choice by xiuliliaofz

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									      European Bank for
Reconstruction and Development

     Investment of Choice
          February 2014




                 0
Contents


•   Overview of EBRD                          2
•   EBRD’s Credit Strengths                   13
•   EBRD’s Financial Performance              18
•   EBRD’s Funding Strategy and Results       23
•   Annex                                     31




                                          1
Overview of EBRD




                   2
About EBRD

•   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 34 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

                                             3
EBRD’s Mission

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



                                           4
    Global Shareholder Structure

•    57% of shareholding is G7 and 84% is
     OECD                                             Global Shareholder Structure1)

•    €30 billion authorised capital                 EBRD region Canada
                                                    excluding EU3) 3.5%
                                                                          Other
                                                                          6.6%

                                                        8.1%
     - €6.2 billion paid-in capital                  Japan
                                                      8.6%
     - €23.8 billion callable capital
•    €29.7 billion subscribed capital as at
                                                         USA
                                                        10.1%
                                                                                         EU 28 Countries2)
     30 September 2013                                                                       63.1%

                                                   1) Based on subscription in capital increase as at 30
•    Continued       reserve    accumulation          September 2013
                                                   2) Includes European Community and European Investment
     (€8.4 billion as at 30 September 2013)           Bank each at 3.0%; France, Germany, Italy, UK each at
                                                      8.6%
•    EBRD is 0% risk weighted (Basel II)           3) Russia at 4.1%




    Strong support from diversified global shareholder base



                                               5
Shareholder Credit Strength

 More than 50% of shareholders are                                      Breakdown of Callable Capital by
 rated AAA/ Aaa by at least one of S&P                                         Rating Category
 and Moody’s                                                                      Total subscribed
                                                                                callable capital €23.5         Total subscribed callable
                                                                                        billion              capital excluding Countries of
                                                                        100%
 95% of the callable capital is rated                                                    4.9%                   Operations €20.3 billion
                                                                        90%
 investment grade or better by at least                                 80%
                                                                                        19.7%                                          1.3%
                                                                                                                          12.6%
 one of S&P or Moody’s




                                          % of Total Callable Capital
                                                                                                     2.6%                             0.7%
                                                                        70%
                                                                                        21.5%                             20.6%
                                                                        60%
 All countries of operation are also                                    50%
 shareholders                                                           40%

                                                                        30%
  – account for 13.6% of the total                                      20%
                                                                                        51.3%                             51.3%

    shareholding                                                        10%

                                                                         0%

                                                                                 AAA         AA          A      BBB         Other
                                                                          Based on subscription in capital increase as at 30 September
                                                                          2013 and ratings from 22 October 2013

  EBRD has the highest quality callable capital among multilateral
  development banks


                                      6
                                                           DRE by Region 30 Sept 2013**
Where we operate                                 100%

                                                  80%
September 2013                                    60%

                                                  40%

                                                  20%

                                                    0%



                                                         SEMED (0.2%)                 Turkey
                                                         Central Asia and Mongolia    Eastern Europe and Caucasus
                                                         Central Europe and Baltics   South-Eastern Europe
                                                         Russia




                                    39 local offices
                                    2,047 staff (75 per cent in London)
                                    €235.2 billion in total project value
                       39 Local Offices Across the Region approx. 1,500 employees
                       (75% based in London headquarters)




                                   ** DRE – Development Related Exposure
                   7
 Development Related Exposure (DRE) I
     €26.2 billion DRE
     1,779 active investments                                                               DRE (2005 - 30 Sept 2013)
                                                                                    30                                                                2,000
     Average loan:




                                                                                                                                                               Annual number of projects
                                                                                    25                                                                1,600




                                                               Volume (€ billion)
      – Size €14 million                                                            20
                                                                                                                                                      1,200
      – Margin 3.2%                                                                 15
                                                                                                                                                      800
      – Internal rating equivalent of ‘BB-’                                         10
                                                                                                                                                      400
     Loan portfolio maturity profile:                                                5

             Maturity             Percentage of Loan DRE                             0                                                                0
         Less than 2 years                 8.3%                                            2005 2006     2007 2008   2009   2010 2011   2012 3Q13

            2 to 5 years                   25.8%                                          Outstanding equity investments (at cost)
           5 to 10 years                   38.1%                                          Outstanding loans
                                                                                          Number of active projects
           10 to 15 years                  24.2%
         More than 15 years                3.7%


     5 largest loan counterparties (on a                                                    DRE by Industry 30 Sept 2013
     consolidated group level) amount to                                                                    Property and
                                                                                                              tourism    Telecoms
                                                                                                                                         Infrastructure
     10% of the loan operating assets                                                             Agribusiness 3.2%
                                                                                                     10.8%
                                                                                                                           2.7%
                                                                                                                                             19.9%


