State development bank of Poland
Open days Workshop “Public Financial Institutions in Europe”
(Conf code 11A23)
Karina Kostrzewa
Brussels, 11th October 2011
Introduction - ProfileState development bank of Poland since 1924
Legally organized as a state bank (as opposed to a joint-stock company or cooperative)
Supervised by Ministry of Finance
Subject to oversight by financial supervision authority (KNF)
Not subject to bankruptcy law (implicit state guarantee)
BGK’s activities are governed by the following acts:
• Act on Bank Gospodarstwa Krajowego (8 February 2011)
• Decree establishing the statute of BGK (11 May 2010)
• Banking Law (29 August 1997)
Ownership: 100% state-owned
Rating (Fitch): A- Stable (IDR)
Assets (2010): c. 9bln EUR (c. 36bln PLN);
8th biggest bank in Poland
Headquarters: Warsaw
Branches: 18 branches across Poland
Employee #: c.1,300
2
Introduction - Mission
3
Supporting government economic and social programs at national and regional level
Agent of the Ministry of Finance (foreign debt servicing)
Managing government loan and transfer funds
Handling government loan and subsidy programmes
Introduction - Lending (2010)
4
BGK activities
Supporting key sectors:
5
Start-ups, entrepreneurship (SMEs)
Innovation and development
Infrastructure
Social housing
Financing municipalities
Exports
6
Intermediary Financial
InstitutionsClients
Local government entities
SMEs
Strategic enterprises
Act on BGK
Public Mandate
Management of Government Funds
Management of Government Programs
Sources of Funding
Equity
International Financial Institutions
EU Funds
Debt markets
Deposits
Government funds
BGK Business Model
State Liability
Special „State Bank” status
BGK’s Branches
BGK business model - instruments
BGK GroupBGK Group
Financing the gap in social housing
Servicing of central budget accounts(currently Central Bank of Poland [NBP])
EU funds transfer from ST accounts (2007-2013 EU financial perspective)
Agent of State Treasury [ST](public debt management)
Complete servicing of municipalities, healthcare: financing, PPP, transactional banking,
liquidity management
Export pre-financing, support for exporters, including liquidity
and risk managementi
Filling in gaps in credit-equity financing in the financial markets
(e.g. VC, entrepreneurship)
Infrastructure financing (transport, municipal, social infrastructure)
Banking services for ministries, central agencies, NFZ, etc...
Guarantee programs
Support of strategic sectors (R&D, education, energy)
and project finance
Support of EU investments
Export finance support
Servicing of appropriated funds
Realization of other tasks as part ofassigned government programs
7
Financing instruments for regions/municipalitiesBGK offers the possibility of financing local government investments
through:
• Capital markets: organizing bond issues (underwriting/advisory)
• Lending: – Loans from the bank’s own resources
– Loans from international financial institutions (eg. EIB)
– Loans from state budget under the Rural Development Programme (PROW)
– Loans under the Municipal Investment Development Fund (FRIK)
• JESSICA – financing urban revitalization (Wielkopolska province);
• Environmental Lending Subsidies (PO IS)
• Environmental Protection Fund resources (in the repayable and non-refundable form);
• Grants from the Treasury
• Investments possible by financing municipal companies without recourse to local government guarantees or financing
• Public-private partnerships (PPP)
8
Leading position in local government financing
Ranked second in underwriting municipal bond issues
• Municipal bond market share ~ 13,14%
• Bond issuance volume over 325mln EUR
• Full service related to bond issue placement: organizing agent, depositary, transfer agent, dealer, underwriter.
Leading bank in local governments financing
• 2489 local municipalities in Poland
• Municipal loan market share ~ 15,5%
• Assets over 1,3 bln EUR
• BGK takes part in almost ½ of all loan tenders announced by local governments (by volume) with nearly 50% effectiveness
9
Leading position in local government financing
BGK is the leader in local governments financing with total assets of 1,27 bln $
• Municipal loan market market share ~ 15,5%
• BGK takes part in almost ½ of all loan tenders announced by local governments (by volume) with nearly 50% effectiveness
• Municipal bonds market share ~ 11,3%
*percentage of tenders won by BGK out of all tenders with BGK offer (by volume)
Municipal bonds market
0%
2%
4%
6%
8%
10%
12%
14%
16%
2006 2007 2008 2009 31.08.2010
Y ear
Mar
ket s
har
e
Municipal loan market
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
2006 2007 2008 2009 08.08.2010
Year
Mar
ket
sh
are
2009 2010
tenders 2340 2577
BGK participation (number) 484 783
BGK participation (volume) 41% 47%
efficiency* 40% 47%
Value added
Municipalies:• Close ties and
network with municipalities developed over the years
• Advisory servises for municipalities (analysis, PPP, liquidity, financing, EU funds)
SMEs:• Equity for innovation
start-ups• Technology grants for
innovation SMEsCounter ciclical:• providing financing for
municipalities/SMEs during the crisis at low cost (loans, guarantees)
• providing liquidity for interbank market
11
Summary
• 100% state own financial institutions with clear public mandate and implicit guarantee
• Support to the development of the country at the central and municipal level
• Guarantor of effective use of EU revolving instruments in Poland especially in 2014-2020 MFF
12