The European Investment Bank (EIB) has announced that it is lending $US40 million to Volkswagen Argentina S.A., a subsidiary of Volkswagen AG, to support investment for the production of gearboxes for passenger cars at its plant in Cordoba, Argentina.

The project will create around 1,000 new jobs in the region, modernising the company’s automotive parts operation and exporting to other Volkswagen car assembly operations, particularly in Brazil.

Full production is expected to be achieved by early 2002, said an EIB statement.

The eight-year EIB loan, with three-year grace period, will be guaranteed by a syndicate of banks including BHF-BANK Aktiengesellschaft, ING Bank N.V., Landesbank Hessen-Thüringen Girozentrale and Norddeutsche Landesbank Girozentrale.

Risks of currency non-transfer, expropriation, war and civil disturbance are covered by an EU budget guarantee.

The EIB has the right to lend up to Euro 2.48 billion ($US2.1 billion) in Asia and Latin America during 2000-2006, as part of the EU’s international development policy.