     Average equity investment:                                                          Manufacturing
                                                                                          and services
                                                                                             13.0%
      – Size €17 million
                                                                                                                                                       Financial
      – Internal rating equivalent of ‘B-’                                                   Micro, small and
                                                                                                                                                      institutions
                                                                                                                                                         17.4%
                                                                                                                                     Energy
      – Holding period 6.4 years                                                              medium-size
                                                                                               enterprises
                                                                                                                                     17.3%
                                                                                                  15.7%
Data from 30 September 2013 unless otherwise stated
At cost basis, excludes undrawn commitments
                                                           8
   Development Related Exposure (DRE) II
     Equity portion stable at 24%, of which:                                                Total DRE by Type
       – 32% have put arrangements and/or                                                     30 Sept 2013
         other option arrangements with the                                                  Equity              Private Sector
                                                                                                                     Loans
         project sponsors                                                                    24.3%
                                                                                                                     56.1%

       – 22% are invested in diversified equity
         funds
                                                                        State & Public
       – 30% are in listed shares                                       Sector Loans
                                                                                       1)
                                                                            19.6%
     In addition to the DRE (disbursed
     amounts only), EBRD has off-balance                                              Total DRE by Currency
     sheet guarantees of approx. €651 million,                                             30 Sept 2013
                                                                                                PLN    Others
     mainly related to its trade finance                                             RUB        2.7%    4.9%
                                                                                    10.0%
     programme
     Loans to clients are made on a floating
                                                                                                                            EUR
     rate basis, and fixing of client loans are                                                                            50.7%

     made on case by case basis and with                                         USD
                                                                                31.7%
     separate hedge (no interest rate risk)
                                                                        Other includes: RON, KZT, LVL, HRK, RSD, GEL, HUF, CZK, LTL,
Data from 30 September 2013 unless otherwise stated                     AMD, UAH, MNT, AZN, KGS, BGN, MDL, BYR
At cost basis, excludes undrawn commitments
1) Includes public sector entities and publicly owned corporation

                                                                    9
    What Makes EBRD Unique

•    Preferred creditor status exempts payments                              Micro, small and medium-sized enterprises
                                                                  MSME Financing (operating assets)
                                                                        financing - operating assets
     to EBRD from generalised moratoria and                              4

     foreign exchange controls                                           3


•




                                                            € billion
     Strong local presence through 39 offices                            2


•    Local currency financing and development                            1

     of local capital markets                                            0
                                                                             2006   2007   2008   2009   2010   2011   2012   3Q13
•    Lending to micro, small and medium-sized
     enterprises to support entrepreneurial                                  Sustainable Energy -Initiative
                                                                             Sustainable Energy Initiative operating
     initiative                                                                     (operating assets)
                                                                                            assets
                                                                        10

•    Promoting sustainable environmental,                         7.5
     social and governance policies that are core


                                                    € billion
     to EBRD projects                                                    5


                                                                  2.5


                                                                         0
                                                                             2006 2007 2008 2009         2010 2011 2012 3Q13




                                           10
    Current Developments (I)
    Extending EBRD’s geographic mandate
•    G8 gave strong support to an extension of the Bank’s geographic mandate to the
     Southern and Eastern Mediterranean (SEMED) region
•    In 2011, Tunisia and Jordan joined Egypt and Morocco as EBRD shareholders with
     a view to becoming recipients of EBRD investments
•    On 30 September 2011, EBRD’s Governors approved a resolution to amend the
     Agreement Establishing the Bank, facilitating technical cooperation in the region
•    In May 2012, EBRD’s Governors approved a net income allocation of €1.0 billion to
     an EBRD SEMED Investment Special Fund (ISF) to start investment in the region
     before formal ratification
      -   For accounting and policy compliance purposes, the resources in the EBRD
          SEMED Investment Special Fund are aggregated with EBRD’s ordinary capital
          resources. Post ratification, the fund will be integrated into EBRD’s balance
          sheet.




