Slide 1 kos Csobdi, 01.10.2013. Regul ulato atory ry envi - PowerPoint PPT Presentation

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks Regulatory environment for investors and banks 5th Annual Wind Energy in Hungary Workshop 1th October, 2013 Csobádi Ákos Head of Project Finance and Syndications Department Raiffeisen Bank Zrt. Slide 1 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks 1. Hungary’s rank on the renewable map and our ambitions 2. Key questions for investors and banks 3. Lending in Hungary 4. Raiffeisen Bank in relation with renewable energy financing 5. Summary Slide 2 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks 1. Hungary’s rank on the renewable map and our ambitions 2. Key questions for investors and banks 3. Lending in Hungary 4. Raiffeisen Bank in relation with renewable energy financing 5. Summary Slide 3 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks Rene newable wable ene nerg rgy count untry ry attractiv activenes eness s ind ndex, , 08/20 2013. 13.* This index was introduced in 2003 and is the weighted average of several criterias Rank Country Onshor hore wind 17 Polan land 57,2 1 US 74,2 including power offtake attractiveness, 19 Italy 56,6 2 China 71,2 strength of natural resources, technology 3 Germany 68,4 20 Spain 56,4 parameters, etc. 4 UK 66,2 21 Austria 56,3 5 Canada 64,2 6 Australia 63,2 22 Portugal 56 Hungary had been ranked until 06/2012 (last 7 Japan 60,3 23 Turkey 55,4 ranking: 39 th out of 40 countries), but was 8 France 60,3 28 Roman ania ia 53,3 taken out, because of several reasons, 9 Ireland 60,3 10 India 60,2 including: cuts in government support and 33 Czech 49 49 11 Denmark 59,8 little progress in the recent years. 35 Bulgari aria 48,2 12 Sweden 59,8 13 Norway 58,9 36 Ukraine ine 46,1 14 Finland 57,8 37 Greece 45,6 15 Netherlands 57,5 39 Slove venia 43,2 16 Belgium 57,3 * source: Ernst & Young Slide 4 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks Ambitions are/were there in Hungary, too!? N ational renew able action plan 2010 800 700 600 M W 500 400 300 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Year Source: http://ec.europa.eu/energy/renewables/action_plan_en.htm Slide 5 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks 1. Hungary’s rank on the renewable map and our ambitions 2. Key questions for investors and banks 3. Lending in Hungary 4. Raiffeisen Bank in relation with renewable energy financing 5. Summary Slide 6 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks Key questions for investors, basic factors 1. Locatio ion/w n/wind ind OK OK 2. Elect ctrici icity ty network k capabili ility ty OK OK The electricity network is capable of receiving a total of approximately 740 MWe of wind power. If network developments will result in an improvement in the controllability of the system, then the establishment of further capacities will be possible. Slide 7 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks Key questions for investors, regulations 3/a. . Permits its OK OK Permitting proccess could be shorter/less difficult, but generally ok. 3/b. . Grid d connect ectio ion n not OK Last valid tender for grid connection in 2006, hopefully new tender will come in the near future. 3/c. c. Feed-in in tariff iffs s not OK Waiting for the new regulations (METÁR), long-term (at least 10 years, but preferably more), above-market traiffs can result in postive NPV 3/d. . Other regulat ulations ons Managable le i.a. variation from the planned output can be fined Slide 8 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks Other questions for banks Experienced sponsor with solid financial Income: capacity * wind * tariff, tarif iff f background should ld be based on solid d regula lation tions s and/or /or Sponsor agreeme ment nts s for or the whole tenor of the loan (10-15 15 years)! )! Cash Flow Costs: not the main question here Subject to CF, Sponsor, but min. Equity 20-30%, max. 50%, state subsidy is not equity, but not loan! Collateral Mainly non-recourse, Pledge/call option on shares, assets (including land plot), receivables, contracts. Slide 9 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks 1. Hungary’s rank on the renewable map and our ambitions 2. Key questions for investors and banks 3. Corporate lending in Hungary 4. Raiffeisen Bank in relation with renewable energy financing 5. Summary Slide 10 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks Corporate lending in Hungary vs. other countries Bulgaria, Poland, Romania +10-17% Slovakia, Czech Republic, Euro zone -3-13% Baltic states, Hunga gary -25-27% Sources: MNB, ECB, national banks Slide 11 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks Conditions of restart of financing new windparks  Willingness of investors to invest in Hungarian energy sector  Lower funding costs (incl. CDS of Hungary) and/or subsidized funding (see Funding for Growth and EIB frame)  Stable ble regulations gulations (inc ncl. l. taxes) xes), , whi hich ch can n be be relied lied on n fo for long ng term rm Slide 12 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks MNB Funding for Growth  Entitled deals: not restructured SMEs (max. EUR 50 mio Net Income or max. EUR 43 mio Total Assets and max. 250 FTEs)  Interest margin: max. 2.50% p.a., fee: 0%  Loan amount: HUF 3 mio. - 3 bio.  Length of the tenor: max. 10 years  Period of the program: 01.10.2013 – 31.12.2014 Slide 13 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks 1. Hungary’s rank on the renewable map and our ambitions 2. Key questions for investors and banks 3. Lending in Hungary 4. Raiffeisen Bank in relation with renewable energy financing 5. Summary Slide 14 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks ns : brief Proj oject ct Finance nance and Syndicatio dications ef introdu troduction tion Key y activiti ities: es:  Real-estate investment & development finance and leasing  Leveraged finance  Acquisition finance  PPP & Project finance (inclu ludin ding g energ rgy y sector tor deal als)  Syndicated lending, club loans, collateral pools,  Lender of record transactions  Agency services for syndicated loans Loan an portfolio rtfolio (draw rawn amou ount) nt): : c. HUF UF 230 230 bn bn FTEs Es: : 20, inc ncl. . 4 FTEs Es for or syn yndicat dications ions Slide 15 Ákos Csobádi, 01.10.2013.

Regul ulato atory ry envi vironme ronment nt for inve vestor stors/banks s/banks Project ect Finance ce and Syndicat icatio ions s Departm tmen ent ns and Proj oject ct Finance nance, , Syndicatio dications d Real Esta tate te Leasi asing ng Strong track record Our predecessor department called Project Finance & Syndications has been established in 1999, meaning that we have more than a decade long track record at the local market Custo tome mer r focus From existence we have been building long-term customer relationships, resulting that we act as home-bank for most of our customers In In-de depth pth industr try y expert rtise Colleagues are specialized for a limited number of industries, thus can demonstrate in-depth knowledge and experience in those, as well as, Raiffeisen Banking Group owns SPVs executing equity investments on proprietary accounts in real estate and energy rgy industry dustry (develo loped 53 53 MW+ MW+ wi windp dparks in in Hun unga gary ry), which provide supplementary know-how for lending Strong ng parent t backgro round und Raiffeisen Bank International AG, as parent, secures further enhancement to large-scale lending activity in form of regional expertise and extended underwriting capacity Extended ded network RBI Group operates an extensive network in CEE, SEE and CIS covering 17 countries, which reveals as major advantage for customers making business in this region Slide 16 Ákos Csobádi, 01.10.2013.