*

Funding limit of EU's lending arm boosted by over 10

billion

euros

*

3.5 billion euros to be spent of defence and security

*

Increase in spending comes days ahead of key NATO meeting

(Adds EIB president's confirmation in paragraphs 2-3, defence

funding context in 4-7)

By Marc Jones and Jan Strupczewski

LONDON/BRUSSELS, June 20 (Reuters) - EU governments

agreed on Friday to lift the annual lending of the bloc's

powerful European Investment Bank to 100 billion euros ($115

billion) this year and treble its funding for the EU's defence

industry.

The new annual lending 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.

"The governors have unanimously increased the financing

ceiling for 2025 to a record 100 billion euros, stepping up

financial support in three key areas: energy grids, with a

record target of 11 billion euros, security and defence with a

target of 3.5 billion euros, and TechEU, supporting Europe's

technological leadership," Calvino told reporters.

European nations are scrambling to ramp up their defence

spending amid pressure from U.S. President

Donald Trump

who has signalled plans to reduce the decades-long U.S.

security backstop for the continent.

The lending decision 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 lending limits will allow the EIB, the

EU's lending arm owned by EU governments, to more than treble

its funding for defence-related projects from 1 billion euros

last year and be well above the 2 billion euros it had flagged

would be spent back in January.

However, the bank's defence-related lending is only a

fraction of the hundreds of billions of euros that EU

governments are expected to spend on boosting their militaries

in the coming decade.

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, helicopters, drones, 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 World

War Two.

The increased EIB lending is set to funnel money into other

areas as well 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.

The EIB, the biggest multilateral lender in the world, will

pump 70 billion euros into the development of EU technology

firms over the next three years.

The programme, called Tech EU, aims to help Europe better

compete with China and the United States in the race for

cutting-edge tech like supercomputing, robotics and artificial

intelligence as well as renewable energy.

The 70 billion euros funding is to be split into 20 billion

euros for equity and quasi-equity, 40 billion euros for loans

and 10 billion for guarantees in 2025-2027.

The EIB cash is to mobilise 250 billion euros of private

investor funding and complement broader European Commission

efforts to support startups and higher risk ventures.

($1 = 0.8727 euros)