                                             11
    Current Developments (II)
    Extending EBRD’s geographic mandate
•    On the 1 November 2013, the Board of Governors passed the Resolutions granting
     recipient country status to each of Jordan, Morocco and Tunisia
      -   Egypt is to remain a potential recipient country and as such shall continue to
          be funded through the SEMED ISF
•    On the date of the Resolution, the assets and capital resources for these new
     countries of operations (Jordan, Morocco and Tunisia) have been reintegrated from
     SMED ISF into the Bank’s balance sheet
      -   €337 million of resources held in the SEMED ISF have been transferred to the
          Bank’s ordinary capital resources
•    At 3Q 2013, the Bank had operating assets to a total value of €103 million in the
     SEMED Region


     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

                                             12
EBRD’s Credit Strengths




                          13
Key EBRD Credit Strengths

•   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 €14.8
    billion, 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 13.6% ownership overlap with
    countries of operation

    EBRD has one of the strongest credit profiles in the supranational segment



                                            14
   Comparative Credit Strengths
 S&P Credit Rating Peer Comparison1)
                                                                                         Ratings Uplift Due                                                 Date of Latest
                                                                    Stand Alone Credit    To Extraordinary    Long term Issuer                               Affirmation
                   Business Profile        Financial Profile                                                                            Outlook
                                                                          Profile           Shareholder         Credit Rating                             (available on the
                                                                                              Support                                                       IFI's website)
    ADB            extremely strong           very strong                  aaa              not required              AAA               Stable               06-Aug-13
   AFDB                very strong              strong                     aa                     yes                 AAA               Stable               20-Dec-13
   EBRD                very strong         extremely strong                aaa              not required              AAA               Stable               05-Nov-13
     EIB           extremely strong           very strong                  aa+                    yes                 AAA               Stable               23-Oct-13
    IADB               very strong            very strong                  aa+                    yes                 AAA               Stable               18-Nov-13
    IBRD           extremely strong        extremely strong                aaa              not required              AAA               Stable               23-May-13
     IFC               very strong         extremely strong                aaa              not required              AAA               Stable               30-Apr-13

 Selected S&P Credit Metrics Peer Comparison2)
                                                            ADB              AFDB            EBRD             EIB                IADB             IBRD             IFC
Principal Size Indicators (USD billion):
Total Assets                                                113.3               31.5          60.8            610.5              89.4             338.2           75.8
Purpose Related Exposure                                    52.8                15.7          32.3            516.1              67.1             138.1           36.2
Adjusted Shareholders' Equity (ACE)                         15.9                 7.4           17             54.3               19.3             36.6            20.6
Risk Adjusted Capital (RAC) (percent):
Before Adjustment                                           30%                 28%           16%             13%                25%              31%             18%
After Adjustment                                            19%                 18%           23%             13%                15%              31%             30%
Leverage (percent):
Gross Debt / ACE                                            368%             261%            242%             986%               331%             398%            248%
Gross Debt Net of Liquidity / ACE                           230%             100%            108%             830%               253%             290%            69%
Liquidity (percent):
Liquid Assets / Total Assets                                19%                 39%           37%             11%                17%              12%             49%
Liquid Assets / Gross Debt                                  37%                 62%           55%             13%                23%              27%             72%


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 2012” (based on 2011 data, except for IBRD and IFC with data from fiscal year ending 30 June 2012)

                                                                                             15
Substantial Paid-In Capital and Reserves

 During the financial crisis EBRD has                            Development of Paid-In Capital
 retained its strong reserve position                            and Reserves (2006 – Q3 2013)
                                                            16

 Available Economic Capital grew by                         14


 €5.2 billion (or 54%) from €9.6 billion                    12


 in 2006 to €14.8 billion as at 30                          10




                                                € billion
 September 2013                                              8

                                                             6

 More than 20% of EBRD’s capital is                          4

 paid in, compared to an average of                          2

 6.3% for other global or regional                           0
                                                                  2006   2007   2008   2009   2010     2011   2012    Q3
 triple-A rated multilateral financial                                                                               2013

 institutions with callable capital                               Paid-in capital                    Reserves
                                                                  General portfolio provisions       Net unrealised gains
                                                                  Available economic capital


 Strong capital position with relatively low level of callable capital



                                           16
Multilateral Development Banks as an
Asset Class
Multilateral Development Banks (MDBs)        Average Rating Transition for Foreign
are designed to repay investors based            Currency Sovereign Ratings
on assets with ultimate recourse to
diversified group of shareholders for        100%

callable capital                              80%

                                              60%
To date, no MDB has had to resort to
calling its callable capital                  40%

                                              20%
Only one triple-A rated MDB has ever
been downgraded by a rating agency            0%
                                                    One year    Three years   Five years    Ten years Fifteen years
and was subsequently upgraded to                      AAA         AA          A       BBB          BB        B
triple-A again
                                                S&P’s Sovereign Defaults And Rating Transition Data 1975-2012,
As a comparison, individual sovereign           2012 Update

triple-A ratings are more prone to
downgrades

Multilateral Development Banks have very stable triple-A ratings

                                        17
EBRD’s Financial Performance




                       17
3Q 2013 Financial highlights

                              3Q 2013         2012

Realised income               €926 million    €1.0 billion

Net profit before transfers   €705 million    €1.0 billion

Total reserves                €8.4 billion    €7.8 billion

Total capital resources       €38.6 billion   €37.7 billion
(including €1.0 for SEMED)

