Post on 19-Jul-2018
transcript
Contents
17 October, 2014 2
• Overview of EBRD 3
• EBRD’s Credit Strengths 14
• EBRD’s Financial Performance 19
• EBRD’s Funding Strategy and Results 24
• Annex 32
About EBRD
17 October, 2014 4
• Who we are
Supranational Institution founded in 1991 owned by 64 countries,
plus the European Community and the European Investment Bank
• Our mission
To promote transition to open, market-based economies in our
countries of operation – we work in more than 30 countries from
central Europe to central Asia and the southern and eastern
Mediterranean
• What we do
Provide project finance mainly to the private sector
• Credit strengths
Strong support from diversified global shareholder base
Conservative risk management and financial policies
AAA/Aaa/AAA rating with stable outlook
EBRD’s Mission
17 October, 2014 5
To foster open, market-oriented economies and promote private and
entrepreneurial initiative in the EBRD’s countries of operations through
investments based on:
• Promoting transition
Through projects that expand and improve markets, and help build
the institutions that underpin the market economy
• Sound banking principles
Ensuring the project returns are commensurate with the risks
• Additionality
Financing projects which would not solely be funded by commercial
banks
• Sustainability
Ensuring socially and environmentally sound development
�No Balance of Payments Funding, No Bail-out Financing, No “Soft” Loans
EU 28 Countries
63%
USA10%
Japan9%
EBRD region
excluding EU8%
Canada3%
Other7%
Global Shareholder Structure
17 October, 2014 6
• 57% of shareholding is G7 and
84% is OECD
• €30 billion authorised capital
− €6.2 billion paid-in capital
− €23.8 billion callable capital
• €29.7 billion subscribed capital as
at 30 June 2014
• Continued reserve accumulation:
€8.9 billion as at 30 June 2014
(2012: €7.7 billion)
• EBRD is 0% risk weighted (Basel II)
�Strong support from diversified
global shareholder base
1) Includes European Community and European Investment
Bank each at 3.0%; France, Germany, Italy, UK each at 8.6%
2) Russia at 4.1%
2)
1)
Ownership
Shareholder Credit Strength
17 October, 2014 7
� More than 50% of shareholders are
rated AAA/Aaa by at least one of
S&P and Moody’s
� 95% of the callable capital is rated
investment grade or better by at
least one of S&P or Moody’s
� All countries of operation are also
shareholders
– account for 14% of the total
shareholding
� EBRD has the highest quality
callable capital among multilateral
development banks
Breakdown of Callable Capital
by Rating Category
Based on ratings from 15 July 2014
51.3% 51.3%
21.5% 20.6%
3.3% 1.3%
19.0%
12.0%
4.9%
1.2%
0%
20%
40%
60%
80%
100%
AAA AA A BBB Other
Total subscribed
callable capital €23.5
billion
Total subscribed callable
capital excluding Countries of
Operations €20.3 billion
39 local offices2,047 staff (75 per cent in London)€235.2 billion in total project value
DRE by Region 30 June 2014**
Wherewe investJune 2014
40 Local Offices Across the Region approx. 1,500 employees (75% based in London headquarters)
36
32
33
34 35
17 October, 2014 8
WHERE WE INVEST
Central Europe and the Central Europe and the Central Europe and the Central Europe and the
Baltic StatesBaltic StatesBaltic StatesBaltic States
01 Croatia
02 Czech Republic*
03 Estonia
04 Hungary
05 Latvia
06 Lithuania
07 Poland
08 Slovak Republic
09 Slovenia
SouthSouthSouthSouth----eastern Europeeastern Europeeastern Europeeastern Europe
10 Albania
11 Bosnia and Herzegovina
12 Bulgaria
13 FYR Macedonia
14 Kosovo
15 Montenegro
16 Romania
17 Serbia
Eastern Europe and the Eastern Europe and the Eastern Europe and the Eastern Europe and the
CaucasusCaucasusCaucasusCaucasus
18 Armenia
19 Azerbaijan
20 Belarus
21 Georgia
22 Moldova
23 Ukraine
Central AsiaCentral AsiaCentral AsiaCentral Asia
24 Kazakhstan
25 Kyrgyz Republic
26 Mongolia
27 Tajikistan
28 Turkmenistan
29 Uzbekistan
30 Russia
31 TurkeySouthern and eastern Southern and eastern Southern and eastern Southern and eastern
MediterraneanMediterraneanMediterraneanMediterranean
32 Egypt
33 Jordan
34 Morocco
35 Tunisia
* As of the end of 2007, the EBRD no longer makes investments in the Czech Republic
** DRE – Development Related Exposure
36 Cyprus
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100% Russia (25.5%)
South-EasternEurope (21.1%)
Central Europe andBaltics (18.6%)
Eastern Europe andCaucasus (16.2%)
Central Asia andMongolia (6.9%)
Turkey (10.4%)
SEMED (1.3%)
Cyprus (0%)
Development Related Exposure (DRE) I
17 October, 2014 9
� €25.9 billion DRE
� 1,825 active investments
� Average loan:
