March 22, 2017 / 3:57 PM / 4 months ago

Britain may have big Brexit bill to settle with EU Investment Bank

FILE PHOTO: European Investment Bank (EIB) President Werner Hoyer presents the EIB Group annual results at a news conference in Brussels, Belgium, January 24, 2017.Francois Lenoir/File Photo

BRUSSELS (Reuters) - Britain's bill for settling its financial position with the European Investment Bank after Brexit may be costly, the EIB's chairman said on Wednesday, calling for "civilized" divorce talks that could avoid such an outcome.

The cost could amount to as much as 65 billion euros ($70 billion), by some estimates. That would be above and beyond any other monies due to the European Union.

Britain is one of the four main shareholders of the bank, which provides finance and expertise for projects that contribute to European Union policy objectives.

It holds 16.1 percent of EIB shares, the same as Germany, France and Italy. But only EU member states can be EIB shareholders, meaning Britain must quit when it leaves the bloc.

Britain has in theory a right to receive a 16.1 percent share of the bank's capital once it leaves the EU, a report of the British House of Lords said in March, estimating that the British claim could be 10.19 billion euros ($11.02 billion), out of the bank's 63.3 billion euros of funds.

But Britain is also liable to cover its portion of the bank's debt, which amounts to 469 billion euros, EIB President Werner Hoyer said in a hearing at the economic affairs committee of the European Parliament.

"Britain has 16 percent of the shares and probably will want to have a countervalue of these shares when they leave. On the other hand, we also have contingency liabilities of (half a trillion) euros in which the United Kingdom participates with 16 percent," Hoyer told lawmakers.

If the 16.1 percentage rate was simply applied to the liabilities, Britain would end up with a 75.5 billion euro tab, from which its share of the bank's capital should be deducted, leaving a 65.3 billion euros bill with the EIB.

EU officials preparing to negotiate a Brexit treaty once Prime Minister Theresa May files for a formal divorce on March 29 cite a working hypothesis that London may have to pay up to 60 billion euros to cover outstanding commitments before leaving in 2019. This hypothesis does not include the potential EIB bill.

Civil Approach

The EIB also has outstanding loans of 457 billion euros, which could give Britain a claim on future profits, but Hoyer made no comment on this.

He urged negotiators to conduct talks "in a civilized way" and made clear that no figure is on the table at the moment, because talks will first focus on the "methodology" of the settlement rather than on concrete numbers.

Hoyer also said that the bank has a "huge number of assets" in Britain which will lose their legal protection once the country leaves the EU, causing the bank a big concern.

Over the past five years, the EIB has invested more than 30 billion euros in the British economy, mostly to finance infrastructure development in the energy, transport and telecommunications sectors.

In past weeks, Hoyer had hinted at the possibility of a change to the EIB statute to allow Britain to remain a member even after Brexit, but this option would need approval from London and the other 27 EU capitals.

He told lawmakers he will regret Britain's departure from the EU. "We will all look miserable after Brexit, the United Kingdom in particular."

Editing by Jeremy Gaunt

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