Balance sheet assets          €49.7 billion   €51.2 billion




                                    19
Strong Underlying Profitability
Robust realised earnings

 Profit with and without Provisions / Fair Value Movements 2007 – 3Q 2013
              2,500



              2,000



              1,500



              1,000
  € million




                500



                  0



               -500



              -1,000



              -1,500



              -2,000
                           2007                 2008                2009               2010                 2011                 2012                3Q13


               Realised profit before provisions for losses and unrealised movements          Provisions for loan losses

               Fair value movements in equity                                                 Net profit/loss after provisions for losses and unrealised movements




              Strong and consistent underlying realised profit before provisions
                                                                                       20
                Equity Portfolio and Realised Equity Gains

                Development of Historic Cost and Fair Value                                              Development of Divestments and Realised Gains
                       Adjustment (2007 – 3Q 2013)                                                                      (2007 – 3Q 2013)
            8
                                                                                                          1.0                                                                        2.5

            7                                                                                             0.9

                                                                                                          0.8                                                                        2.0
            6




                                                                                                                                                                                           Cumulative equity gains
                                                                                                          0.7
            5
                                                                                                          0.6                                                                        1.5
€ billion




                                                                                             € billion
            4                                                                                             0.5


            3                                                                                             0.4                                                                        1.0

                                                                                                          0.3
            2
                                                                                                          0.2                                                                        0.5
            1
                                                                                                          0.1

            0                                                                                             0.0                                                                        0.0
                                                                                                                2007     2008         2009       2010   2011      2012     Q3 2013
                 2007      2008         2009      2010        2011       2012      3Q 2013

                        Historic cost      Fair value adjustment (incl. derivatives)                       Divestments          Realised equity gains     Cumulative realised equity gains



                • Equity portfolio (including derivatives) remains valued above cost (+5%).
                • At end 3Q 2013, equity investments at cost stood at €6.36 billion, representing
                  24% of total operating assets (2008: 18%), with an equity portfolio fair value of
                  €6.65 billion.
                • During the period 2007 – Q3 2013 the Bank recognised €2.1 billion in realised
                  equity gains at an average money multiple of 1.8 times.
                                                                                                    21
Impaired Assets and Provisions
   Development of impaired assets, Provisions and Loan Loss Reserves
                           (1999 – 3Q 2013)1)
                    900                                                                                                                   14.00%

                    800
                                                                                                                                          12.00%
                    700
                                                                                                                                          10.00%
                    600
        € million




                    500                                                                                                                   8.00%

                    400                                                                                                                   6.00%

                    300
                                                                                                                                          4.00%
                    200
                                                                                                                                          2.00%
                    100

                     0                                                                                                                    0.00%

                            99     00     01     02     03     04     05     06      07      08     09     10     11     12          13
                          19     20     20     20     20     20     20     20      20      20     20     20     20     20          20
                                                                                                                               3
                                                                                                                              Q
                                 Total Loan Impaired Assets (LHS)
                                                                                                                        1) Comparative data for Total Provisions and
                                 Specific and General Provisions (IFRS Provisions) (LHS)
                                                                                                                        LLR only available from 2005          due to
                                 Loan Loss Reserves (LHS)                                                               accounting changes.
                                 Loan Impaired Assets as % of Loan Operating Assets (RHS)
                                 IFRS Provisions and LLR (from 2005) as a % of Loan Operating Assets (RHS)


   Low level of impaired loans and high level of provisions
   As at 31 December 2013, the cumulative debt write-offs (net of recovery)
   since inception of the EBRD amounts to 332 million, which is 0.47% of the
   cumulative loan business volume (net of cancellations)
                                                                                  22
EBRD’s Funding Strategy and Results




                       22
Funding Principles

•   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




                                           24
Support for Investors

•   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:
              enhanced liquidity
              improved trading performance
      - Private Placements:
              EBRD commits to show prices for its bonds
              investors can lock in profits
      - 11.2% repurchased upon investor demand (as at 31 December 2013)
•   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

                                              25
Innovative Funding Structures


EBRD is able to issue innovative structures which meet specific investors’
requirements:

 •   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
                                           Oil, Gold, S&P 500 Index. Source: Bloomberg




