ABN AMRO credentials - PowerPoint by chenshu

VIEWS: 5 PAGES: 25

									ABN AMRO’s response to
      climate change
Presentation at the annual conference
on the environment organized by
FinMedia                                                       Plaatjes van de gletsjer




Bucharest, September 28th


Peter Weiss, Country Executive, ABN AMRO Romania
Teia Marina Catana, Group Sustainable Development, Amsterdam           STRICTLY PRIVATE & CONFIDENTIAL
Executive summary

   ABN AMRO, an introduction
           - international profile,
           - operations in Romania,
           - the way we conduct our business
   The context of climate change
           - the issue,
           - the risks and opportunities,
           - the global solutions,
   The carbon markets
           - the flexible mechanisms,
           - how they operate,
           - EU ETS - activity so far, industrial sectors
           - Romania‟s position
   ABN AMRO’s response
           - direct and indirect footprint,
           - financial services for your climate related activities
   Contact information



                                                                      2
1
    ABN AMRO,
    an introduction



                      3
ABN AMRO – the international profile

    Well-positioned Bank(2)                  ABN AMRO is one of the world‟s leading financial institutions with one of the
                         Ranking              strongest balance sheets in the industry
Total assets
- Worldwide                   16
- European                    10
                                             We believe in building strong teams and strong relationships. The rich diversity of
Tier One Capital                              cultures, expertise and experience we possess is harnessed to work on your
- Worldwide                   20
- European                    11              behalf
                                             Our goal is to create value for our clients through a constant focus on their
      Solid Credit Rating

                        Long-term
                                              financial services needs. There is more than one solution to every challenge. We
Moody‟s                       Aa3             aim to find the one that suits you best
Standard & Poor              AA-
Fitch IBCA                   AA-             We implement our strategy through a number of (Strategic) Business Units -
                                              Consumer & Commercial Clients, Wholesale Clients, Private Clients, Asset
      Global Resources(1)
                                              Management, Transaction Banking Group, Group Shared Services and Group
Employees worldwide       97,000+
Branches and offices       3,000+             Functions
Countries/territories         59
                                             The Consumer & Commercial Clients, which serves almost 20 million consumer
                                              clients and clients in the small and medium-sized enterprises sector worldwide.
    Strong Balance Sheet(1)                   ABN AMRO is among the leading players in these segments in its three home
Total assets
                         EUR (bn)
                            701.8
                                              markets (the US Midwest, Brazil and the Netherlands) while targeting other high-
Group capital                33.2             growth regions through its Business Unit New Growth Markets (like Romania)
Risk weighted assets        231.6
                                    (1)31 December 2004
                                    (2)Federal Reserve Board report on US offices of foreign banks, April 2005
                                    (3) The Banker, July 2005                                                                   4
 ABN AMRO – the operations in Romania

                          Ten years since the establishment of ABN AMRO’s Romanian operations, it already has an
           The goal of
                              impressive history of developing strong business relationships with multinational
        ABN AMRO in
                              corporations, medium-sized international companies doing cross-border business with
  Romania is to create
                              Romania, and local companies especially those with export and growth potential. It is the
  value for our clients
                              bank’s aim to continue such relationships as it grows with the Romanian business market.
                                   45o employees in 15 branches covering the entire territory of the country
Key in our relationship
                                   Ten-years of providing comprehensive banking services
approach is a constant
 focus on the financial            Sixth-largest bank in Romania by total assets
  service needs of our             Wholly owned by ABN AMRO Bank NV
         chosen client
                                   Part of the Wholesale Clients SBU, ABN AMRO in Romania focuses on: Consumer Industries,
             segments
                                    Automotive Industries, Diversified Industries, Integrated Energy, Telecommunications, Media,
                                    Technology and Healthcare & Financial Institutions and Public Sector.
      It is through the            Starting with September 2004, ABN AMRO offers also consumer services and products to its
 professionalism and                Romanian customers.
motivation of our staff
  that we realise this
    value, resulting in
maximum benefits for
        our customers



                                               ABN AMRO presence
                                                                                         A comprehensive branch network
                                                                                                                               5
ABN AMRO – the way we conduct our business

   Business Principles:
ABN AMRO employees        1. We are the heart of our organisation
                          2. We pursue excellence
                                                                        Corporate Values

    Our shareholders      3. We aim to maximise long-term
                             shareholder value
                          4. We manage risk prudently and
           Our clients       professionally

                          5. We strive to provide excellent service
Our business partners     6. We build our business on confidentiality


               Society    7. We assess business partners on their
                             standards


