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

billion

euros -sources

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3.5 billion euros to be spent of defence and security

-sources

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Increase in spending comes days ahead of key NATO meeting

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)