                                      26
2013-2014 Borrowing Programmes

                                                                                 Historical Borrowing Programme
 2014 Borrowing Programme of up to                                                          2001 - 2013
 €6 billion                                                                 8                                                                    10
                                                                            7
                                                                            6                                                                    8
          €6.5 billion executed in 2013




                                                               € billions
                                                                            5                                                                    6




                                                                                                                                                      Years
                                                                            4
                                                                            3                                                                    4
          €6.3 billion executed in 2012                                     2                                                                    2
                                                                            1
                                                                            0                                                                    0
 USD Global benchmark bonds, Green




                                                                               01

                                                                               02

                                                                               03

                                                                               04

                                                                               05

                                                                               06

                                                                               07

                                                                               08

                                                                               09

                                                                               10

                                                                               11

                                                                               12

                                                                               13
 bonds, and Catastrophe bonds




                                                                            20

                                                                            20

                                                                            20

                                                                            20

                                                                            20

                                                                            20

                                                                            20

                                                                            20

                                                                            20

                                                                            20

                                                                            20

                                                                            20

                                                                            20
                                                                                   Amounts raised 31 Dec 2013 (LHS)          Average maturity (RHS)



    Breakdown of 2012 Issuance                                                         Breakdown of 2013 Issuance
                           INR                                                                   INR   ZAR      IDR
             IDR   CHF
                          0.3%   MXN                                                            0.9%   0.4%    0.4%   MYR
            1.0%   0.8%                                                                    MXN
    RUB                          0.2%   UYU                                                                           0.3%    UYU
                                                                                           1.0%                                      AUD
    1.1%                                0.2%                                                                                  0.3%
                                                                                          TRY                                        0.2% VND
           EUR                                 JPY
   BRL     5.3%                                0.1%                                       3.5%                                           0.06% JPY
                                                                                RUB
   6.2%                                                                         4.4%                                                          0.04%


  TRY                                                                            BRL
 11.4%                                                                           5.6%

                                                       USD
     GBP                                              60.4%                        EUR
                                                                                                                                       USD
    13.0%                                                                         11.3%
                                                                                                                                      71.6%

                                                              27
Outstanding Debt

  €62.9 billion issued since EBRD’s inception in 1,266 transactions and in more
  than 40 currencies
  €26.7 billion outstanding through 456 bonds
  Average maturity at launch 7.6 years, average life remaining 3.7 years

  Outstanding Debt by Currency                                       Outstanding Debt by Currency after
          before Swap                                                             Swap
                      ZAR     IDR
                      1.3%           Other
               AUD           1.0%
                                     2.0%
               2.8%                                                                            RON
        JPY                                                                     GBP    RUB
                                                                                              0.01%
       3.7%                                                                     8.1%   2.6%
    RUB
    3.8%                                                                EUR
 TRY                                                                   17.7%
 6.0%

 BRL
 6.7%                                                    USD
                                                        53.4%
        EUR
        7.5%                                                                                                 USD
                   GBP
                  11.8%                                                                                     71.6%

        Other includes: INR, NOK, CNY, MXN, MYR, NZD,
        CHF, PHP, CAD, RON, SKK, UYU, VND                                                     As at 31 Dec 2013


                                                                28
    Recent USD Global Bond Issuance
2013:
USD 1 billion 1.625% November 2018                                                                 80%

                                                                                                   70%
“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.                                             60%
                                                                                                   50%
USD 1.25 billion 1.00% September 2018
                                                                                                   40%
“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.                                                30%

                                                                                                   20%
USD 1.25 billion 1.00% June 2018
                                                                                                   10%
“The issuer was able to get a sub-Libor spread in fives, which I don’t think we’ve seen all
                                                                                                   0%
year” Euroweek                                                                                           2013 -    2013 -      2013 -    2013 -    2012-Sep17 2012- Feb17 2011-Oct16 2011- Mar16
                                                                                                         Nov18     Sep18      June18     Mar20
USD 1.25 billion 1.50% March 2020                                                                                     Central Bank      Bank      Asset Manager      Other
“EBRD’s latest deal had strong sponsorship from Asian Central Banks” IFR
                                                                                                   60%
2012:
                                                                                                   50%
USD 1.7 billion 0.75% September 2017
“There was a strong bid for the credit given the lack of quality supply” IFR                       40%

