State development bank of Poland

Open days Workshop “Public Financial Institutions in Europe”

(Conf code 11A23)

Karina Kostrzewa

Brussels, 11th October 2011

Introduction - ProfileState development bank of Poland since 1924

Legally organized as a state bank (as opposed to a joint-stock company or cooperative)

Supervised by Ministry of Finance

Subject to oversight by financial supervision authority (KNF)

Not subject to bankruptcy law (implicit state guarantee)

BGK’s activities are governed by the following acts:

• Act on Bank Gospodarstwa Krajowego (8 February 2011)

• Decree establishing the statute of BGK (11 May 2010)

• Banking Law (29 August 1997)

Ownership: 100% state-owned

Rating (Fitch): A- Stable (IDR)

Assets (2010): c. 9bln EUR (c. 36bln PLN);

8th biggest bank in Poland

Headquarters: Warsaw

Branches: 18 branches across Poland

Employee #: c.1,300

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Introduction - Mission

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Supporting government economic and social programs at national and regional level

Agent of the Ministry of Finance (foreign debt servicing)

Managing government loan and transfer funds

Handling government loan and subsidy programmes

Introduction - Lending (2010)

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BGK activities

Supporting key sectors:

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Start-ups, entrepreneurship (SMEs)

Innovation and development

Infrastructure

Social housing

Financing municipalities

Exports

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Intermediary Financial

InstitutionsClients

Local government entities

SMEs

Strategic enterprises

Act on BGK

Public Mandate

Management of Government Funds

Management of Government Programs

Sources of Funding

Equity

International Financial Institutions

EU Funds

Debt markets

Deposits

Government funds

BGK Business Model

State Liability

Special „State Bank” status

BGK’s Branches

BGK business model - instruments

BGK GroupBGK Group

Financing the gap in social housing

Servicing of central budget accounts(currently Central Bank of Poland [NBP])

EU funds transfer from ST accounts (2007-2013 EU financial perspective)

Agent of State Treasury [ST](public debt management)

Complete servicing of municipalities, healthcare: financing, PPP, transactional banking,

liquidity management

Export pre-financing, support for exporters, including liquidity

and risk managementi

Filling in gaps in credit-equity financing in the financial markets

(e.g. VC, entrepreneurship)

Infrastructure financing (transport, municipal, social infrastructure)

Banking services for ministries, central agencies, NFZ, etc...

Guarantee programs

Support of strategic sectors (R&D, education, energy)

and project finance

Support of EU investments

Export finance support

Servicing of appropriated funds

Realization of other tasks as part ofassigned government programs

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Financing instruments for regions/municipalitiesBGK offers the possibility of financing local government investments

through:

• Capital markets: organizing bond issues (underwriting/advisory)

• Lending: – Loans from the bank’s own resources

– Loans from international financial institutions (eg. EIB)

– Loans from state budget under the Rural Development Programme (PROW)

– Loans under the Municipal Investment Development Fund (FRIK)

• JESSICA – financing urban revitalization (Wielkopolska province);

• Environmental Lending Subsidies (PO IS)

• Environmental Protection Fund resources (in the repayable and non-refundable form);

• Grants from the Treasury

• Investments possible by financing municipal companies without recourse to local government guarantees or financing

• Public-private partnerships (PPP)

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Leading position in local government financing

Ranked second in underwriting municipal bond issues

• Municipal bond market share ~ 13,14%

• Bond issuance volume over 325mln EUR

• Full service related to bond issue placement: organizing agent, depositary, transfer agent, dealer, underwriter.

Leading bank in local governments financing

• 2489 local municipalities in Poland

• Municipal loan market share ~ 15,5%

• Assets over 1,3 bln EUR

• BGK takes part in almost ½ of all loan tenders announced by local governments (by volume) with nearly 50% effectiveness

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Leading position in local government financing

BGK is the leader in local governments financing with total assets of 1,27 bln $

• Municipal loan market market share ~ 15,5%

• BGK takes part in almost ½ of all loan tenders announced by local governments (by volume) with nearly 50% effectiveness

• Municipal bonds market share ~ 11,3%

*percentage of tenders won by BGK out of all tenders with BGK offer (by volume)

Municipal bonds market

0%

2%

4%

6%

8%

10%

12%

14%

16%

2006 2007 2008 2009 31.08.2010

Y ear

Mar

ket s

har

e

Municipal loan market

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

2006 2007 2008 2009 08.08.2010

Year

Mar

ket

sh

are

  2009 2010

tenders 2340 2577

BGK participation (number) 484 783

BGK participation (volume) 41% 47%

efficiency* 40% 47%

Value added

Municipalies:• Close ties and

network with municipalities developed over the years

• Advisory servises for municipalities (analysis, PPP, liquidity, financing, EU funds)

SMEs:• Equity for innovation

start-ups• Technology grants for

innovation SMEsCounter ciclical:• providing financing for

municipalities/SMEs during the crisis at low cost (loans, guarantees)

• providing liquidity for interbank market

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Summary

• 100% state own financial institutions with clear public mandate and implicit guarantee

• Support to the development of the country at the central and municipal level

• Guarantor of effective use of EU revolving instruments in Poland especially in 2014-2020 MFF

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