          Compliance      8. We are a responsible institution and a
                             good corporate citizen
                          9. We respect human rights and the
                             environment

                          10. We are accountable for our actions and
                                                                                           6
                              open about them
  ABN AMRO – ambition for sustainable development

  “We are committed to continuously improving the integration of sustainable development
    into our working environment and business processes. Our aim is to play a proactive
    role in contributing to sustainable development, within our spheres of influence. We are
    committed to accountability and transparency in our sustainable development
    performance.”
                                                                     Integrating environmental,
Active dialogue with NGOs                                                 social and ethical
                                  Sustainable products
                                                                           considerations
                                      and services


     Client engagement                                    Supporting local
                                                           communities


                            A great place to work                     Minimising impact from
                                                                       business operations


  We are the leader in the European banking sector according to the Dow Jones
  Sustainability Index – Stoxx (2004, 2005)


                                                                                                  7
2
    The context of
    climate change



                     8
The context of climate change – the issue


A critical challenge to the world
   The average surface temperature has
    increased by about 0.6°C and the CO2e
    in the atmosphere increased from 280ppm
    to 380ppm (faster than any times in the last
    1000 years
   Human activity (burning fossil fuels and
    deforestation) is a major contributor to                Source: IPCC report 2001
    climate change, according to most studies.
   Climate change is now regarded as the          Sustainable
    world’s most pressing environmental
    problem (with social and economic              Management
    consequences as well).
                                                   Ever-Changing
   Sustainable management of an ever-                Planet
    changing planet? (looking into the future)



                                                                                       9
 The context of climate change – the risks…

   In 2003, drought in Australia cost farmers
    and businesses A$3.8 billion and reduced
    winter crop yield by 40%


   The 2003 European heat wave lead to
    27,000 premature deaths, reduced grain
    yields by 30-40% and caused economic
    losses far exceeding $ 10 billion


   Warmer than average weather pushed up
    benchmark contracts for crude oil, gasoline
    pump prices, and futures for grain, soy
    beans and wheat. In 2004 soybeans rose
    above $10 a bushel for the first time in 15
    years as insufficient rain in South America
    threatened to damage crops.

“The magnitude of effects that climate change may have on the global economy
dwarfs any other environmental risk” ( World Resource Institute and CERES – coalition of institutional
investors from US)

                                                                                                         10
 The context of climate change – … and the opportunities.

  Reducing GHG is not just costly or “anti-growth” but can bring savings and new
    jobs
     Low-carbon corporate leaders have achieved a reduction of 60% or more and
      companies like BP, IBM and DuPont report savings of $650 million, $791 million and
      $2 billion respectively;
     In the UK, emissions dropped by 15%, while the economy grew by 30% between
      1990 and 2002;
     Cities like Portland, Toronto and Heidelberg have also realized millions of dollars in
      energy savings, freeing-up public funds for other purposes.
                                                                           (Findings from “The Climate Group”)



“The EU could save at least 20% of its present energy consumption in a cost-
effective manner, equivalent to EUR 60 billion per year.. Such an initiative could
potentially create a million new jobs in Europe” (European Commission, Green Paper on energy
efficiency, 2005)


                                                                                                           11
The context of climate change – the global solutions

Count down to Kyoto and EU ETS
                  IPCC “Intergovernmental Panel on Climate Change” formed
 1988

                  UNFCCC enters into force
 1994
                   - Aspirational objectives, no specific targets or timeframes

                  COP3: Kyoto Protocol
 1997
                   - Emission limits on 34 Countries: Avg -5.2% on 1990 by 2008-12
                   - Meet limits by emission reductions and/or buying compliance credits

                  COP7: Marrakech Accords kickstarts the Credits Mechanism
 2001

 2005        1st January 2005: starts EU ETS


 2005        16th February 2005: Kyoto Protocol entered into force


                                                                                           12
3
    The carbon
    markets



                 13
 The carbon markets – the Kyoto flexible mechanisms

The flexible mechanisms of the Kyoto Protocol
    International Emissions Trading (Allowances) – AAU (assigned amount units)
         - allocated to Annex B countries based on 1990 emissions levels
           - “Hot air” are excess AAUs of countries whose current emissions are lower than base year / GIS
     initiatives
    Clean Development Mechanism (Carbon Credits) – CER (certified emission reductions)
         - Designed to assist developing countries in achieving sustainable development by permitting
     industrialized countries to finance projects for reducing greenhouse gas emission in developing countries
     and receive credit for doing so
    Joint Implementation (Carbon Credits) – ERU (emission reduction units)
         - If takes places between industrialized countries (including countries with economies in transition)