– Size €14 million
– Margin 3.3%
– Internal rating eq. of ‘B+’
– Remaining life 6.6 years
� 5 largest counterparties (on a
group level) amount to 13.7% of
the total operating assets
� Average equity investment:
– Size €16 million
– Internal rating equivalent of ‘B-’
– Holding period 6.2 years
Bank FI24.8%
Non Bank FI4.7%
Infrastructure20.7%
Energy18.0%
Manufacturing & Services
12.8%
Agribusiness9.6%
Equity Funds3.8%
Property & Tourism
3.0%
IT & Communication
2.6%
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
0
5
10
15
20
25
30
Net c
um
ula
tive b
usin
ess v
olu
me
Annual busin
ess I
nvestm
ent
(AB
I)
Outstanding loans Outstanding equity investments (at cost) Number of active projects
DRE 2005 – June 2014
DRE by Industry 30 June 2014
Development Related Exposure (DRE) II
17 October, 2014 10
� Equity portion stable at 23%, of which:
– 30% have put arrangements and/or
other option arrangements with the
project sponsors
– 24% are invested in diversified
equity funds
– 33% are in listed shares
� In addition to the DRE (disbursed
amounts only), EBRD has off-balance
sheet guarantees of approx. €588.1
million, mainly related to its trade
finance programme
� Loans to clients are made on a floating
rate basis, and fixing of client loans are
made on case-by-case basis and with
separate hedge (no interest rate risk)
DRE by Type
Private Sector Loans55.2%
State & Public Sector Loans
21.5%
Equity23.3%
EUR51.0%
USD30.3%
RUB9.5%
PLN4.0%
Others5.2%
Data from 30 June 2014 unless otherwise stated
At cost basis, excludes undrawn commitmentsOther includes: RON, KZT, LVL, HRK, RSD, GEL, HUF, CZK, LTL, AMD, UAH, MNT,
AZN, KGS, BGN, MDL, BYR
DRE by Currency
What Makes EBRD Unique
17 October, 2014 11
• Preferred creditor status exempts
payments to EBRD from generalised
moratoria and foreign exchange
controls
• Strong local presence through 40
offices
• Local currency financing and
development of local capital markets
• Lending to micro, small and medium-
sized enterprises to support
entrepreneurial initiative (Small
Business Initiative – SBI)
• Promoting sustainable environmental,
social and governance policies that are
core to EBRD projects
Small Business Initiative
0
1
2
3
4
5
6
2006 2007 2008 2009 2010 2011 2012 2013 1H14
€B
illio
n
Micro, Small and Medium-size enterprise (Operating Assets)
0
2
4
6
8
10
2006 2007 2008 2009 2010 2011 2012 2013 1H14
€B
illio
n
Sustainable Energy Initiative - launched in May 2006 (OperatingAssets)
Sustainable Energy Initiative
Current Developments (I)
17 October, 2014 12
� In 2011, the G8 gave strong support to an extension of the Bank’s geographic
mandate to the Southern and Eastern Mediterranean (SEMED) region
� Investments initially made through a Special Fund (on the amendment of Article
18 and the approval of potential recipient country status). The EBRD SEMED
Investment Special Fund is controlled by the Bank.
� At the 2012 Annual Meeting in London, the Board of Governors approved a net
income allocation of €1.0 billion in favour of an ‘EBRD SEMED Investment
Special Fund’ (ISF) to permit the start of EBRD investment in the region before
formal ratification is finalised (Post ratification of all countries, the fund will be
integrated into EBRD’s balance sheet).
� On 12 September 2013 the Amendment of Article 1 of the Agreement
Establishing the Bank entered into force.
� On the 1 November 2013, the Board of Governors adopted resolutions granting
recipient country status to each of Jordan, Morocco and Tunisia. On the same
date, €337 million of resources previously drawn down from allocated net
income into the SEMED ISF for each of the new country of operations was
transferred back to the Bank’s Ordinary Capital Resources.
Current Developments (II)
17 October, 2014 13
� The SEMED ISF remains in place to continue to fund investments in Egypt
and regional investments, while Egypt remains a Potential Recipient Country.
� At the 2014 Annual Meeting, the Board of Governors approved a net income
allocation of €500 million in favour of the SEMED ISF as a prudent level of
additional funding for continuing special operations in Egypt.
� At end June 2014, Bank has signed 38 projects with operating assets of
€334 million in SEMED.
� Libya - on 15 May 2014 Libya was approved as a member of EBRD with a
view to becoming a recipient country.
� Cyprus - At the 2014 Annual Meeting the Board of Governors took the
decision to start investing in Cyprus (a founding EBRD shareholder), for a
limited period, to help the country overcome transition challenges that have
emerged during its severe economic crisis.
