BRUSSELS — European Investment Bank head Nadia Calviño wants to scrap rules that limit the amount of cash it can lend, as it steps up efforts to boost the EU’s defense industry amid Russia’s war on Ukraine and rebuild the war-ravaged country.

For the first time since its creation in 1958, the bank’s chief publicly supported getting rid of the lender’s so-called gearing ratio, which limits the percentage of EIB funding that can come from borrowing to 2.5 times of equity.

Officials hailed Calviño’s announcement as a “gamechanger.” Removing the threshold could allow the EIB to invest more money in climate projects — potentially replacing funding that is normally paid through the EU’s seven-year budget. EIB capital currently stands at €248 billion.

“If we remove this constraint … we can increase our ability to invest without any impact on Europe’s taxpayers,” Calviño said during an event in Brussels on Monday.

An EU diplomat who was granted anonymity to speak freely said that the EIB’s involvement “makes the whole thing (EU spending) more market-oriented.” In contrast to grants paid by national governments, the EIB only hands out money to firms that are expected to make a profit and pay back their loan.

Calviño on Monday ruled out raising more capital that would typically require a cash call on member country governments, which are the EIB’s shareholders.

It is not a coincidence that the bank’s readiness to step up investments comes as capitals signaled little appetite to put more money into the bloc’s €1.2 trillion cash pot.  

“We need to join forces with the European [Investment] Bank and it would be very natural if there is a close cooperation,” the EU’s Budget Commissioner Johannes Hahn said during a media briefing on Monday. 

The EU executive will put forward a formal proposal for the new budget in the summer of 2025, which will have to be unanimously approved by governments before the end of 2027. 

The EIB has already moved to boost its capacity to fund defense projects.

In April, the lender deleted a rule that prohibited it from lending to companies that derive over 50 percent of their revenues from the sale of military equipment. The bank has also pledged to cut red tape when handing out €6 billion earmarked for defense projects.

Calviño expressed confidence that the EU’s 27 finance ministers — who are the EIB’s shareholders — will sign off on the proposed change to the rules in a board of governors’ meeting in June.

Germany, however, is expected to oppose the recommendation.