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Mongolia Trade & Commodity Finance ConferenceMongolia Trade & Commodity Finance Conference

Introduction to Panel Discussion: Developing trade Introduction to Panel Discussion: Developing trade finance in Mongoliafinance in Mongoliafinance in Mongoliafinance in Mongolia

Marco NindlMarco NindlUlaanbaatar, 13 October 2011Ulaanbaatar, 13 October 2011

What is the EBRD?What is the EBRD?

International financial institution promotes transition56

6064

institution, promotes transition to market economies in 29 countries from central Europe to central Asia

Owned by 61 countries and two inter-governmental institutions

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Capital base of €30 billion*

Cumulative commitments of €62.0 billion

Unaudited as at 31 December 2010

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1216

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10

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Shareholders breakdown

Global Shareholder StructureGlobal Shareholder Structure

Triple-A Shareholders Form 60%

Shareholders breakdown

Japan8 6%

EBRD region

EU 27 Countries

(1)62.7%

8.6% region excluding

EU (2)7.3%

USA10.1%

Others11.3%

(1) Includes European Community and European Investment Bank each at 3%; France, Germany, Italy, UK each at 8.6%

(2) Russia at 4%

As at 1 September 2010

12 65

Invested over €62.0bn € billion

EBRD’s objectives achieved through financing the EBRD’s objectives achieved through financing the private sectorprivate sector

4

6

8

10

15

25

35

45

55in more than 3,119 projects since 1991

€9.0bn invested in 2010 in 380 projects

Private sector > 79% of EBRD fi a

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e (A

BV

)

Net cu

mu

lative b

usin

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2

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

-5

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Debt ABV Equity ABV Net Cumulative Business Volume

EBRD finance

Debt 83%, Equity 17% of EBRD finance

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Reconciled as at 31 December 2010

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A network of 36 offices in 29 countries

More than half our bankers based in the region

Where we operate

EBRD in MongoliaEBRD in Mongolia

Resident Office in Ulaanbaatar operational since p2007

Promote a sound investment climate, good corporate governance and stronger institutions

100% share of private sector projects

Debt/Equity Investments: 77% / 23%

Net business volume EUR 300.9 million

Total project value EUR 877.2 million

*All figures cumulative as of March 2011

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Trade Facilitation Programme (TFP)Trade Facilitation Programme (TFP)of EBRDof EBRD

Facilitates financing of all stages of the trade chain

Production & Export Transport Storage &

distribution

Receivables Management

TFP TFP –– How does it work?How does it work?

EBRD supports trade by providing:EBRD supports trade by providing:

guaranteesguarantees that cover risks arising from trade finance

transactions:

shortshort--term cash advances/financingterm cash advances/financing for pre-export

and post import as well as local trade finance purposes;;

TC funded trade finance training and advisory training and advisory

serviceservice..

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Two Main ComponentsTwo Main Components

Trade Facilitation Programmeg(EUR 1.5 billion framework)

Trade Finance Guarantee

Facility

Trade Finance Cash

Facility(fully operational

since 1999)(launched in 2000)

Guarantee Structure and ApplicationGuarantee Structure and Application

EBRD issues a Stand-By

Banking InstrumentBanking Instrument

ApplicationConfirmation

Letter of Credit covering the risks of Issuing Bank

towards the Confirming bankObligation Issuing

Bank,Country of Operation

Obligation Receiving Bank,

World Wide

BuyerSeller UnderlyingTrade Transaction

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Sample: Sample: TFP TFP –– Import of car tyres and Import of car tyres and spare parts to Mongoliaspare parts to Mongolia

A German automobile producer sells car tyres and spare parts to Mongolia, EUR 940,000

A Mongolian bank issues a L/C, confirmed by a bank in Germany y

EBRD guarantees 100% of the political and commercial payment risk

ShortShort--term cash advances/financingterm cash advances/financing

Local Company

Local Bank (EBRD’s borrower)•Takes local company risk

•Borrows from EBRD•On-lends to the local company

Loan repayment Loan disbursement

EBRD

•Takes local bank risk•Lends to the local bank against

sub-loan reports

Repayment to EBRD EBRD’s disbursement

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Sample: Export of wine from MoldovaSample: Export of wine from Moldova

A Moldovan wine A Moldovan wine producer requires pre-export finance for purchase of agro-chemicals and equipment and export of wine to Russia