� Geographic expansion will continue to be phased, gradual and will be achieved
while preserving the conservative risk profile of the Bank and in full compliance
with its prudential capital and liquidity limits
Key EBRD Credit Strengths
17 October, 2014 15
• Stable and granular “development related” investment portfolio – low
concentration risk, high degree of regional and sector diversification
• Conservative leverage and liquidity limits – maximum leverage limit of 1:1,
minimum 3-year liquidity limit of 45% and a target of 90%
• Prudent capital adequacy policies – economic capital policy, which excludes
all callable capital, uses a 99.99% confidence interval to underpin the triple-
A rating
• Substantial paid in capital and reserves – available economic capital of €15
billion, with the level of paid-in capital of above 20%
• Highest quality callable capital of any multilateral development bank – 95%
of shareholders are rated investment grade, only 14% ownership overlap with
countries of operation
� EBRD has one of the strongest credit profiles in the supranational segment
ADBADBADBADB AFDBAFDBAFDBAFDB EBRDEBRDEBRDEBRD EIBEIBEIBEIB IADBIADBIADBIADB IBRDIBRDIBRDIBRD IFCIFCIFCIFC NIBNIBNIBNIB
Principal Size Indicators (USD billion):Principal Size Indicators (USD billion):Principal Size Indicators (USD billion):Principal Size Indicators (USD billion):
Total Assets 116.2 32.3 67.3 705.4 97.2 324.4 77.5 32.3
Purpose Related Exposure 57.6 18.8 35.8 578.9 71.6 145.5 27.4 20.0
Adjusted Shareholders' Equity (ACE) 16.8 9.0 20.4 78.2 23.4 39.5 22.3 3.5
Risk Adjusted Capital (RAC) (Risk Adjusted Capital (RAC) (Risk Adjusted Capital (RAC) (Risk Adjusted Capital (RAC) (percentpercentpercentpercent):):):):
Before Adjustment 30% 23% 16% 18% 32% 33% 16% 23%
After Adjustment 19% 17% 25% 17% 17% 28% 29% 22%
Leverage Leverage Leverage Leverage (multiple):(multiple):(multiple):(multiple):
Gross Debt / ACE 3.7x 2.2x 2.0x 7.5x 2.9x 3.6x 2.0x 6.6x
Gross Debt Net of Liquidity / ACE 2.4x 1.0x 0.6x 6.1x 2.0x 2.5x -0.3x 4.1x
Liquidity (percent):Liquidity (percent):Liquidity (percent):Liquidity (percent):
Liquid Assets / Total Assets 19% 34% 41% 15% 22% 13% 66% 30%
Liquid Assets net of Deposits / Gross Debt 36% 55% 63% 17% 31% 29% 114% 38%
Comparative Credit Strengths
17 October, 2014 16
Business ProfileBusiness ProfileBusiness ProfileBusiness Profile Financial ProfileFinancial ProfileFinancial ProfileFinancial ProfileStand Alone Credit Stand Alone Credit Stand Alone Credit Stand Alone Credit
ProfileProfileProfileProfile
Ratings Uplift Due Ratings Uplift Due Ratings Uplift Due Ratings Uplift Due
To Extraordinary To Extraordinary To Extraordinary To Extraordinary
Shareholder Shareholder Shareholder Shareholder
SupportSupportSupportSupport
Long term Issuer Long term Issuer Long term Issuer Long term Issuer
Credit RatingCredit RatingCredit RatingCredit RatingOutlookOutlookOutlookOutlook
Date of Latest Date of Latest Date of Latest Date of Latest
Affirmation Affirmation Affirmation Affirmation
(available on the (available on the (available on the (available on the
IFI's website)IFI's website)IFI's website)IFI's website)
ADBADBADBADB extremely strong very strong aaa not required AAA Stable 03-Jul-14
AFDBAFDBAFDBAFDB very strong strong aa yes AAA Stable 17-Sep-14
EBRDEBRDEBRDEBRD very strong extremely strong aaa not required AAA Stable 15-Sep-14
EIBEIBEIBEIB extremely strong very strong aa+ yes AAA Stable 25-Jul-14
IADBIADBIADBIADB very strong very strong aa+ yes AAA Stable 21-Aug-14
IBRDIBRDIBRDIBRD extremely strong very strong aaa not required AAA Stable 2-Apr-14
IFCIFCIFCIFC very strong extremely strong aaa not required AAA Stable 11-Dec-13
NIBNIBNIBNIB very strong very strong aa+ yes AAA Stable 6-Junt-14
1) Source: Current ratings by Standard & Poor’s, based on their methodology "Multilateral Lending Institutions And Other Supranational Institutions Ratings Methodology,"
published Nov. 26, 2012
2) Source: Standard & Poor’s, “Supranationals Special Edition 2014” (based on 2013 data, except for IBRD and IFC with data from fiscal year ending 30 June 2013)
S&P Credit Rating Peer Comparison1)
Selected S&P Credit Metrics Peer Comparison2)
0
2
4
6
8
10
12
14
16
18
2006 2007 2008 2009 2010 2011 2012 2013 H12014
EUR Billion
EUR Billion
EUR Billion
EUR Billion
Paid-in capital Reserves
General portfolio provisions Net unrealised gains
Substantial Paid-In Capital and Reserves
17 October, 2014
� During the financial crisis EBRD has
retained its strong reserve position
� Available Economic Capital grew by
€4.5 billion (or 41%) from €10.8 billion
in 2008 to €15.3 billion as at 30 June
2014.
� More than 20% of EBRD’s capital is
paid in, compared to an average of
5.4% for other global or regional triple-
A rated multilateral development banks
with callable capital (IBRD, ADB, IADB,
AFDB and EIB)
Development of Paid-In Capital and
Reserves (2006 – 1H 2014)
Available economic capital
� Strong capital position with relatively high proportion of paid-in capital
17
Multilateral Development Banks as an Asset Class
17 October, 2014
� Multilateral Development Banks
(MDBs) are designed to repay
investors based on assets with
ultimate recourse to diversified group
of shareholders for callable capital
� To date, no MDB has had to resort to
calling its callable capital
� Only one triple-A rated MDB has ever
been downgraded by a rating agency
and was subsequently upgraded to
triple-A again
� As a comparison, individual sovereign
triple-A ratings are more prone to
downgrades
Average Rating Transition for Foreign
Currency Sovereign Ratings
� Multilateral Development Banks have very stable triple-A ratings
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
One year Three years Five years Ten years Fifteen years
AAA AA A BBB BB B
S&P’s Sovereign Defaults And Rating Transition Data 1975-
2012, 2012 Update
18
Financial highlights (in € million)1H14 financials provisional, subject to Board approval
17 October, 2014 20
€€€€ billionbillionbillionbillion H1 2014H1 2014H1 2014H1 2014 2013201320132013 2012201220122012
YOY ChangeYOY ChangeYOY ChangeYOY Change
Business performanceBusiness performanceBusiness performanceBusiness performance
Annual Banking Investment (ABI) € 3.6 € 8.5 € 8.9 -4.7%
Number of projects 148 392 393 -0.3%
Operating assets (at cost) € 26.0 € 26.4 € 26.5 -0.4%
Underlying financial performanceUnderlying financial performanceUnderlying financial performanceUnderlying financial performance
Realised profit before impairment € 0.5 € 1.2 € 1.0 16.1%
Net profit* € 0.2 € 1.0 € 1.0 -0.9%
Non-performing assets ratio (all loans) 3.6% 3.3% 3.4% -2.9%
Strong capitalisationStrong capitalisationStrong capitalisationStrong capitalisation
Statutory capital (incl. allocation to SEMED ISF**) € 39.2 € 38.8 € 37.7 2.9%
Economic capital base € 15.3 € 15.0 € 14.0 7.1%
*Before net income allocations approved by the Board of Governors.
