financial institutions 2003– ifc €55 mm – eib €30 mm (gtd by hsbc & deniz) 18 ms, 2010...

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MS, 2010 Syndications and Co-financiers Meeting

12th Annual Syndications and Co-financiers Meeting

London 16th March 2010

Presentations will be posted to http://www.ebrd.com/oppor/syndi/meeting/index.htm

European Bank for Reconstruction and Development

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Manfred Schepers Vice President, Finance

Meeting the challenges of recovery London 16th March 2010

2


Agenda

EBRD response to the crisis

EBRD 2009 financial and operating performance

EBRD priorities for 2010

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EBRD today

AAA/Aaa multilateral development bank

The largest lender and private equity investor in the CEE region

Promoting transition and entrepreneurship in 29 countries from Central Europe to Central Asia 0.0

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36 offices in 30 countries, with more than half of our bankers based in the region

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2009 – A year of Crisis Response

Record investments - 55% increase to €8 billion

Lifeline to financial sector - by supporting banks we maintained lending to real economies

Funding the real economy - supported the corporate, energy and infrastructure sectors

Focus on key priorities - less advanced economies, Western Balkans and energy efficiency

Strong capital position and AAA rating – enabled proactive crisis response and attractive long-term funding

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Support for the Banking sector

• Joint IFI Action Plan – EBRD participated in €25 billion initiative with IMF, EIB, WB/IFC to provide bank liquidity and capital

• Support for systemic banks - supported 36 local banks and 33 subsidiaries of 16 regionally active EU based banking groups.

Local currency financing – reducing FX risk through local currency loans in AZN, GEL, KGS, KZT, MDL, PLN, RUB, TRY

Currency swap facilities – helped client banks to manage their short dated €, CHF, US$ FX swap rollovers

Providing bank capital – €760 million Tier 2 capital and T1 equity investments of over €340 million with 23 banks

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Providing funding for the real economy

Intense policy dialogue - ongoing contact with governments and regulatory authorities across the region

Enterprise Response Package - increased working capital and long-term financing in the absence of commercial sources

Support financing of trade - expand Trade Facilitation Programme to €1.5 billion

Maintain focus on the long-term projects - prevent abandonment or postponement of key infrastructure projects

Invest in Turkey - first projects signed with €150 million in energy efficiency and SME facilities

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Strong operational results in 2009

Record annual business volume of €8 billion

– 55% increase – compared to 2008 volume of €5.1 billion

– 311 projects in all the 29 countries of operation

– €5 billion to crisis response – 65% of ABV

– Record disbursements - €5.5 billion, up by 10%

Growth in Portfolio and Operating assets

– Portfolio grew 19% to €25.6 billion

– 1,490 projects

– Operating assets grew by 19% to €17.9 billion

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Continued portfolio and ABV* growth

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Strong performance in key areas

Private sector: key focus with share at 83% of business volume

Equity investments: 25% of ABV, including– €1.2 billion equity

– €900 million bank capital investments in spite of challenging market

Sustainable Energy Investments: – Up 34% to €1.3 billion

Western Balkans investments: – Up 36% to €727 million

Early Transition Countries: – Over €500 million in less advanced countries of Caucasus and Central Asia

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2009 Business Volume by Region

Russia31%

South-eastern Europe & Balkans

21%

Eastern Europe & Caucasus

18%

Central Asia7%

Turkey2%

Central Europe & Baltics21%

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2009 Business Volume by Sector

Equity Funds2%

Transport17%

Financial Institutions24%

Power & Energy12%

Property & Tourism3%

Telecoms Informatics & Media

1%

Municipal & Env Inf7%

Natural Resources9%

Manufacturing & Services9%

MSME Financing16%

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Case studies from 2010

Responding to the crisis

Financial institutions: supporting strategic and systemic institutions with debt and equity

Corporates: helping refinancing needs and promoting energy efficiency

Infrastructure: promoting continued reform and investment

Early Transition Countries: promoting investment in the less advanced economies

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EBRD: Key investments in BanksUniCredit Group Regionally EUR 432 mm snr/subUkrSibBank, Ukraine USD 100 mm subBank Aval, Ukraine USD 150 mm subBank Forum, Ukraine USD 80 mm subUkrexim, Ukraine USD 300 mm subErste Bank, Hungary EUR 100 mm snrVTB 24, Russia USD 150 mm snrBCR, Romania EUR 100 mm snrBanca Transilvanea, Romania EUR 100 mm snrBank St Petersburg Russia USD 75 mm subPromsvyazbank, Russia RUB 4.6 bn equityParex Bank, Latvia LVL 57.5 mm equity