EBRD grants a loan to EBRD grants a loan to a Moldovan bank which the bank can use to fund a loan to the Moldovan exporter (amount USD 170,000, tenor 8 months)

TFP TFP –– Technical Cooperation ProjectsTechnical Cooperation Projects

EUR 4.2 million have been used for TFP TC consultancy services training of over 800 trade finance staff of 200 banks in 17 of EBRD’s Countries of Operation

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TFP TFP -- Trade Finance Training in Trade Finance Training in MongoliaMongolia

TFP Trade Finance Training & Advisory ProjectsTFP Trade Finance Training & Advisory Projects

2009 & 20102009 & 2010

Topics: trade finance practices, advanced and structured trade finance, factoring, UCP 600, fraud prevention, correspondent banking, restructuring trade finance deals, legal proceedings in connection with defaulted trade finance transactions, e-learning, etc.

Projects were generously sponsoredProjects were generously sponsoredby Taipei China, Switzerland, Italy, theNetherlands, New Norway CooperationFund, Western Balkans Fund, EarlyTransition Country Fund, SpecialShare-holder Fund of EBRD.

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EBRD EEBRD E--Learning ProgrammeLearning Programme

The ICC’s technology partner Coastline Solutions has assisted EBRD to develop an online training programme incorporating ICCEBRD to develop an online training programme, incorporating ICC content on rules and operations in trade finance;

Project funded by the EBRD’s special shareholder’s fund and offered free of charge to Issuing Banks in EBRD’s countries of operations.

To date 230 trade professionals from 70 banks in 15 countries enrolled.

TFP Business Volume p.a. TFP Business Volume p.a. 1999 1999 -- 20102010

900

300

400

500

600

700

800Volume, € mln

0

100

200

300

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

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EBRD TFP EBRD TFP –– 1274 Transactions in 1274 Transactions in 20102010

1. Russia (489)

2. Kazakhstan (118)

3. Georgia (112)

4. Belarus (105)

5. Ukraine (98)

6. Macedonia (74)

7. Azerbaijan (63)

8. Moldova (63)

9. Armenia (61)

10. Uzbekistan (24)

11. Serbia (23)

12. Tajikistan (20)

13. Bosnia (12)

14. Kyrgyz Republic (9)

15. Croatia (2)

16. Turkmenistan (1)

TFP support for SMEsTFP support for SMEs

1,274 transactions in 2010

87% of all transactions are under EUR 1 million87% of all transactions are under EUR 1 million

462

651

300

400

500

600

700

Number of Transactions

136

250

100

200

<100,000 0.1 - 1mln

1 - 5 mln > 5 mln

Amount in EURs

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TFP in MongoliaTFP in Mongolia

Currently 2 Issuing Banks:Currently 2 Issuing Banks:

730 Confirming Banks in 77 730 Confirming Banks in 77 CountriesCountries

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EBRD TFP EBRD TFP –– Top 20 Confirming Banks by Top 20 Confirming Banks by Number of Transactions in 2010 Number of Transactions in 2010

1. Commerzbank

2 Deutsche Bank

11. Banco de Sabadell

12 KBC Bank2. Deutsche Bank

3. UniCredit Bank

4. UBS

5. HSBC Bank

6. Bank of New York Mellon

7. LBBW

12. KBC Bank

13. JP Morgan Chase Bank

14. BHF Bank

15. Landesbank Berlin

16. Fortis Bank

17. Banca delle Marche

18 Banca Monte dei Paschi di Siena8. Intesa San Paolo

9. RZB

10. ING Bank

18. Banca Monte dei Paschi di Siena

19. Bank Hapoalim

20. Yapi ve Kredi Bankasi

The Panellists:The Panellists:

Panel Discussion: Developing trade finance in Mongolia

Vincent O’Brien,Vincent O’Brien, Chair, Market Intelligence Group, ICC Chair, Market Intelligence Group, ICC Banking CommissionBanking Commission

Bodo Thöns,Bodo Thöns, Senior Representative for Kazakhstan, Senior Representative for Kazakhstan, Tajikistan, Kyrgyzstan & Mongolia, CommerzbankTajikistan, Kyrgyzstan & Mongolia, Commerzbank

Bulgan Zayat,Bulgan Zayat, Director of SME Banking, XacBankDirector of SME Banking, XacBankg y ,g y , g,g,

Stephen Caley,Stephen Caley, Chief Risk Officer, Khan BankChief Risk Officer, Khan Bank