**An initial net income allocation of €1.0bn made in 2012 followed by a replenishment of €0.5bn in 2014.
Strong Underlying ProfitabilityRobust underlying realised profits
17 October, 2014 21
(1,500)
(1,000)
(500)
0
500
1,000
1,500
2009 2010 2011 2012 2013 H1 2014
€€ €€million
million
million
million
Realised profit before provisions for losses Provisions for loan losses
Fair value movements in share investments Net profit /loss
Equity Portfolio and Realised Equity Gains
• Equity portfolio (including derivatives) remains valued above cost (+5.5%) and
includes €0.6 billion of investments with determinable returns (‘debt-like’): put
options to counterparties to exit at pre-determined minimum.
• At end 2013, equity investments at cost stood at €6.4 billion, or 24% of total
operating assets (2008: 18%), with fair value of €6.7 billion.
• During the period 2008 - 2013 the Bank recognised €1.7 billion in realised equity
gains at an average money multiple of 1.65 times.
Development of historic cost & fair value
adjustment (2008-1H 2014)
Development of divestments & realised
gains (2008-1H 2014)
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2008 2009 2010 2011 2012 2013 H1 2014
€€ €€million
million
million
million
Fair value adjustment (incl. derivatives) Historic cost
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
-
200
400
600
800
1,000
1,200
1,400
2008 2009 2010 2011 2012 2013 H1 2014
Cumulative equity gains
Cumulative equity gains
Cumulative equity gains
Cumulative equity gains
€€ €€million
million
million
million
Net realised equity gains Divestments Cumulative realised equity gains
22
Strong Underlying ProfitabilityRobust underlying realised profits
17 October, 2014 23
• At end 2013 impaired loans represented 3.4% (2012: 3.4%) of total loan operatingassets. Well provisioned at 58% of impaired loans.
• The non-performing asset ratio based on a 7 year average was 2.1% for 2013(2012: 1.7%).
• €817 million of general and specific provisions and €730 million of additional loanloss reserve represent 7.7% of total loan operating assets.
• €343 million cumulative loan write-offs since 1991.
Development of historic cost & fair value adjustment (1999-1H 2014)
0
100
200
300
400
500
600
700
800
900
1,000
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
1H14
€ m
illion
0%
2%
4%
6%
8%
10%
12%
14%
Total Loan Impaired Assets(LHS)
Specific and GeneralProvisions (IFRS Provisions)
(LHS)
Loan Loss Reserves (LHS)
Loan Impaired Assets as % ofLoan Operating Assets (RHS)
IFRS Provisions and LLR
(from 2005) as a % of LoanOperating Assets (RHS)
Funding Principles
17 October, 2014 25
• Investor-driven
- Active support of EBRD debt in the secondary market
- Tailor-made structured products
• Committed to long-term relationships
- Sustain existing, and develop new, investor relationships
- Ongoing interaction with investor groups
• Strategic focus
- Benchmark issuance in core currency markets
- Developing capital markets in emerging currencies
• Diversify across markets, currencies and instruments
Support for Investors
17 October, 2014 26
• Increases: possibility to tap existing issues
•Buybacks: EBRD’s exceptionally strong liquidity position allows the
Bank to offer investors a secondary market bid for all its bonds
- Public Issues:
� enhances liquidity
� improves trading performance
- Private Placements:
� EBRD commits to show prices for its bonds
� investors can lock in profits
- 10.6% repurchased upon investor demand (as at 30 Sep 2014)
•Restructuring: EBRD offers a flexible approach for investors wishing to
restructure private placements by amending existing documentation
or reissuing under new terms
•Size: EBRD has no minimum size for buybacks or new issuance
Innovative Funding Structures
17 October, 2014 27
• Commodity-Linked Notes
• Credit-Linked Notes
• Equity-Linked Structures
• Exotic Currencies
• Fund-Linked Notes
• FX-Linked Notes
• Gold-Linked Notes
• Inflation-Linked Notes
• Interest Rate Linked Notes
EBRD is able to issue innovative structures which meet specific investors’
requirements:
USD71.7%
EUR11.3%
BRL5.6%
RUB4.4%
TRY3.5%
MXN1.0%
INR0.9%
ZAR0.4%
Other1.3%
2013-2014 Borrowing Programmes
17 October, 2014 28
Breakdown of Breakdown of Breakdown of Breakdown of 2014 Issuance2014 Issuance2014 Issuance2014 Issuance(at 30 Sep 2014)(at 30 Sep 2014)(at 30 Sep 2014)(at 30 Sep 2014)
Breakdown of 2013 IssuanceBreakdown of 2013 IssuanceBreakdown of 2013 IssuanceBreakdown of 2013 Issuance
Historical Borrowing Programme 2001 Historical Borrowing Programme 2001 Historical Borrowing Programme 2001 Historical Borrowing Programme 2001 ––––
30 Sep 201430 Sep 201430 Sep 201430 Sep 2014
• 2014 Borrowing Programme of up
to €6 billion
- €6.5 billion executed in 2013
- €6.3 billion executed in 2012
• USD Global benchmark bonds,
Green bonds, and Catastrophe
bonds
0
1
2
3
4
5
6
7
8
9
0
1
2
3
4
5
6
7
8
Years
Years
Years
Years
EUR billion
EUR billion
EUR billion
EUR billion
Amounts raised (LHS) Average maturity (RHS)
USD
42.2%
EUR
23.0%
GBP
8.4%
BRL
8.0%
TRY