… to name a few

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Integra, Russia – corporate crisis response: refinancing and debt restructuring

Integra is a leading independent provider of oil field services (OFS) and a manufacturer of oil drilling related equipment in Russia

USD 250 million syndicated A/B Senior Loan

A-loan: 5 yrs; B-Loan: 3 years

EBRD’s value-added: – Comprehensive solution, refinancing 1-year

debt falling due for repayment

– Supports an independent OFS company

– Supports improvements in energy efficiency

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OAO Russian Railways/RZD: Supporting Infrastructure Reform

RZD Russia’s largest commercial employer, with 1.3 million employees; – vertically integrated company managing

infrastructure and operating freight and passenger train services

EBRD Loan USD 500 mm; 10 years. The loan contributes to:– Balance sheet restructuring;

Supports sectoral reform – unbundling of freight operations into

separate companies – establishment of independent regulator– Energy efficiency programme to reduce

energy and carbon intensity of operations

http://eng.rzd.ru/isvp/public/rzdeng/fp?STRUCTURE_ID=704

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Rotor Wind Farm, Turkey: Commitment to Renewables

€45 mm loan for the financing a 135MW rotor wind farm being developed by ZorluEnerji

The largest wind farm in Turkey

The project builds on the Bank’s expertise in financing wind farms and demonstrates commitment to renewables

Joint financing with:

– IFC €55 mm

– EIB €30 mm (gtd by HSBC & Deniz)

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Agenda

The EBRD’s response to the crisis to date

The EBRD’s 2009 financial and operating performance

The priorities for 2010

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Summary Financial Results 2009

• Realised income €849 million - 2008 €849 million– Net interest income €582 million (2008: €667 million)

– Realised equity gains €98 million (2008: €423 million)

Net loss €746 million - 2008 €602 million

– Net unrealised equity losses €886 million (2008: €1.6 billion)

– Banking loan provisions €535 million (2008: €105 million)

Total reserves €6.3 billion - 2008 €6.6 billion

– Provisions for impairment €2.3 billion (2008: €1.2 billion)

– Unrealised gains €1.6 billion (2008: €1.8 billion)

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2009 revaluation and provision losses

• Net unrealised losses on equity of €886 million– Net unrealised losses on associate holdings and equity

derivatives of €630 million

– Net impairment charge on non-associates of €256 million

• Increase in Banking loan provisions of €535 million– General portfolio provisions €364 million due to project

downgrades, increased disbursements and provisioning rate

– Relatively modest specific provisions of €171 million

– Total loan provisions are 11.5% of total loan portfolio

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Equity portfolio is above cost

Fair value of total equity portfolio is €4.7 billion vs cost of €4.5 billion

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Impaired loans remain relatively low

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Non-performing loans are 2.3% of total outstanding loans

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Executed 2009 Borrowing Programme

2009 Borrowing Programme of €4.3 billion

– Executed in most challenging year on record

– Average maturity of 4.2 years

– Average funding cost at LIBOR less 31 basis points

– More than 25 bps lower than average MDB* benchmark pricing

2009 Local Currency Borrowing Programme €300 million

– New benchmark issues in RUB, RON

– 14 basis points below local currency MM benchmarks

– Extensive use of TCX** and fixed rate disbursements* MDB = Multilateral Development Bank** TCX = The Currency Exchange Fund

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A strong capital position

Financial strength and AAA rating underpinned by strong capital base and reserves

– Total capital resources at €26.3 billion vs total banking operating assets €17.9 billion, 147% of operating assets

– Total paid-in capital, reserves and provisions at €11.7 billion vs operating assets €17.9 billion, 65% of operating assets

– Required economic capital of €7.6 billion vs available economic capital of €11.7 billion

– High credit quality of callable capital with approximately 90% rated A-/A3 or better

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A strong and high quality liquidity position

Liquidity Policy incorporates two elements:

– a minimum net liquidity of 45% of its next three years’ net cash requirements (76% at end 2009).