USD 3.0 billion 1.00% February 2017                                                                30%
“It’s an awesome trade.” Euroweek
                                                                                                   20%
2011:
                                                                                                   10%
USD 1.5 billion 1.375% October 2016
                                                                                                    0%
“This is an impressive outcome and real testament to their name ” Euroweek                                2013 -    2013 -     2013 -     2013-       2012-       2012-      2011 -      2011 -
                                                                                                          Nov18     Sep18      Jun18      Mar20       Sep17       Feb17      Oct16       Mar16
USD 1.5 billion 2.5% March 2016
                                                                                                                   Asia      Europe      Middle East / Africa         Americas
“The EBRD was again able to demonstrate its ability to attract investor interest with the deal
being upsized from the US$1bn trade originally planned. The pricing puts the issuer at the
apex of the Triple A SSA sector.” IFR                                                                    For 2013-Mar20, 2013-Nov18 and 2012-Feb17 Europe also includes Middle East / Africa




                                                                                              29
How to Contact the EBRD Funding Team

Funding:
Isabelle Laurent                  Deputy Treasurer and Head of Funding: laurenti@ebrd.com
Jessica Pulay                     Deputy Head, Funding: pulayj@ebrd.com
Olga Dyakova                      Senior Manager, Funding: dyakovao@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
Funding desk group email:         fundingdesk@ebrd.com
Bloomberg
Tel: +44 (0)20 7628 3953
Fax: +44 (0)20 7338 7335
Treasurer:
Axel Van Nederveen - Treasurer: vannedea@ebrd.com
Tel: +44 (0)20 7338 7370

Website: http://www.ebrd.com/pages/workingwithus/capital.shtml




                                               30
Annex




        30
   Callable Capital
   Art. 6, 16, 17 and 42 of the Agreement Establishing EBRD

 Payment source sequence pre termination of the                 Payment source sequence post termination of the
 Bank’s operations (Article 17)                                 Bank’s operations (Article 42)
       Losses arising in the Bank’s ordinary operations         • In the event of termination of the operations of the
       shall be charged to/ against:                               Bank, the liability of all members for all uncalled
                                                                   subscriptions to the capital stock of the Bank shall
         1)   provisions                                           continue until all claims of creditors shall have
         2)   net income                                           been discharged

         3)   special reserves (Article 16)                     • Creditors on ordinary operations holding direct
                                                                   claims shall be paid:
         4)   general reserves and surpluses
                                                                     1)   out of the assets of the Bank,
         5)   unimpaired paid-in capital                             2)   out of the payments to be made to the Bank
         6)   “…lastly, an appropriate amount of the                      in respect of unpaid paid-in shares
              uncalled subscribed callable capital which             3)   and then out of payments to be made to the
              shall be called…“                                           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   32
SEMED Investment Special Fund

                       31 Oct 2013                     1 Nov 2013
                    EUR 1bn allocated to SEMED      EUR 1bn allocated to SEMED
                    region                          region
     EBRD           • EUR 570mn actually
                        transferred to SEMED ISF
                                                    • EUR 233mn actually
                                                        transferred to SEMED ISF
                                                    • EUR 337mn transferred
                                                        back to EBRD’s ordinary
                                                        capital resources

                    EUR 570mn received split on     EUR 233mn received split on
                    • Projects EUR 522mn            • Projects EUR 185mn
   SEMED ISF        • Net losses (FX movements,     • Net losses (FX movements,
                      expenses, etc.) EUR 23mn        expenses, etc.) EUR 23mn
                    • Transfer to Shareholders      • Transfer to Shareholders
                      Special Funds EUR 25mn          Special Funds EUR 25mn
                      (out of EUR 75mn allocated)     (out of EUR 75mn allocated)

                    EUR 25mn received as grant      EUR 25mn received as grant
  EBRD Special
Shareholders Fund

                              33
Robust Balance Sheet & Callable Capital
Key Components of EBRD’s Balance Sheet 3Q13




                                                                  Other Financial
                        55
                                                                  Liabilities, 3.09

                        45
                             Liquid Assets & Other
            € billion




                        35       Assets, 23.45

                                                               Borrow ings, 31.94

                        25                                                                  Off Balance Sheet
                                                                                            Other Callable Capital,
                        15    Operating Assets,                                                    11.43
                                   26.20                        Paid-In Capital,
                                                              Reserves & Retained              Triple A Callable
                        5                                                                       Capital, 12.04
                                                                Earnings, 14.62


                        -5          Assets                          Liabilities                Callable capital




 “Triple A” callable capital with at least one triple A rating from either Moody’s or S&P

                                                                             34
Comparative Credit Strengths

                                                     Leverage Ratio Stress Testing

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 (14 Jan 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 (14
          Jan 2014)




