
take advice from appropriate legal or taxation professionals.
24
(7) On 12 September, 2002 EIB had the following EARNs outstanding:
EARNs 4.50% due 15th February, 2003 EUR 3,359,796,072
EARNs 5.25% due 15th April, 2004 EUR 6,188,037,320
EARNs 3.875% due 15th April, 2005 EUR 5,000,000,472
EARNs 4.875% due 15th April, 2006 EUR 5,000,000,000
EARNs 4% due 15th January 2007 EUR 5,000,000,000
EARNs 5.75% due 15th February, 2007 EUR 2,577,649,892
EARNs 5% due 15th April, 2008 EUR 6,082,200,000
EARNs 4% due 15th April, 2009 EUR 4,538,326,000
EARNs 5.625% due 15th October, 2010 EUR 3,000,000,000
EARNs 5.375% due 15th October, 2012 EUR 5,000,000,000
(8) Market Making and Electronic Trading
Some Dealers have entered into a market making arrangement with EIB.
Quotations can be found on "EIBEARN01" pages in Reuters. All EARNs have been
admitted for trading on electronic trading systems managed, directly or
indirectly, by MTS-Societa` per il Mercato dei Titoli di Stato SpA. Some Dealers
participate in such electronic trading systems in relation to EARNs in
accordance with the procedures laid down by MTS in consultation with them.
(9) Other than registration with the Commission, no action is being taken by
EIB, the Arrangers, the Dealers to permit a public offering of the EARNs,
or the distribution of any document, in or from any jurisdiction where
action would be required for such purpose. Accordingly, the EARNs may not
be directly or indirectly offered or sold or any offering circular,
prospectus, form of application, advertisement or other offering material
distributed or published in any country or jurisdiction or to persons
subject to any specific jurisdiction except in compliance with any
applicable laws or regulations. In particular, no representation is made
that the EARNs may be lawfully sold in compliance with any other applicable
registration requirements and neither EIB, the Arrangers nor any of the
Dealers assumes any responsibility for facilitating such sales.
Agents, Dealers and underwriters may be entitled under agreements entered
into with EIB to indemnification by EIB against certain civil
liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments which the agents, Dealers or
underwriters may be required to make in respect thereof. Agents, Dealers
and underwriters or their respective affiliates may engage in
transactions with or perform services for EIB in the ordinary course of
business.
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AUTHORIZED AGENT IN THE UNITED STATES
The Authorized Agent of EIB in the United States is:
Gunter O. Burghardt
Delegation of the European Commission
2300 M Street, N.W.
Washington, D.C. 20037
The information set forth herein, except the information appearing under the
heading "Plan of Distribution" is stated on the authority of the President of
EIB, in his duly authorized official capacity as President.
EUROPEAN INVESTMENT BANK
By:
-------------------------------
Name: Philippe Maystadt
Title: President
26
OFFICE OF EUROPEAN INVESTMENT BANK
100 Boulevard Konrad Adenauer
L-2950 Luxembourg
ARRANGERS
ABN AMRO BANK N.V. BNP PARIBAS
250 Bishopsgate 10 Harewood Avenue
London EC2M 4AA London NW1 6AA
FISCAL AGENT, PAYING AGENT AND CALCULATION AGENT
BNP PARIBAS LUXEMBOURG
10A Boulevard Royal
L-2093 Luxembourg
LUXEMBOURG LISTING AGENT
BNP PARIBAS LUXEMBOURG
10A Boulevard Royal
L-2093 Luxembourg
LEGAL ADVISORS
CRAVATH, SWAINE & MOORE LLP LINKLATERS
Worldwide Plaza Linklaters & Alliance
825 Eighth Avenue One Silk Street
New York, NY 10019-7475 London EC2Y 8HQ
SULLIVAN & CROMWELL LLP ARENDT & MEDERNACH
125 Broad Street 8-10, rue Mathias Hardt
New York, NY 1004-2498 L-2010 Luxembourg
II-2