– gross treasury liquid assets should equal at least 75% of committed but undisbursed project financing plus one year’s debt service (78% at end 2009)

€12.2 billion of liquid assets out of €32.5 billion balance sheet, 38% of total assets.

– Treasury liquid assets of high credit quality: 93% of Treasury assets investment grade.

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Financial efficiency and cost control

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Agenda

The EBRD’s response to the crisis to date

The EBRD’s 2009 financial and operating performance

The priorities for 2010

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The transition region in deep crisis; but is transition itself in crisis?

• How have market-oriented institutions and policy frameworks performed during the crisis?

• Are the development paradigms pursued by transition economies still attractive?

• How has the crisis affected ideas about the goals of transition, and how far away are countries from these goals?

• Is the transition process in crisis? Will the crisis lead to a backlash against reforms?

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Conclusion: Transition in Crisis?

Answer: a qualified “No”

Reforms and economic integration achieved over the last 15 years have proven resilient

At the same time, crisis has revealed pitfalls of the growth models in many countries in the region

– Risks associated with large capital inflows

– Limitations of commodity-based development

The way to address these pitfalls is to extend the transition agenda, not to replace it

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Key initiatives 2010

Sustainable Energy Initiative and climate change activities– Further increase climate change mitigation financing including

renewable energy, buildings and industrial energy efficiency

Focus on operations in smaller economies:– Increase investments in Early Transition Countries and

Western Balkans

– ETC hub to be established in Istanbul

Focus on corporate – Industry, Commerce and Agribusiness– Support economic diversification, job and skill creation

– Focus on full production and distribution chain

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Strategy for CRR4 period, 2011-2016

Support fragile recovery and deepen transition process; – EBRD will need to be able to sustain higher ABV level to

support fragile recovery process across CEE region

– Focus on SEI and regional priorities (ETC, WB, Turkey)

– Focus on growing corporate sector and diversification

– Strengthening of financial sector and the development of domestic, local currency capital markets

– improve market-supporting institutions through policy dialogue

Shareholder support to ensure financial capacity & strength– Provide additional capital to underpin AAA rating, increased

portfolio and EBRD issuance on international capital markets

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EBRD investments meet high standards

Sound banking– Market-based pricing and covenants

Additionality– Tenor, currency, structures

Transition impact– Corporate Governance and Integrity

– Environmental standards and projects

– Transparency and IAS

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How can we support you and your clients?

Provide confidence in projects:– help you to help your clients – use EBRD to strengthen

projects

Lengthen maturity of corporate loans:– Increase tenors and broaden the investor base

Provide risk across the capital structure– Provide equity and mezzanine/subordinated debt

Provide financial, technical and policy support:– Engage us early to leverage our resources effectively

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Summary

The EBRD is financially strong

The EBRD wants to be a catalyst for the private sector

The EBRD has the capacity to share your risks, and to help you to structure and finance your transactions

The EBRD does not want to compete with the private sector, but complement and support it

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Manfred Schepers Vice President, Finance

Meeting the challenges of recovery London 16th March 2010

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12th Annual Syndications and Co-financiers Meeting

Any Questions?

European Bank �for Reconstruction and DevelopmentSlide Number 2AgendaEBRD todaySlide Number 52009 – A year of Crisis ResponseSupport for the Banking sectorProviding funding for the real economyStrong operational results in 2009Continued portfolio and ABV* growthStrong performance in key areas2009 Business Volume by Region2009 Business Volume by SectorCase studies from 2010EBRD: Key investments in BanksIntegra, Russia – corporate crisis response:�refinancing and debt restructuringOAO Russian Railways/RZD:�Supporting Infrastructure ReformRotor Wind Farm, Turkey:�Commitment to RenewablesAgendaSummary Financial Results 20092009 revaluation and provision lossesEquity portfolio is above cost Impaired loans remain relatively lowExecuted 2009 Borrowing ProgrammeA strong capital positionA strong and high quality liquidity positionFinancial efficiency and cost controlAgendaThe transition region in deep crisis;�but is transition itself in crisis?Conclusion: Transition in Crisis?Key initiatives 2010 Strategy for CRR4 period, 2011-2016EBRD investments meet high standardsHow can we support you and your clients?SummarySlide Number 36Slide Number 37

financial institutions 2003– ifc €55 mm – eib €30 mm (gtd by hsbc & deniz) 18 ms, 2010...

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