                                                                    35
    S&P Credit Metrics - Peer Comparison1)

                 Principal Size Indicators (USD billion)                                             Risk Adjusted Capital After Adjustment
  700                                                                                       35%
  600                                                                                       30%
  500                                                              Total Assets             25%
  400                                                                                       20%
                                                                   Purpose Related                                                               Risk Adjusted Capital
  300                                                                                       15%                                                  After Adjustment
                                                                   Exposure
  200                                                                                       10%
                                                                   Adjusted Common
  100                                                                                       5%
                                                                   Equity
    0                                                                                       0%
         EBRD     ADB   AFDB     EIB   IADB   IBRD     IFC                                        EBRD   ADB   AFDB    EIB   IADB   IBRD   IFC


                            Leverage (percent)                                                                        Liquidity (percent)
1200%                                                                                       80%
                                                                                            70%
1000%
                                                                   Gross Debt /
                                                                                            60%
                                                                   Adjusted
800%                                                               Common Equity            50%                                                  Liquid Assets / Total
600%                                                                                        40%                                                  Assets
                                                                   Gross Debt Net of        30%                                                  Liquid Assets / Gross
400%                                                               Liquidity /                                                                   Debt
                                                                   Adjusted                 20%
200%                                                               Common Equity
                                                                                            10%
  0%                                                                                        0%
          EBRD    ADB   AFDB     EIB   IADB    IBRD    IFC                                        EBRD ADB AFDB        EIB   IADB IBRD     IFC
        1) Source: Standard & Poor’s, “Supranationals Special Edition 2012”

                                                                                       36
Net Debt Write offs
% of Loan Operating Assets




      Notes
      • OA = Loan Operating Assets


 • Losses remain very low, partly reflecting the Bank’s superior
   liquidity and capital which allows patience in debt work-outs.
                                                             As at 30 June 2013

                                     37
Managing Treasury Asset Maturity

                                   Shortening of Treasury Maturity
                                                                                                                            Short Term Liquidity Ratios
                                               Profile
                                                                                                                          In the 4Q 2012 EBRD introduced a
                                   25                                                       3.0
                                                                                                                          new short term liquidity policy which
Treasury Balance Sheet (€ bln) d




                                   20                                                                                     is based on the principles of the




                                                                                                  Average Maturity
                                                                                            2.0
                                   15                                                                                     Liquidity Coverage Ratio proposed
                                   10
                                                                                                                          as part of Basel III
                                                                                            1.0

                                   5                                                                                      The policy requires that the ratio of
                                   0                                                        0.0                           eligible liquid assets and scheduled
                                        2007   2008     2009       2010       2011   2012
                                                      Treasury Balance Sheet LHS
                                                                                                                          cash inflows to cash outflows over
                                                      Average Maturity RHS
                                                                                                                          both a 30-day and 90-day horizon
                                                                                                                          must be a minimum of 100 per cent
                                                                                                                          Since its introduction, these
                                                                                                                          minimum ratios have been
                                                                                                                          consistently exceeded


                                                                                                                     38
Low Leverage and Strong Liquidity Ratios


            Low Leverage Ratio                                                   Strong Liquidity Ratio
160%                                                               120%
140%                                                               100%
120%
100%
                                                                    80%
 80%                                                                60%
 60%                                                                40%
 40%
                                                                    20%
 20%
  0%                                                                    0%
        2006   2007   2008   2009   2010   2011   2012    Q3                  2006 2007 2008 2009 2010 2011 2012            Q3
                                                         2013                                                              2013

        Gross debt / shareholders' equity + AAA callable capital                    Next 3 years' cash requirement basis



       At end Q3 2013 gross borrowings were                                  In Q3 2013, net liquidity increased to
       130% (2012: 133%) of shareholders’                                    72% from 64% in 2012 - substantially
       equity and ‘triple-A’ callable capital,                               above the 45% minimum requirement
       including capital increase
       Increase reflects the impact of the
       SEMED region activities



                                                                   39
Prudent Capital Adequacy policies

•   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 repayment with triple-A level of certainty

                                           40
Prudent Statutory and Risk Capital Ratios

        Statutory Capital Ratio                                 Economic Capital Utilisation Ratio
 100%
                                                                    100%
 90%
                                                                    90%
 80%
                                                                    80%
 70%
                                                                    70%
 60%
                                                                    60%
 50%
                                                                    50%
 40%
        2007    2008    2009    2010    2011    2012     Q3         40%
                                                        2013               2007   2008   2009   2010    2011   2012    Q3
                                                                                                                      2013
               Operating assets / Total statutory capital
               92% Threshold                                                      REC / AEC     Limit     Threshold
               Limit



• Q3       2013    statutory capital                                  • Q3 2013 AEC at €14.8 billion
  utilisation is at 68% (2012: 70%)                                     gave an Economic Capital ratio
  including €9 billion effective                                        of 72% (2012: 74%)
  callable capital increase and
  SEMED Special Fund allocation of                                    • 100% of EBRD’s economic
  €1.0 billion                                                          capital would be treated as Tier
                                                                        1 capital under Basel II


