EU to lift EIB lending limit to 100 billion euros in defence push, sources say

By Marc Jones and Jan Strupczewski

LONDON/BRUSSELS, June 20 (Reuters) - EU governments have agreed to lift the annual spending of the bloc's powerful European Investment Bank (EIB) lending arm to 100 billion euros ($115 billion) this year and treble its funding for the EU's defence industry, said sources briefed on the plans.

The sources said the decision was approved at an EIB board meeting in Luxembourg ahead of a formal sign off expected by EU finance ministers later on Friday. They spoke on condition of anonymity because the information was not yet public.

The new 100 billion euro annual spending ceiling is more than 10 billion euros above the amount the EIB lent last year and 5 billion higher than 95 billion euros the bank's President Nadia Calvino set as a target at the start of the year.

It will also allow it to more than treble its funding for defence-related projects. The amount will go up 3.5 billion euros from 1 billion euros last year and be well above the 2 billion euros it had flagged would be spent back in January, the sources said.

The EIB is prohibited from investing directly in weapons or ammunition but it can lend for so-called "dual use" purposes, such as GPS systems or buildings and infrastructure for army bases.

It has signed off on funding for one such base in Lithuania near the border with Belarus where German troops are due to be permanently deployed on foreign soil for the first time since the Nazi military in World War II.

European nations are scrambling to ramp up their defence spending amid ongoing pressure from U.S. President Donald Trump who has signalled plans to reduce the decades-long U.S. security backstop for the continent.

It also comes just days before a NATO summit in The Hague where the alliance's members are under pressure to raise their defence commitments.

The increased EIB lending is set to funnel money into other areas as well, the sources said, including technology innovation and renewable energy.

It follows a mid-year review of its operational plan and comes after it got approval last year to raise its so-called gearing ratio, which sets out a nominal maximum for the amount of loans on its balance sheet as a percentage of its subscribed capital.

($1 = 0.8727 euros)