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Thüringer Aufbaubank A German example for a regional development bank
Public Financial Institutions in Europe – Open Days 2011 Brussels, 11 October 2011
Public Financial Institutions in Europe – Open Days 2011 Brussels,11 October 2011
Introduction
500 mls 800 km
Bild: LEG Thüringen
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The Free State of Thuringia in figures (2010):Founded 14th October 1990Surface 16.172 sq kmPopulation 2.24 Mio.Capital Erfurt (~200.000 inh.)GDP 49.9 bn.
Quelle: Thüringer Landesamt für Statistik
Public Financial Institutions in Europe – Open Days 2011 Brussels,11 October 2011
• Development bank of the Free State of Thuringia
• Founded in 1992
• Shareholder: 100% The Free State of Thuringia
• Headquarters: Erfurt
• Balance Sheet Total: 2,7 bn. € (31.12.2010)
• 352 employees (group: 618)
Introduction
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Thüringer Aufbaubank at a glance:
Public Financial Institutions in Europe – Open Days 2011 Brussels,11 October 2011
Introduction
subsidiaries
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Public Financial Institutions in Europe – Open Days 2011 Brussels,11 October 2011
Activities - Framework
Legal Framework:• Understanding about the orientation of legally independent special
credit institutions in Germany (Understanding II), 1st March 2002
• „Thüringer Aufbaubankgesetz“ (TAB-Act ), 21st November 2001
Activities are limited to promotional tasks and to financing of municipalities due to advantages resulting from state guarantees “Anstaltslast “and “Gewährträgerhaftung”!
Economic Framework:
• Basel III /CRD IV
• Budget policy restrictions
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Public Financial Institutions in Europe – Open Days 2011 Brussels, 11 October 2011 6
Activities – Business Fields
Economy and Technology
Housing
Financing of Municipalities
Watermanagement
Agriculture and Environment
Job Market and Tourism
Fields of Promotional Activities
Public Financial Institutions in Europe – Open Days 2011 Brussels,11 October 2011
Business Model - Instruments
grants / allowances
LoansGuarantees
Equity
acts under public law
acts under private law
acts on behalf of the State as a
public authorityacts on its own
behalf as a bank
Thüringer Aufbaubank
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Public Financial Institutions in Europe – Open Days 2011 Brussels, 11 October 2011
Business Model – Procedure for Granting Allowances
Investment projectInvestment project
ConceptConcept
Development bankDevelopment bank
InvestmentInvestment
Monitoring of application of fundsMonitoring of application of funds
granted allowancegranted allowance
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House bankHouse bankconfirmation of permanent financing
Public Financial Institutions in Europe – Open Days 2011 Brussels, 11 October 2011
Business Model – Procedure for Granting Loans
Individual applicantIndividual applicant
ConceptConcept
House bankHouse bank Development bankDevelopment bank
granted loangranted loan
Final borrowerFinal borrower
Monitoring of application of fundsMonitoring of application of funds9
refinancing andinterest subsidy
interestsubsidy
Public Financial Institutions in Europe – Open Days 2011 Brussels,11 October 2011
Business Model – Global Loans
House bankHouse bank Development bankDevelopment bank
granted loangranted loan
Project 1
Project 1
low interest refinancing
Project 2Project 2 Project 3Project 3
global loan
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low interestadvantage
Public Financial Institutions in Europe – Open Days 2011 Brussels,11 October 2011
Business Model - Refinancing
Refinancing:
• Loans
• Bonds
• Equity Capital
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Thüringer Aufbaubank is not allowed to do deposit banking for competitive reasons!
Public Financial Institutions in Europe – Open Days 2011 Brussels,11 October 2011
Added Value – Grant Business
Added value of the grant business:• Investment grants
• are an important tool to attract businesses and to create jobs in development areas
• strengthen the equity position of companies in the “new” Federal States of Germany which is generally weaker than the equity position of companies in the “old” Federal States of Germany
Technology grants
• enable the development of new products due to the risk sharing
• strengthen the equity position of companies
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Public Financial Institutions in Europe – Open Days 2011 Brussels,11 October 2011
Added Value – Loan Business
Added value of the loan business:
Global loans to commercial banks
•support the economic cycle because healthy commercial banks can revert to an alternative source of finance which is needed under such difficult capital market conditions resulting from the financial and sovereign debt crisis•help the final borrowers because the commercial banks pass on the refinancing advantages to them
Loans in the “forwarding business”
•help the final borrower because house banks are obliged to forward the refinancing advantage and the interest subsidy
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Public Financial Institutions in Europe – Open Days 2011 Brussels,11 October 2011
Conclusion
• The concept of development banks in Germany has proved to be successful.
• Development banks contribute to faster reducing the disparities between the regions especially in the transitional or “phasing-out” regions.
• The business model of development banks is sustainable. Revolving funds will become more important in the near future due to the decreasing volume of grants. Development banks are predestinated to manage the funds for their shareholders.
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Public Financial Institutions in Europe – Open Days 2011 Brussels,11 October 2011
Contact Details
Thank you for your attention!
Thüringer Aufbaubank
Gorkistrasse 9D-99084 Erfurt
Telefon +49 361 7447 - 519Fax +49 361 7447 - 571
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