Leasing in CEE

1. Leasing in CEE Increasing SMEs’ Access to Finance Andreea Moraru, EBRD 2 February 2012

2. Table of Contents EBRD Background SMEs – A Key Driver of Economic Growth EBRD’s SME Funding Programs Case Studies

3. EBRD: A Driving Force for Promoting Open Market Economies ADriving Force for Promoting Market Economies • 1991ouryearof establishment • 61 countries as shareholders • 20 years of investment experience • 29 countries of operation to promote transition to market economies • AAA rated International Financial Institution

4. EBRD Investments Equity €12 bn Debt €59 bn €71 billion invested in over 3,389 projects Financial Institutions (FI) €25 billion invested in 1,443 projects ` ` Equity €3 bn Debt €22 bn FI is a key element of the EBRD’s portfolio Data as of YE 2011

5. EBRD: More than 300 Banking Staff in a Network of 34 Offices in 29 Countries

6. EBRD: Commitment to the SME Sector More than 24% of total FI portfolio is dedicated to SMEs! Data as of YE 2011

7. The economic situation and leasing in CEE Leasing volumes grow significantly throughout CEE! EBRD & OECD forecasts ** 1Q 2011

8. EBRD’s Commitment to the Leasing sector in CEE • EBRD is highly active in the leasing sector with an annual business volume of around EUR 100 mln in the last 5 years • Given the characteristics of the financial markets, CEE represents the most important leasing market for EBRD • As of 31/12/2011 EBRD‘s leasing portfolio in CEE consists of 41 projects and amounts to EUR 260 mln

9. Table of Contents EBRD Background SMEs – A Key Driver of Economic Growth EBRD’s SME Funding Programs Case Studies

10. A thriving SME sector is crucial for economic success • EBRD recognizes the importance of SMEs for economic development in the CEE region based on SMEs’ vital role in the EU • In the EU SMEs represent more than 99% of the total number enterprises and hence contribute significantly to economic output and employment

11. SMEs: Reasons for their success Nearly 60% of all SMEs are engaged in innovate activities and hence boost growth Source: EC, SMEs’ Access to Finance Survey 2011

12. External financing – One of SMEs’ most pressing problems According to a survey in the EU-27, access to almost all sorts of external financing deteriorated or remained unchanged in 2011 Source: EC, SMEs’ Access to Finance Survey 2011 Enhancing access to external funding for SMEs is crucial!

13. Table of Contents EBRD Background SMEs – A Key Driver of Economic Growth EBRD’s SME Funding Programs Case Studies

14. EBRD’s priority – Expanding access to finance for SMEs • In 2006 the EU/EBRD SME Finance Facility was established to: • Improve access to finance for SMEs • Increase sustainability of SME finance through local financial intermediaries • Initially, EU grant funds contributed to accelerate access to finance through the provision of technical assistance and performance fees In accordance with the European Commission recommendation, SMEs are defined as follows:

15. EU/EBRD SME Finance Facility - Structure EC Grant Sub-project Leases Leasing Company Loans Sub-project Repayments Sub-project Repayments TA & PF

16. EU/EBRD SME Finance Facility – Expanding access to finance for SMEs • With other 100,000 sub-projects amounting to almost EUR 2,400 mln, the EU/EBRD Facility has been a great success • With an average sub-project size of EUR 22,730 and 41% of total disbursements directed to micro borrowers, especially the smallest enterprises have profited significantly from the facility

17. EU/EBRD SME Finance Facility – Leasing for SMEs in CEE • Loans to participating leasing companies substantially contributed to expand access to finance for SMEs further • Leasing companies have disbursed almost EUR 1,000 mln under the facility to eligible sub-borrowers as of 30/06/2011

18. SEFFs – Sustainable Energy Efficiency Facilities • In EBRD has added several SEFF facilities to foster investments in energy efficiency and renewable energy measures at SMEs targeting CO2 emissions reductions • In several countries the EU will provide grants for technical assistance to provide training and capacity building and support for financial intermediaries and sub-borrowers with project identification and preparation • Based on CO2 emission reductions, sub-borrowers will receive performance fees • Sample of eligible sub-projects: • On site co-generation of heat and electricity • Installation of absorption chillers • Rehabilitation of boilers • Rehabilitation of compressed air systems • Energy saving measures in the built environment

19. PolSEFF – Fostering energy efficiency in Poland • In June 2010, the Polish SME sustainable Energy Financing Facility (PolSEFF) was established by the EU and EBRD • EBRD has committed EUR 150 mln to PolSEFF with the EU providing funding for TA & PF EC Grant Sub-project Leasing Company Leases PF Sub-project Loans Repayments Sub-project Repayments TA TA

20. Advantages of for all participants of SEFF Sub-Borrowers EBRD Leasing Companies • Improve skills for SMEs and EE projects • Foster growth • Increase revenues • Enter relationship with EBRD • Increase availability of finance for SMEs • Contribute to enhanced energy efficiency • Develop partnerships with leasing companies for future business • Achieve good financial results • Gain access to funding for EE projects • Benefit from TA • Increase cost efficiency through EE projects • Potentially earn PF

21. Table of Contents EBRD Background SMEs – A Key Driver of Economic Growth EBRD’s SME Funding Programs Case Studies

22. Raiffeisen Leasing – Leasing for SMEs in CEE DISBURSEMENTS TO SMEs UNDER EU/EBRD SME FINANCE FACILITY TRANSACTION SUMMARY Source: EBRD • Raiffeisen Leasing is one of the leading players on the CEE leasing market • SME financing accounts for more than 40% of the company’s portfolio • Before Raiffeisen’s market entry the leasing market for SME clients was mostly untapped, particularly for long-term loans. EBRD was among the first financiers to provide long-term leasing solutions to SMEs • Under the EU/EBRD SME Facility Raiffeisen Leasing has provided almost 6,000 SMEs with total leases amounting to EUR 121 mln

23. BZWBK Leasing EEF – Dedicated to energy efficiency POLISH LEASING MARKET TRANSACTION SUMMARY March 2011 • WBK Finance & Leasing, a subsidiary of Bank Zachodni WBK, serves SMEs throughout Poland, providing them with financing for machinery and other equipment • The project is the first EBRD loan to a leasing company under a sustainable energy finance facility • The loans will be used to finance investments in energy efficiency and small-scale renewable energy projects with a maximum lease size of EUR 1 mln

24. Case Study Sub-Project: Wood Processing Industry EXAMPLE: MODERNISATION OF PRODUCT LINE TRANSACTION SUMMARY HIGHLIGHTS • The wood processing and forestry industries typically have considerable energy costs • Energy efficiency investments are cost-saving improving product quality • Experience showed that a significant part of the investment costs can be covered by energy savings • Leasing can assist businesses in creating cash-flow-neutral equipment upgrades

25. EBRD Leasing Contacts EBRDOne Exchange Square, London. EC2A 2JN, United Kingdom www.ebrd.com