6.7%
IDR
5.6%
INR
4.9%
GEL
0.6%
NZD
0.4%
UYU
0.2%AUD
0.2% CHF
0.02%
� €66.5 billion issued since
EBRD’s inception in 1,326
transactions and in more than 40
currencies
� €27.2 billion outstanding through
341 bonds
� Average maturity at launch 7.3
years, average life remaining 3.6
years
Outstanding Debt
17 October, 2014 29
USD71.1%
EUR18.9%
GBP8.0%
RUB1.9%
GEL0.1% RON
0.01%
USD54.3%
GBP12.1%
EUR9.9%
TRY6.2%
BRL4.8%
RUB3.1%
AUD2.8%
IDR1.7%
JPY1.6%
ZAR1.2%
INR0.8% Other
1.5%
Outstanding Outstanding Outstanding Outstanding Debt by Currency Debt by Currency Debt by Currency Debt by Currency
after Swapafter Swapafter Swapafter Swap
Outstanding Outstanding Outstanding Outstanding Debt by Currency Debt by Currency Debt by Currency Debt by Currency
before Swap before Swap before Swap before Swap
Recent USD Global Bond Issuance
17 October, 2014 30
2014201420142014::::
USD USD USD USD 1.5 1.5 1.5 1.5 billion 1.75% June 2019billion 1.75% June 2019billion 1.75% June 2019billion 1.75% June 2019
“The EBRD capitalised on demand from central banks and
bank treasuries, offering investors a more attractive spread
versus US Treasuries.” IFR
2013:2013:2013:2013:
USD 1.7 billion 1.625% November 2018USD 1.7 billion 1.625% November 2018USD 1.7 billion 1.625% November 2018USD 1.7 billion 1.625% November 2018
“It’s a good result. A lot of central banks buy this issuer in
secondary, and they’re not going to see any supply now for four
to six weeks” Euroweek.
USD 1.25 billion 1.00% September 2018USD 1.25 billion 1.00% September 2018USD 1.25 billion 1.00% September 2018USD 1.25 billion 1.00% September 2018
“The EBRD were very responsive, and able to take advantage
of the positive tone we have seen in secondaries for top-quality
SSA names” IFR
USD 1.25 billion 1.00% June 2018USD 1.25 billion 1.00% June 2018USD 1.25 billion 1.00% June 2018USD 1.25 billion 1.00% June 2018
“The issuer was able to get a sub-Libor spread in fives, which I
don’t think we’ve seen all year” Euroweek
USD 1.3 billion 1.50% March 2020USD 1.3 billion 1.50% March 2020USD 1.3 billion 1.50% March 2020USD 1.3 billion 1.50% March 2020
“EBRD’s latest deal had strong sponsorship from Asian Central
Banks” IFR
2012:2012:2012:2012:
USD 1.7 billion 0.75% September 2017USD 1.7 billion 0.75% September 2017USD 1.7 billion 0.75% September 2017USD 1.7 billion 0.75% September 2017
“There was a strong bid for the credit given the lack of quality
supply” IFR
USD 3.0 billion 1.00% February 2017USD 3.0 billion 1.00% February 2017USD 3.0 billion 1.00% February 2017USD 3.0 billion 1.00% February 2017
“It’s an awesome trade.” Euroweek
Breakdown by geographyBreakdown by geographyBreakdown by geographyBreakdown by geography
Breakdown by investor typeBreakdown by investor typeBreakdown by investor typeBreakdown by investor type
0%
10%
20%
30%
40%
50%
60%
70%
80%
Central Bank Bank Asset Manager Other
0%
10%
20%
30%
40%
50%
60%
70%
Asia Europe Middle East / Africa Americas
How to Contact the EBRD Funding Team
17 October, 2014 31
FundingFundingFundingFunding::::
Isabelle Laurent Deputy Treasurer and Head of Funding: laurenti@ebrd.com
Jessica Pulay Deputy Head, Funding: pulayj@ebrd.com
Charles Smith Manager, Funding: smithc@ebrd.com
Aziz Jurayev Manager, Local Currency Funding: jurayeva@ebrd.com
Stefan Filip Manager, Funding: filips@ebrd.com
Giulia Franzutti Manager, Funding: franzutg@ebrd.com
Funding desk group email: fundingdesk@ebrd.com
Bloomberg
Tel: +44 (0)20 7628 3953
Fax: +44 (0)20 7338 7335
Treasurer:Treasurer:Treasurer:Treasurer:
Axel Van Nederveen - Treasurer: vannedea@ebrd.com
Tel: +44 (0)20 7338 7370
Website: http://www.ebrd.com/pages/workingwithus/capital.shtmlhttp://www.ebrd.com/pages/workingwithus/capital.shtmlhttp://www.ebrd.com/pages/workingwithus/capital.shtmlhttp://www.ebrd.com/pages/workingwithus/capital.shtml
Callable CapitalArt. 6, 16, 17 and 42 of the Agreement Establishing EBRD
17 October, 2014 33
Payment source sequence pre termination of the Bank’s
operations (Article 17)
� Losses arising in the Bank’s ordinary operations
shall be charged to/ against:
1) provisions
2) net income
3) special reserves (Article 16)
4) general reserves and surpluses
5) unimpaired paid-in capital
6) “…lastly, an appropriate amount of the
uncalled subscribed callable capital which
shall be called…“
Payment source sequence post termination of the
Bank’s operations (Article 42)
• In the event of termination of the operations of
the Bank, the liability of all members for all
uncalled subscriptions to the capital stock of the
Bank shall continue until all claims of creditors
shall have been discharged
• Creditors on ordinary operations holding direct
claims shall be paid:
1) out of the assets of the Bank,
2) out of the payments to be made to the
Bank in respect of unpaid paid-in shares
3) and then out of payments to be made to
the Bank in respect of callable capital
stock
Payment of callable capital subscriptions (Article 6)
• Payment of the amount subscribed to the callable capital stock of the Bank shall be subject to call, taking account