         - Does not have a sustainable development component
         - ERUs can be used by companies under the EU ETS for compliance in the period 2008 – 2012

ABN AMRO can play a role as advisory to governments to maximize their AAUs value,
financing GIS projects, providing access to clients interested in the credits

                                                                                                                 14
 The carbon markets – EU ETS activity so far
                                                           6000000                      35,00
EU ETS
    In Phase 1, over 6 billion                            5000000
                                                                                        30,00


     allowances (EUAs) have been




                                         Volume Thousand
                                                                                        25,00




                                                                                                EUR/Allowance
     allocated, equivalent to a value                      4000000

     of some €120 billion. Trading is                                                   20,00

     now around €20/EUA                                    3000000

                                                                                        15,00
    Currently most activity is in the
                                                           2000000
     brokered OTC market. Market                                                        10,00

     share of exchanges is between                         1000000
                                                                                        5,00
     25-30 %. But exchanges are
     gaining market share.                                      0                       0,00

    Approx. 5 million EUAs                                          04

                                                             4- 04

                                                             1- 04

                                                                     04

                                                             3- 04

                                                             1- 04

                                                                     04

                                                             2- 04

                                                                     04




                                                             3- 05

                                                             3- 05

                                                               -3 05




                                                                     05
                                                               11 4

                                                               12 4

                                                                      4




                                                               -4 5

                                                               -5 5

                                                               -6 5
                                                                7- 5
                                                            4- 00

                                                            2- 00

                                                                    00




                                                            22 00

                                                            20 00

                                                            17 00
                                                             8- 2 00
                                                                  20

                                                                  20

                                                                  20

                                                                  20

                                                                  20

                                                                  20

                                                                  20

                                                                  20

                                                                  20




                                                                  20

                                                                  20

                                                            24 -20




                                                                  20
                                                                 -2

                                                                 -2

                                                                 -2




                                                                 -2

                                                                 -2

                                                                 -2
                                                                1-

                                                                2-

                                                                3-

                                                                4-

                                                                5-

                                                                6-

                                                                7-

                                                                8-

                                                                9-




                                                                1-

                                                                2-




                                                                 -
                                                                3
                                                               10
                                                             1-

                                                             5-




                                                             6-




                                                             5-




                                                             6-
                                                            7-
     exchange hands weekly
                                                                     Date


Almost 50 public and private carbon funds and carbon tender programmes launched, with
more than $1.5 billion in dedicated capital (Carbon Disclosure Project, 2005)

                                                                                        15
The carbon markets – Romania’s position
   Romania ratified the UNFCCC by law 24/1994 and the Kyoto
    Protocol by law 3/2001
   Total net GHG emissions decreased by about 50% in 2002
    compared to the reference year 1989 – the emission scenarios
    show that a gap of at least 50 million tons CO2e annually is   National Strategy on Climate
    expected to remain                                             Change of Romania 2005-2007

                                                                   Objective 5

                                                                   •To participate in flexible
                                                                   mechanisms under the KP (JI and
                                                                   IET) to the maximum benefit of the
                                                                   Romanian environment and
                                                                   economy in compliance with
                                                                   UNFCCC and EU regulation, and in
                                                                   a stable and transparent domestic
                                                                   policy, institutional and regulatory
                                                                   framework



                                                                                                   16
4
    ABN AMRO’s
    response




                 17
ABN AMRO’s response – direct and indirect footprint

Transparency/disclosure                                      ABN AMRO's CO2 footprint -      2004
   Sustainability reports – 2003, 2004,
    including data on our CO2 emissions               100%                   B usines A ir
                                                                                Travel
   Signatory of Carbon Disclosure Project –           80%
    2003, 2004, 2005.
                                                       60%
Minimising emissions – through technical                                       From
   and behavioral changes, applying                    40%                  energy-end
   alternative technologies and using green                                    use
   energy                                              20%
Green banking – through financing projects              0%
   that prevent environmental harm and
   promote the use of sustainable                                Total CO2 tonnes: 366,293
   technologies

     ABN AMRO was selected part of the Climate Leadership Index within the banking sector
     based on an assessment by Innovest of the strategic awareness, management accountability,
     emissions management and reporting, emissions trading, programs in place, establishment of
     targets.


