Delivering more competitive loans to SMEs using Structural Funds

Natalija Iniakina

Head of Corporate Loans

2011-10-28 | Natalija Iniakina, Head of Corporate Loans 2

New YorkShanghai

Singapore

SEB Group

Founded in 1990Member of SEB Group since 200057 branch offices in over 30 townsOver 1,800 employeesLargest bank in Lithuania with market share of 28% in corporate financing

Founded in 1856 in Sweden

Represented in 20 countries

SEB offices in the all the world’s important financial centers

Over 17,000 employees

Net profit, EUR 0.13 bn

Assets, EUR 6.7 bn

Loans and leasing, EUR 5.5 bn

Net profit, EUR 0.97 bn

Assets, EUR 259 bn

Loans and leasing, EUR 131 bn

Key facts, SEB group Key facts, SEB Lithuania

Key figures (1-3Q, 2011), SEB group Key figures (1-3Q, 2011), SEB Lithuania

2011-10-28 | Natalija Iniakina, Head of Corporate Loans 3

SEB Bank customer base in Lithuania

Large Corporate ClientsCustomer number – 2 thou

Income share – 45%

SMECustomer number – 46 thou

Income share – 35%

Private individualsCustomer number – 834 thou

Income share – 25%

2011-10-28 | Natalija Iniakina, Head of Corporate Loans 4

FRSP utilisation dynamics

0

5

10

15

20

25

Feb-Ju

n 2010

Jul-1

0Aug-10Sep

-10Oct-

10Nov-10Dec-

10Jan

-11Feb

-11M

ar-11

Apr-11

May

-11Ju

n-11Ju

l-11

Aug-11Sep

-11

MEUR

0

25

50

75

100

125unitsFRSP amount Number of FRSP agreements

Agreement signedFebruary 2010

2011-10-28 | Natalija Iniakina, Head of Corporate Loans 5

New product takes time to understand

Specific restrictions caused limited volumes:

- Most “wanted” product after the crisis – credit line for financing of WoC(not within the scope of FRSP)

- Restrictions to maximum amount of the loan

- Restrictions to risk class of SMEs (internal SEB rating of companies) set by EIF

- Lending only in EUR seeking to avoid currency risk

General economic situation:

- slow recovery of the economy after the crisis

- low lending volumes

SEB experienceSlow startSlow start due to several factors

2011-10-28 | Natalija Iniakina, Head of Corporate Loans 6

Strong SEB management focus

- Road show to all branches by Head of Retail Division- Weekly follow-up with Branch Managers- Training sessions to Client Executives- Marketing campaigns “Let your business expand” and

“More power to your business”

Reduction of restrictions

- Increased maximum amount of the loan- Reduced restrictions to risk class of SMEs- SEB decision to take currency risk and lend in LTL

Improvement of macroeconomic situation

SEB experienceImprovement of FRSP utilisationImprovements in 2011

2011-10-28 | Natalija Iniakina, Head of Corporate Loans 7

Real example of SME borrowingLITNAGLIS JCS

Established 2004Employees 98Activity Metalwork, production of

nails

Project Installation of additional production line increasing manufacturing capacity by 25%

Total Project EUR 0.778 mFRSP Loan EUR 0.350 m

12 working places created

90% of production for export to Western Europe

Business expansion in small town Plungė(~20.000 citizen)

Company & Project

Benefits of FRSP to the company and to the economy:

2011-10-28 | Natalija Iniakina, Head of Corporate Loans 8

Real example of SME borrowing Stikloporas JSC

Established 2009

Employees 1

Activity Production of foam glass

Project new production line of thermal insulation product -foam glass granulate

Total Project EUR 2.822 m

FRSP Loan EUR 0.971 m

Company & Project

22 new working places will be created

80% of production will be exported to Russia and Poland

Eco-friendly project. Recycling of glass waste – 5,000 tons per year (5% of total glass waste in Lithuania)

Benefits of FRSP to the company and to the economy:

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Level of efforts determines success of the product

Time is needed to understand a new product

Too many restrictions hamper use of the product

Partnership with EIF is crucial to resolve issues

Greater focus on financing of WoC would allow greater volumes

SEB would consider participation in distribution of other products of EIF

Benefits and lessons learned

Clauses in loan agreement related to EU legislation in respect to structural funds “frighten” SMEs and in some cases the choice is to receive financing without FRSP despite higher margin

Possibilities for SMEs to decrease financing costsCompetitive advantage for SEB after the crisis when competition between banks increasesAdditional experience of working with international institutions

Issues

Benefits Lessons learned

2011-10-28 | Natalija Iniakina, Head of Corporate Loans 10

Thank you!