of Articles 17 and 42 of this Agreement, only as and when required by the Bank to meet its liabilities
• Such calls shall be uniform in ECU value upon each callable share calculated at the time of the call
http://www.ebrd.com/downloads/research/guides/basics.pdf
SEMED Investment Special Fund
17 October, 2014 34
SEMED ISF
EBRD
EBRD Special
Shareholders
Fund
31 Oct 2013 1 Nov 2013
EUR 1bn allocated to SEMED
region
• EUR 570mn actually
transferred to SEMED ISF
EUR 570mn received split on
• Projects EUR 522mn
• Net losses (FX movements,
expenses, etc.) EUR 23mn
• Transfer to Shareholders
Special Funds EUR 25mn (out
of EUR 75mn allocated)
EUR 25mn received as grant
EUR 1bn allocated to SEMED
region
• EUR 233mn actually
transferred to SEMED ISF
• EUR 337mn transferred back
to EBRD’s ordinary capital
resources
EUR 233mn received split on
• Projects EUR 185mn
• Net losses (FX movements,
expenses, etc.) EUR 23mn
• Transfer to Shareholders
Special Funds EUR 25mn (out
of EUR 75mn allocated)
EUR 25mn received as grant
Robust Balance Sheet & Callable Capital
17 October, 2014 35
Operating Assets,
25.70
Liquid Assets & Other
Assets, 25.60
Paid-In Capital,
Reserves & Retained
Earnings, 15.10
Borrowings, 33.50
Triple A Callable
Capital, 12.04
Other Callable Capital,
11.43
Other Financial
Liabilities, 2.70
-5
5
15
25
35
45
55
Assets Liabilities Callable capital
Key Components of EBRD’s Balance Sheet 1H14
Comparative Credit Strengths
17 October, 2014 36
� Ratio: (Paid-in capital and reserves + AAA and Aaa
callable capital) / Borrowings
� Shows part of ratio with paid-in capital and
reserves only
� Shows part of ratio with AAA and Aaa
callable capital only (30 April 2014)
� Shows total ratio in case of downgrade of
all Eurozone AAA and Aaa countries and
institutions currently on negative outlook
by either Moody’s or S&P (30 April 2014)
Leverage Ratio Stress Testing
Net Debt Write-offs% of Loan Operating Assets
17 October, 2014 37
• Losses remain very low, partly reflecting the Bank’s superior liquidity
and capital which allows patience in debt work-outs.
Notes
• OA = Loan Operating Assets
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
-20
0
20
40
60
80
100
120
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
Perc
en
tag
e
€m
illi
on
Debt Recoveries Debt Write Off Net Debt Write off as % of OA
1H
Managing Treasury Asset Maturity
17 October, 2014 38
0
5
10
15
20
25
2007 2008 2009 2010 2011 2012 2013
Treasury Balance Sheet (€ bln)
0.0
1.0
2.0
3.0
Average Maturity
Treasury Balance Sheet LHSAverage Maturity RHS
Treasury Maturity Profile
Credit StrengthsMaintaining sufficient levels of liquidity
16 June, 2014 39
Matched funding ratioMatched funding ratioMatched funding ratioMatched funding ratio Net cash requirements ratioNet cash requirements ratioNet cash requirements ratioNet cash requirements ratio
• Liquidity in terms of coverage of oneyear cash requirements was 103% atend H1 2014 and above the 75%minimum (2013: 93%).
• Net liquidity was 97% at end H1 2014(2013: 95%) substantially above the45% minimum requirements.
• At end 2013, 98% liquid assetsinvestment grade quality (2012: 96%).
0%
20%
40%
60%
80%
100%
120%
2007 2008 2009 2010 2011 2012 2013 H12014
Liquid assets / undisbursed Banking investments plus 1 year debtservice
0%
20%
40%
60%
80%
100%
120%
2007 2008 2009 2010 2011 2012 2013 H12014
Next 3 years' cash requirement basis
Prudent Capital Adequacy Policies
17 October, 2014 40
• Statutory Capital Requirement ensures total debt never exceeds
callable capital plus liquid assets
- Development related exposure (“DRE”) must not exceed
unimpaired subscribed capital, reserves and surpluses
• Economic Capital Policy aims to underpin EBRD’s triple-A rating by:
- Using triple-A consistent methodology (99.99% confidence
level/1 yr horizon)
- Estimating required economic capital (“REC”) for market, credit
and operational risk consistent with Basel II
- Excluding callable capital from Available Economic Capital (AEC)
calculation
- Managing economic capital utilisation ratio (REC/AEC) against a
90% threshold to provide a 10% prudential capital buffer
� Conservative economic and statutory policies designed to ensure full investor Conservative economic and statutory policies designed to ensure full investor Conservative economic and statutory policies designed to ensure full investor Conservative economic and statutory policies designed to ensure full investor
repayment with triplerepayment with triplerepayment with triplerepayment with triple----A level of certaintyA level of certaintyA level of certaintyA level of certainty
Prudent Statutory & Risk Capital Ratios
41
Economic Capital Utilisation RatioEconomic Capital Utilisation RatioEconomic Capital Utilisation RatioEconomic Capital Utilisation RatioStatutory Capital RatioStatutory Capital RatioStatutory Capital RatioStatutory Capital Ratio
• H1 2014 statutory capital
utilisation is at 66% (2013: 68%)
including €9.0 billion effective
callable capital increase and
SEMED Special Fund allocation.