                                                                                                    18
ABN AMRO’s response
– financial services for your climate related activities

ACCESS TO MARKET (after joining EU ETS-2007): Over the counter (OTC)
   ABN AMRO offers access to the OTC market with the bank as counterparty
    – Client buys/sells EUAs to ABN AMRO
    – Avoids counterparty risk for client
   Master agreements (contracts) between ABN AMRO and client must be
    negotiated
    – ABN AMRO will trade under ISDA, IETA, and EFET
   In addition, client must have credit line with ABN AMRO
    – OBSI lines calculate maximum exposure bank is willing to accept with
      counterparty
   ABN AMRO can also post Exchange-For-Physical contract on the exchange
    – Exchange will take over credit risk




                                                                             19
 ABN AMRO’s response
 – financial services for your climate related activities

FORWARD TRADING
   A forward transaction is a contractual commitment to transact in the future
    on terms agreed today. The vast majority of transactions have been forward
    transactions in the OTC market
    – Role of exchanges are becoming more important
    – Future will see much more spot trading
   If the market as a whole is confident that the price will rise, the seller‟s
    forward price will likely reflect this
    – Little potential for “upside”
   Both buyer and seller are exposed to counterparty risk. Banks can play a
    role in establishing creditworthiness


ABN AMRO facilitates forward trading in OTC market and on exchanges




                                                                                   20
 ABN AMRO’s response
 – financial services for your climate related activities

ACCESS TO MARKET: Exchanges
   ABN AMRO Futures is very active on the European Climate
    Exchange and is planning to join several more exchanges
   Companies cannot trade on the exchange directly but must have
    an account with a clearing member
    – ABN AMRO Futures is one of the largest clearing members on
      the ECX
   Companies must deposit collateral as „initial margin‟. If the market
    moves against your position, company must make addition
    payments:
    – ABN AMRO can finance these „margin calls‟


The first trade on carbon futures on the European Climate
Exchange‟s (ECX) trading platform was between BP an E.ON and
was cleared by ABN AMRO Futures in April 2005.


                                                                           21
 ABN AMRO’s response
 – financial services for your climate related activities

COMPANY RISK MANAGEMENT


          Trade EUAs on exchange and OTC
              Access to carbon credits                 Near term: Focus on compliance

                   Monetise EUAs

                                         Plan for Phase II
                                                                            Medium term: Focus on
                                    Develop trading strategy
                                                                                  Risk Management
                                    Calculate abatement costs


                                                         Where to build new plants
                                                                                                Long term:
                                                             Replacing current stock              Strategic
Similar advisory possible for the                    Developing renewable electricity        considerations
government too



                                                                                                       22
Conclusions

What ABN AMRO Bank can do for the Government and the business environment

        ADVISORY
                Risk, strategy, legal, hedging, industry knowledge


        PRODUCTS
                Futures, forwards, spot


        MARKET INTERMEDIATION
                Access to exchanges, trading, cross border intermediation


       PROJECT FINANCE
                With Equator Principles

        MANAGEMENT/
                Monetization, custody, registration(clearing)




                                                                             23
5
    Contact information




                          24
Contact information


  Gerhard Mulder                                             Eva Karra                                                   Richard Cornielje
  Vice President                                             Vice President                                              Director
  Group Sustainable Development                              ABN AMRO Futures Ltd                                        Commodity Derivatives Marketer

  Gustav Mahlerlaan 10, 1082 PP Amsterdam, The               199 Bishopsgate, London EC2M 3XW                            Gustav Mahlerlaan 10, 1082 PP Amsterdam, The
  Netherlands                                                                                                            Netherlands
                                                             Telephone         +44 20 7678 6588
  Telephone          +31 20 629 9272                         Mobile:           +44 7070 603603                           Telephone             +31 20 464 5547
  Mobile:            +31 6 1371 9003                         E-mail:     eva.karra@uk.abnamro.com                        Mobile:               +31 6 5163 1942
  E-mail: gerhard.mulder@nl.abnamro.com                                                                                  E-mail: richard.cornielje@nl.abnamro.com




               Peter M. Weiss                                                              Roxana Moldovan
               Chairman of the Board and Country Executive                                 Head of Financial Institutions and Public Sector / VP Member of the
                                                                                           Board
               ABN AMRO Bank Romania
               10, Montreal Square, WTCB                                                   ABN AMRO Bank Romania
               Bucharest - 1, Romania                                                      10, Montreal Square, WTCB
               Tel:    +(40 21) 20 20 400                                                  Bucharest - 1, Romania
               Fax:    +(40 21) 31 91 169                                                  Tel:   +(40 21) 20 20 400
               E-mail: peter.weiss@ro.abnamro.com                                          Fax:   +(40 21) 31 91 169
                                                                                           E-mail: roxana.moldovan@ro.abnamro.com




                                                                                                                                                                        25

								
To top