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Leasing in CEE. Increasing SMEs’ Access to Finance Andreea Moraru, EBRD. 2 February 2012. Table of Contents. EBRD Background SMEs – A Key Driver of Economic Growth EBRD ’ s SME Funding Programs Case Studies. EBRD: A Driving Force for Promoting Open Market Economies. - PowerPoint PPT Presentation
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Table of Contents
A. EBRD Background
B. SMEs – A Key Driver of Economic Growth
C. EBRD’s SME Funding Programs
D. Case Studies
EBRD: A Driving Force for Promoting Open Market Economies
A Driving Force for Promoting Market Economies
1991 our year of 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
Shareholder BreakdownJapan, 9%
USA, 10%
Others, 7%
Russia, 4%EU - 27
countries, 63%
EU Region (excluding
EU members),
7%
EBRD Investments
Data as of YE 2011
€71 billion investedin over 3,389 projects
€71 billion investedin over 3,389 projects
0
10
20
30
40
50
60
70
1994
1996
1998
2000
2002
2004
2006
2008
2010
EUR bn
FI is a key element of the EBRD’s portfolio
Debt €59 bn Equity €12 bn
Financial Institutions (FI)
€25 billion invested in 1,443 projects
`Debt €22 bn
`Equity €3 bn
EBRD: Commitment to the SME Sector
EBRD portfolio€ 34.7 bn*
EBRD portfolio€ 34.7 bn*
FI€ 9.5 bn
FI€ 9.5 bn
SME€ 2.3 bn
SME€ 2.3 bn
Other€ 7.2 bn
Other€ 7.2 bn
Leasing€ 370 m
Leasing€ 370 m
Bank lending€ 1.9 bn
Bank lending€ 1.9 bn
EE€ 135 m
EE€ 135 m
More than 24% of total FI portfolio is dedicated to SMEs!
Data as of YE 2011
The economic situation and leasing in CEE
Country
GDP growth
YoY 2012 vs. 2011* 1.6% 2.2% 1.1% 0.5% 0.5% 2.1% 2.4% 2.6% 3.5% 1.1% 2.3% 4.2% 2.5%
Growth of new leasing volumes 1H2010 vs. 1H2011
16% 28% 33% 11% -4% 33% 32% 71% 80%** 23% 45% 101% 92%
Leasing volumes grow significantly throughout CEE!
EBRD & OECD forecasts
** 1Q 2011
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
0
2040
6080
100120
140160
180
2006 2007 2008 2009 2010 2011
EU
R m
ln
Non-CEE CEE
Table of Contents
A. EBRD Background
B. SMEs – A Key Driver of Economic Growth
C. EBRD’s SME Funding Programs
D. Case Studies
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
A thriving SME sector is crucial for economic success
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
34%
26%
22%
23%
33%
25%
23%
22%
0% 5% 10% 15% 20% 25% 30% 35% 40%
A new or significantlyimproved product orservice to the market
A new way of sellingyour goods or services
A new organisation ofmanagement
A new or significantlyimproved productionprocess or method
2009 2011
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
Enhancing access to external funding for SMEs is crucial!
Source: EC, SMEs’ Access to Finance Survey 2011
15%
15%
45% 8%
8%41%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Bank overdraft, creditline or credit card
overdraft
Bank loans
Deteriorated Remained unchanged Improved
Table of Contents
A. EBRD Background
B. SMEs – A Key Driver of Economic Growth
C. EBRD’s SME Funding Programs
D. Case Studies
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:
EBRD’s priority – Expanding access to finance for SMEs
Enterprise category Headcount Turnover (Or) Balance sheet size
Medium-sized < 250 ≤ EUR 50 mln ≤ EUR 43 mln
Small < 50 ≤ EUR 10 mln ≤ EUR 10 mln
Micro < 10 ≤ EUR 2 mln ≤ EUR 2 mln
EU/EBRD SME Finance Facility - Structure
Leasing Company
Sub-project
Sub-project
Sub-project
LoansRepayments
EC
Grant
Leases
RepaymentsTA & PF
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
0
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
2,500
Dec-00
Jun-01D
ec-01Jun-02D
ec-02Jun-03D
ec-03Jun-04D
ec-04Jun-05D
ec-05Jun-06D
ec-06Jun-07D
ec-07Jun-08D
ec-08Jun-09D
ec-09Jun-10D
ec-10Jun-11
Eu
ro M
illio
n
Bulgaria Croatia Czech Republic Estonia
Hungary Latvia Lithuania Poland
Romania Slovakia Slovenia Regional
EBRD Disbursements EBRD Commitments
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
0
50
100
150
200
250
BG HR CZ HU LV PL RO SK SI
EU
R m
ln
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
Nr
of l
ea
ses
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
SEFFs – Sustainable Energy Efficiency Facilities
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
Leasing Company
Sub-project
Sub-project
Sub-project
Loans
Repayments
EC
Gra
nt
Leases
Repayments
TA TA
PF
Advantages of for all participants of SEFF
Leasing Companies Sub-BorrowersEBRD
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
Table of Contents
A. EBRD Background
B. SMEs – A Key Driver of Economic Growth
C. EBRD’s SME Funding Programs
D. Case Studies
Raiffeisen Leasing – Leasing for SMEs in CEE
Countries Regional
Currency EUR
Sector Leasing
Product Senior Debt
Amount EUR 55,000,000
HIGHLIGHTS
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
TRANSACTION SUMMARY DISBURSEMENTS TO SMEs UNDER EU/EBRD SME FINANCE FACILITY
Source: EBRD
05
1015
2025
3035
4045
BG HR CZ PL RO SI
EUR
mln
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Nr o
f lea
ses
BZWBK Leasing EEF – Dedicated to energy efficiency
TRANSACTION SUMMARY POLISH LEASING MARKET
HIGHLIGHTS
March 2011
Country Poland
Currency EUR
Sector Leasing
Product Senior debt
Amount EUR 15 million
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
14.216.3
21.8
23.223
32.932.6
1%
-30%
1%
50%34%
15%
28%
0
5
10
15
20
25
30
35
2004 2005 2006 2007 2008 2009 2010
PL
N b
n
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
Market volume Growth,%
Case Study Sub-Project: Wood Processing Industry
TRANSACTION SUMMARY EXAMPLE: MODERNISATION OF PRODUCT LINE
Investment amount USD 750,000
Period 60 months
Down payment 10%
Monthly leasing rate 59 x USD 12,700
Annual revenue saving USD 240,000
Investment amount USD 450,000
Annual energy saving 200 MWh (20 %)
Annual revenue savings USD 120,000
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
The company installed modern equipment at several stages of the production line to:
increase productivity
save material and
reduce energy consumption
EBRD Leasing Contacts
Name Business Phone Other Contact Details
Noel Edison Director, Insurance and Financials Services
Tel: (+44) 20 7338 6638 Email: [email protected]
PRIMARY CONTACT
Andreea MoraruSenior Banker – FI Leasing Coordinator
Tel: (+44) 20 7338 6718 Email: [email protected]
EBRDOne Exchange Square, London. EC2A 2JN, United Kingdom
www.ebrd.com