• H1 2014 AEC at €15.3 billion gave
an Economic Capital ratio of 69%
(2013: 72%).
• 100% of EBRD’s risk capital would
be treated as Tier 1 capital under
Basel III.17 October, 2014
EBRD Investment DecisionOperations Committee
17 October, 2014 42
Operations Committee
(OpsCom)
ControlsControlsControlsControls
Lead transactions
Client relationships
Identify exits
Banking teamsBanking teamsBanking teamsBanking teams
Sector teamsSector teamsSector teamsSector teams
Local officesLocal officesLocal officesLocal officesCredit/Risk Mgmt
Legal
Mandate ComplianceMandate ComplianceMandate ComplianceMandate Compliance
Economists
Environment
Compliance
• Key operational decision body; committee meetings on a weekly basis
• Comprised of members from Banking, Risk Management, Legal, Operations,
Economists’ Department and Finance
• Project based decisions on e.g. investments proposals and equity exits
• Decisions require consensus
ProcurementIT Systems
EBRD Investment DecisionProcess steps
Concept Review Structure Review Final Review Board Approval Signing
Initial clearance before allocating resources to a project.
Complex projects return to Ops Com for Structure Review. Norm for e.g. equity investments.
Once key terms have been negotiated and appropriate due diligence has been completed.
Unless approved in a framework, all projects need to be approved by the Board of Directors. Host country has veto right.
Before signing a closing certificate is signed to record any significant changes since Final Review.
Documentation required for each stage of approval follows a prescribed format
• Rigorous screening and approval process, with early involvement of support units
(e.g. Risk Management, Legal, Treasury)
• Included in the process are requirements on e.g. anti money laundering and
counter terrorism funding regulations as well as environmental policies
17 October, 2014 43
Board of Directors
• The powers of the EBRD are vested in the Board of Governors to which
each member appoints a governor, generally the minister of finance
• The Board of Governors delegates most powers to the Board of Directors,
which is responsible for EBRD's strategic direction
• EBRD has a resident Board of Directors that meet every second week
• There are currently 23 Directors representing the 66 shareholders
• Investment discussions typically focus on a project’s alignment with the
Bank’s mandate and larger strategy
• Decisions are made by majority vote; the Director of the country in which
the project is located has a veto right
44
MonitoringDevelopment Related Exposure
• The monitoring phase begins immediately after Board Approval and
continues until repayment or, for equity, divestment
• The monitoring focuses not only on credit elements, but also development
milestones agreed with the client (related to e.g. business or environmental
targets, changes in corporate governance)
• The additional monitoring elements ensure in-depth understanding of the
client’s business and increase the probability of identifying problems early
• The monitoring system also provides the basis for a quarterly credit report
that is submitted to the Board of Directors
45
EBRD Equity Portfolio
• EBRD’s total equity investments at end of June 2014 was €6.03 billion, with an equity
fair value of €6.39 billion (including associated derivatives)
Listed40 investments
33% of investment cost
Co-Investment
FDI Sponsor104 investments
26 % of investment cost
Co-Investment
Local Owner75 investments
18% of investment cost
Equity Funds118 investments
24% of investment cost
IPO
Privatisations
Strategic Investors
New Market
Puts and Calls
Entrepreneurs
Minority Status
Intermediated
Investments
Locally Based
Fund Managers
EquityEquityEquityEquity
InvestmentsInvestmentsInvestmentsInvestments
€€€€6.4 6.4 6.4 6.4 billionbillionbillionbillion
47
EBRD Valuation and Control Process
Fair Value AssessmentFair Value AssessmentFair Value AssessmentFair Value AssessmentAll equity holdings valued and reported
semi-annually in accordance with IFRS.
