Presentation: The USA - EBA Experience

4/30/2010 EBA 2009 www.envirobank.org 1

Definition of a Banker?

• According to famous American author, Mark Twain, a

banker is a fellow who lends you his umbrella when the

clouds first appear and wants it back the minute it

begins to rain.

• In reality, bankers only want to be repaid, on time and

with interest, plus fees.



Who is the EBA?

• Non-profit trade association of

• 105 financial institutions and

• Affiliates, who are consulting firms, insurance companies, brokerages, law firms, appraisers, industrial companies, commercial real estate service companies

EBA Members

• Bank of America

• JP Morgan Chase

• HSBC

• Deutsche Bank

• CitiGroup

• TD Financial

• RBC Financial

• Royal Bank of

Scotland

• CIBC Bank

• Bank of New York

Mellon

• Bank of the West

• US Bank Corp

• Comerica Bank

• Wells Fargo/Wachovia

• Sun Trust Bank



EBA Mission Statement

Our mission is to protect and preserve bank net

income and assets from environmental exposure

and liability resulting from lending and trust

activities through the employment of

environmental risk management (ERM) in the US

and worldwide


EBA Vision Statement

Enhance visibility and awareness of environmental risk

management’s global role in promoting environmentally

sound lending and fiduciary activities, sustainable

development, and new concepts of social responsibility for

the financial services industry.


How it all started ...

• Lender Liability (CERCLA)

• Real Estate and S&L Crisis

• Environmental regulations

• Banking regulator guidance (FDIC, OTS, Federal

Reserve, OCC, Fannie Mae and Freddie Mac, SBA)

• Formed the EBA in 1994


Banking Issues

• Credit & Trust Risk

• Cash Flow Impairment

• Collateral Devaluation

• Direct Liability, Loan origination to foreclosure

• Reputational Risk (Brand and Image)

• Operational & Enterprise Risk

• Market & Interest Rate Risk

• Restructurings and Foreclosures

• Sustainable Development & Finance

Sustainable Finance in Banking

Monetizing Opportunities and Risks

• Carbon Disclosure Project

• Carbon and Climate Principles

• Infrastructure development (utility)

• Green building developments

• Renewable energy technologies

• Green businesses/community dev

• Sustainable Design/Remediation

• Brownfield redevelopments



Environmental Risk Management Stages for

Financial Institutions

• Risk Identification

• Risk Appraisal/

Evaluation

• Risk Control

• Risk Transfer/

Financing

• Risk Monitoring

– Life Cycle of Loan

Environmental Risk Management Issues

• Bank Risk Tolerance

• Business Environmental Risk

• Distressed Assets& Restructurings

• Loan modifications/renewals

• Workouts, Foreclosure/Bankruptcy

• Climate Change Risk

• Bank Failures



Committees

• Risk Management

• Technical

• ASTM and Legal issues

• Trust Activities

• Global Issues

• Membership & Business Development

• Programs and Communications

• Policy

• Finance


Accomplishments and Work Products

• Benchmarking

• Participation in Conferences

• Training

• Technical Support/Tip Sheets

• Publications

• Industry Leader

– CMP

– AAI

– Surveys

Tip Sheets

• Environmental Risks to Lending

• Lender’s Checklist for Maintaining Security Interest

Exemption

• Default & Workout Checklist for Environmentally

Impacted Real Estate

• Streamlined Due Diligence

• Risks by Industry

• Carbon Risk and Loan Portfolio Profiles



Benefits

• Networking/Social Media

• Local and Global Forums

• Resources- repository for reports, policies

• Training/Education

• Conferences/Meetings

• Publications

• Surveys

• Webinars

• 93% reported that your institution has a designated full-time Environmental Risk Manager or Environmental Policy Manager

– 44% Credit Policy

– 26% Real Estate

– 19% Appraisal

– 7% Legal

– 19% Facilities/Properties Management

– 41% Risk Management

– 7% Asset Management

– 4% Trust

– 15% Corporate Gov. Affairs/Env. Affairs


2008 Survey Results Environmental Staff

Does your Policy Require Environmental Due

Diligence on

• New Loans, Extensions & Renewal Transactions?

– Prior to closing a loan- 89% Yes, 11% Sometimes

– Prior to closing an existing Loan Extensions/Renewals-

48% Yes, 44% Sometimes

– Monitoring during the life of the loan- 15% Yes, 37%

Sometimes, 48% No

• Majority of those who do monitor say it is

performed upon renewal



Emerging ERM Policy Issue-

Vapor Intrusion

81%

11%8%

Is vapor Intrusion an issue with your bank on

real estate lending or trust transactions?

Yes

No

Depends


Collaboration

• Bank Regulators & Trade Associations

• Export credit agencies

• EPA and other Federal/State Agencies

• Rating agencies

• Standard Setting Organizations (ASTM, CMP &

Others)

• UNEPFI


Training

• Environmental credit risk management program

• Technical issues – Tip Sheets

• Sustainable Financing ,(green buildings)

Redevelopment of brownfields,

• Sustainable development/carbon risk underwriting

• Management issues

EBA San Diego Conference

January 17,18 & 19, 2010

• Topics

– Environmental credit risk management for distressed

assets in workout, foreclosure and bankruptcy

– Storm water management issues associated with

foreclosed vacant real property

– Carbon Risk Matrix & Assessment of High Carbon

Emission Industries

– Green building underwriting standards



• Land Development Perspective on REO Management and

Disposition Program, Understanding the Asset Complexities

and Value Drivers, the Steps Beyond the Physical Due

Diligence

• Monetizing the Value of Sustainable Development and

Certifications for Commercial Real Estate End Users

• Guidance and Legal Strategies for Performing

Comprehensive Environmental Audits of Commercial Bank

Buildings,



• Evolution of Green Building Due Diligence & Disclosure,

Panel Discussion

• Releasing Due Diligence Reports to Prospective Purchasers

at Foreclosures,

• Sustainability Management Maturity Model, (SM3),

Enhancing Business Performance,

• New Appraiser Requirements and the Revaluation of

Commercial Real Estate



EBA Web Site

• Directory

• Registration and payment

• E-mail

• Articles & Tip sheets

• News & Articles

• Members Only Section

• BankNotes & Alerts

• Resource list & Career Center


“BankNotes”

• Cover Story-Philosophical Message

• Legislation / Regulations

• Case Law – International, National, Regional

• Banking Buzz, Commercial Real Estate and Insurance

and Risk Management

• International Activities

• Articles of Interest / Member News

• Committee Presentations

• Members in the News


What Next ?

• How to join

• Dues

• Attend a meeting

• Attend a Committee conference call or webinar

• Membership ERM and Sustainability Survey

• Global Expansion


Environmental Bankers Association

510 King Street, Suite 410

Alexandria, VA 22314 USA

1-703-549-0977 [email protected]

Documents

Presentation: The USA - EBA Experience