                                                               41
EBRD Investment Decision
Operations Committee

                                      Operations Committee
                                           (OpsCom)


                      Controls             Banking teams          Mandate Compliance
                                            Sector teams
                                            Local offices
                   Credit/Risk Mgmt                                   Economists

                        Legal                                         Environment
                                           Lead transactions
                                           Client relationships
      IT Systems     Compliance                                       Procurement
                                              Identify exits



•   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



                                                      42
EBRD Investment Decision
Process steps

Documentation required for each stage of approval follows a prescribed format
  Concept Review      Structure Review    Final Review         Board Approval        Signing


  Initial clearance   Complex projects    Once key terms       Unless approved       Before signing a
  before allocating   return to Ops Com   have been            in a framework, all   closing certificate
  resources to a      for Structure       negotiated and       projects need to      is signed to record
  project.            Review. Norm for    appropriate due      be approved by        any significant
                      e.g. equity         diligence has been   the Board of          changes since
                      investments.        completed.           Directors. Host       Final Review.
                                                               country has veto
                                                               right.

  •   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



                                                  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
Monitoring
Development 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
46
EBRD Equity Portfolio

                                                   Equity
                                                Investments
                                                 €6.9 billion

                              Co-Investment                  Co-Investment
       Listed                                                                           Equity Funds
     43 investments            FDI Sponsor                    Local Owner                 114 investments
  30% of investment cost         106 investments                 79 investments         22% of investment cost
                              27 % of investment cost         21% of investment cost

               IPO                      New Market                    Entrepreneurs             Intermediated
                                                                                                 Investments

          Privatisations              Puts and Calls                  Minority Status           Locally Based
                                                                                               Fund Managers
        Strategic Investors



• EBRD’s total equity investments at end of June 2013 was €6.35 billion, with an equity fair
  value of €6.9 billion (including associated derivatives)




                                                        47
EBRD Valuation and Control Process


                                Fair Value Assessment
                                All equity holdings valued and reported
                               semi-annually in accordance with IFRS.
                                  20 largest holdings valued quarterly
     IT Systems                                                            External Auditors
         SAP, Summit,
                                                                              Valuations agreed
         Frameworks,
                                                                              with EBRD auditors
     In-house monitoring
                                                                                   (Deloitte)
        software (PMM)
                              Equity Valuation Committee
                                  Meets quarterly to review valuations




                                                                          Credit/Risk
                Controllers                 Banking
                                                                          Management


 •    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: € 12.3 billion
•   Strong B loan portfolio performance
    -     Gross write-offs/total B loans committed: 0.18%
    -     Net write-offs/total B loans (after recoveries and write-backs) 0.14%
•   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 2012

                                                                       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 benchmark issuance in Euro and US Dollars (10 outstanding)
    exempt from SEC filing
    cleared through Euroclear, Clearstream and DTC

Eurobond 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

Domestic bonds including
   Hong Kong, Hungary, Italy, Romania, Russia, Singapore, South Korea,
   Spain, Sweden, Taiwan

Many of the publicly issued bonds represent landmark transactions


                                     52
Green Bond Issuance

• 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:

              Energy                    Sustainable             Environmental
              Efficiency                living                  services and
                                                                public
                                                                transport
                                       Water
              Clean                                             Waste
                                       Management
              Energy                                            Management



• Criteria established by the EBRD’s Environmental and Sustainability, Banking,
  Treasury and Legal departments




                                          53
    Breakdown of 2013 Green Issues
•    Proceeds from issuance are directed towards the GPP by:
    - Definitions in the bond documentation
                                                                                                           Criteria &
    - Limiting total green bond issuance to 70% of the GPP
    - Allocating proceeds to existing and new projects                                                     Selection

                                                                                                             GPP
•    EBRD issued a total of 12 bonds for EUR 415 million equivalent since 2010.
•    Breakdown of 2013 Green bond issuance                                                       Reporting Monitoring
    - Total green issuance EUR 287.4 million in 4 issues in AUD, BRL and USD
    - Average maturity is 4.28 years


•    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 USA, and over
     60% with the pension funds.
                        Geography                                                   Investor type
                                                                                             Foundations
                                                                            State Entities       1%
                 Asia                                      Asset Managers        5%
                18.0%                                            12%




                                             USA     Central Banks
                                            51.0%        18%
       Europe                                                                                                      Pension Funds
        31.0%                                                                                                           64%


                                                          54
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.




                                                     55

								
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