20 largest holdings valued quarterly
Equity Valuation CommitteeEquity Valuation CommitteeEquity Valuation CommitteeEquity Valuation Committee
Meets quarterly to review valuations
External AuditorsExternal AuditorsExternal AuditorsExternal AuditorsValuations agreed
with EBRD auditors
(Deloitte)
Credit/Risk Credit/Risk Credit/Risk Credit/Risk
ManagementManagementManagementManagementControllersControllersControllersControllers BankingBankingBankingBanking
IT SystemsIT SystemsIT SystemsIT SystemsSAP, Summit,
Frameworks,
In-house monitoring
software (PMM)
• Fair value of equity investments is regularly and rigorously assessed in a well
established process involving all key constituencies
48
Loan Syndications I
• A prime objective for the EBRD is to mobilise private sector funding in
its projects, which is often achieved via the EBRD A/B loan structure:
- The EBRD, as lender of record, extends a loan to a borrower on
terms pre-arranged with commercial lenders and the EBRD
- The EBRD then sells participations, without recourse to itself, in
such loans to the commercial lenders
- The portion which the EBRD lends is often referred to as the A Loan,
with the commercial lender’s portion being referred to as the B Loan
• Through this technique, the B Lenders benefit from EBRD’s preferred
creditor status
49
Loan Syndications II
• Total B loans committed: € 12.6 billion
• Strong B loan portfolio performance
- Gross write-offs/total B loans committed: 0.32%
- Net write-offs/total B loans (after recoveries and write-backs) 0.23%
• Key assumptions/provisos:
- That a commercial bank writes off the same percentage of its B loan
as the EBRD writes off on its A loan
- Currency exchanges rates vary, and thus precise percentages may
vary
• For more loan syndications information and contact details, please refer
to http://www.ebrd.com/pages/workingwithus/loans.shtml
These are cumulative data since establishment of EBRD in 1991 (not per annum data) until 31 December 2013
50
Loan Syndications III(Preferred Creditor Status)
• The Preferred Creditor Status (PCS) means that:
- EBRD loans are not subject to moratoria, rescheduling or restrictions on
convertibility or transferability of hard currency
- Potential exemption from country provisioning requirements (where
applicable) for participant banks
- EBRD loans are not included in the Paris Club or London Club
- May allow rated transactions to pierce the sovereign ceiling
• The PCS does not constitute:
- A guarantee or letter of comfort from the government, or from the EBRD,
that the loan will perform commercially
- An indicator of the loan’s creditworthiness per se and co-financiers must
carry out their own due diligence in the normal manner
• The PCS was tested during the Russia crisis in 1998
- During the moratorium, all payments to the EBRD and its B Lenders came
through on time
51
Universe of Public Issuance
Global benchmarkGlobal benchmarkGlobal benchmarkGlobal benchmark issuance in Euro and US Dollars (10 outstanding)
� exempt from SEC filing
� cleared through Euroclear, Clearstream and DTC
EurobondEurobondEurobondEurobond issuance including:
� Australian Dollars up to 2028
� Brazilian Real up to 2025
� Great British Pound up to 2040
� Indonesian Rupiah up to 2016
� Russian Rouble up to 2018
� Turkish Lira up to 2025
DomesticDomesticDomesticDomestic bonds including
� Armenia, Georgia, Hong Kong, Hungary, Italy, Romania, Russia,
Singapore, South Korea, Spain, Sweden, Taiwan
Many of the publicly issued bonds represent landmark transactionsMany of the publicly issued bonds represent landmark transactionsMany of the publicly issued bonds represent landmark transactionsMany of the publicly issued bonds represent landmark transactions
52
• EBRD’s Green Bonds provide an opportunity to invest in environmental and
sustainable solutions that support state and private sector environmental
projects in EBRD’s countries of operations
• The proceeds of the bond are specifically earmarked to support the Green
Project Portfolio (“GPP”), comprising investments in:
• Criteria established by the EBRD’s Environmental and Sustainability, Banking,
Treasury and Legal departments
Energy
Efficiency
Clean
Energy
Sustainable
living
Water
Management
Environmental
services and
public transport
Green Bond Portfolio
Waste
Management
53
Green Bond Portfolio
Operating assets by region Operating assets by industry
54
South-Eastern Europe28.6%
Turkey23.9%
Central Europe and the Baltic States18.5%
Eastern Europe and
the Caucasus12.2%
Russia7.9%
Regional4.87%
Central Asia3.8%
Southern and
eastern Mediterran
ean0.2%
Banks (EE via partner banks)
38.5%
Power and Energy23.3%
Municipal & Env Inf21.6%
Transport7.6%
Manufacturing & Services
6.9%
Agribusiness1.7%
Leasing Finance0.4%
Operating assets by class
Energy Efficiency & Sustainable Living48.4%
Clean Energy23.3%
Environ-mental services and
sustainable public
transport15.4%
Water Mgmt12.4%
Waste Mgmt0.5%
Green Project Portfolio (at 30 June 2014):
� €4.3bn committed amounts
� €2.35 operating assets
� 258 projects
� 9.14 years weighted average remaining
life
Asset Managers
12%
State Entities
5%
Foundations
1%
Pension Funds
64%
Central Banks
18%
USA
51.0%
Asia
18.0%
Europe
31.0%
Green Bond Issues
Criteria & Criteria & Criteria & Criteria &
SelectionSelectionSelectionSelection
MonitoringMonitoringMonitoringMonitoringReportingReportingReportingReporting
• Proceeds from issuance are directed towards the GPP by:
- Definitions in the bond documentation
- Limiting total Green bond issuance to 70% of the GPP
- Allocating proceeds to existing and new projects
• EBRD has issued 17 bonds totalling EUR 495 million equivalent since 2010
• The Bonds were denominated in AUD, BRL, IDR, NZD and USD
• In September 2013 the Bank issued its 1st Global Green USD 250 million
1.625% bond due 10 April 2018: over 50% was placed in the US, and over
60% with pension funds.
GPPGPPGPPGPP
GeographyGeographyGeographyGeography Investor typeInvestor typeInvestor typeInvestor type
55
Disclaimer
This information is provided for discussion purposes only, may not be reproduced or redistributed and
does not constitute an invitation or offer to subscribe for or purchase any securities, products or
services. No responsibility is accepted in respect of this presentation by its author, the European Bank
for Reconstruction and Development (the "Bank") or any of its directors or employees (together with the
author and the Bank, the "EBRD") for its contents. The information herein is presented in summary
form and does not attempt to give a complete picture of any market, financial, legal and/or other
issues summarised or discussed. The EBRD is not acting as your advisor or agent and shall have no
liability, contingent or otherwise, for the quality, accuracy, timeliness, continued availability or
completeness of the information, data, calculations nor for any special, indirect, incidental or
consequential damages which may be experienced because of the use of the material made available
herein. This material is provided on the understanding that (a) you have sufficient knowledge and
experience to understand the contents thereof; and (b) you are not relying on us for advice or
recommendations of any kind (including without limitation advice relating to economic, legal, tax,
regulatory and/or accounting risks and consequences) and that any decision to adopt a strategy, deal
in any financial product or enter into any transaction is based upon your own analysis or that of your
professional advisors, whom you shall consult as you deem necessary.
56