141017 - investment of choice - final - 1h14 except ... · sized enterprises to support...

56
European Bank for Reconstruction and Development Investment of Choice October 2014

Upload: vuongtruc

Post on 19-Jul-2018

214 views

Category:

Documents


0 download

TRANSCRIPT

European Bank for Reconstruction and Development

Investment of Choice

October 2014

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

Overview of EBRD

17 October, 2014 3

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

EBRD’s Credit Strengths

17 October, 2014 14

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

EBRD’s Financial Performance

17 October, 2014 19

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)

EBRD’s Funding Strategy and Results

17 October, 2014 24

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: [email protected]

Jessica Pulay Deputy Head, Funding: [email protected]

Charles Smith Manager, Funding: [email protected]

Aziz Jurayev Manager, Local Currency Funding: [email protected]

Stefan Filip Manager, Funding: [email protected]

Giulia Franzutti Manager, Funding: [email protected]

Funding desk group email: [email protected]

Bloomberg

Tel: +44 (0)20 7628 3953

Fax: +44 (0)20 7338 7335

Treasurer:Treasurer:Treasurer:Treasurer:

Axel Van Nederveen - Treasurer: [email protected]

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

Annex

17 October, 2014 32

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