sid bank lecture
TRANSCRIPT
International Economic Development for Slovene
Economy with instruments of Long Term Financing and Insurance
Sibil Svilan, President of Management BoardRoman Rojc, Director, Research and Strategy
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Contents
1. SID Bank’s Profile
2. Importance of Export for Slovenia
3. Export Promotional System
4. Export Financing
5. Export Credit Insurance
6. Other Supportive Services
7. Impact
8. Future role
6 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
Mission
We develope and provide long-term financial services,
designed to supplement financial markets and in such
way stimulate competitive position of the economy,
creating new jobs and sustainable development of
Slovenia.
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• Established as a Stock Company, 1992, under the Law of Slovenian export company for insuring and financing Slovenian export.
• Transformation to national Export and Development Bank 2005 – 2008.
• Ownership: Republic of Slovenia - 100%.
• Meeting customers’ demands and business needs in the area of market gaps and failures.
• Current credit rating: Ba1 (Moody’s).
Company profile
6 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
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Key Figures
million EUR 2008 2009 2010 2011 2012
Rating / Aa2
(Moody’s)
Aa2
(Moody’s)
A1
(Moody’s)
Baa2
(Moody’s)
Total Assets 2.088 3.025 3.896 4.029 4.088
Equity 161 322 328 332 340
CIR 29,3 22,4 15,1 13,1 8,5
Net Profit 2,8 0,9 5,7 6,5 5,0
Capital Adequacy 11,1% 16,7% 13,5% 14,4% 14,2%
No. of Employees 76 87 94 112 124
6 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
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Legal Status, Purpose & Visibility
SID Bank is a specialized promotion and development bank with its own legal nature of credit institution and Export Credit Agency/Bank (ECA), equity and cash assets.
SID Bank has the legal status of a State-owned bank as has been established by:• The Law of Slovene Export and Development Bank • The Law on Insurance and Financing of International Business
Transactions
It operates under the supervision of the Bank of Slovenia, Agency for Insurance Supervision, Ministry of Finance and Ministry of Economy.
• Sustainable finance and insurance• Good reputation - responsible lending• SID Bank’s loan programs are offered through majority of Slovenia's commercial
banks• SID Bank’s extensive involvement in government’s anti-crisis measures
confirmed its central and leading role among all public-promotion institutions• SID Bank’s importance for national economy and sustainable development of the
Republic of Slovenia is highly acknowledged among all stakeholders
SID Bank’s purpose is development and promotion of tasks and services that address market gaps and failures across the following areas:
• International trade and economic cooperation,• SMEs,• RDI - Research, development and innovation,• Enterpreneurial and educational activities,• Ecology, energy and construction of infrastructure,and other areas, which are important for development of Republic of Slovenia.
Visibility
Purpose
Legal Status
6 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
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Covering market gap – complementary services
Financing, bonds/
guarantees
Insurance (as a national
ECA)
Other financial & information
services
Strategy and business model
Specialized (public) export, promotion and development bank with
The Role of SID Bank
mandate for promotional and development financial services
6 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
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Position of SID Bank
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TIME
YIELD
MARKETCommercial banks, insurance companies…
RISKS
StateFundsAgencies
6 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
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• Financing projects important for sustainable development, (Re/Co) financing banks• Risk participation (funded, unfunded)• Guarantees• Credit rating information
Two Ways
On its own account, SID Bank's provides:
On account of the State, SID Bank offers:
• Insurance of – medium/short term export credits against commercial and non-commercial risks– outward investments against non-commercial and commercial risks – Interest Rate Equalization Program
• Lead mandate on administrative procedures for state guarantees in financial crisis• Other transactions on special authorization
6 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
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Business Model of DFI
Source: UN-DESA, 2005
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DFI’s Main Functions
6 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
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Appearances of DFI
6 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
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Typical Development Banks - IMultilateral DB
World Bank EIB + EIF CEB EBRD BSTDB NIB0
50
100
150
200
250
300
350
400
Vo
lum
e o
f B
usi
nes
s (b
ln U
S$)
Durban, SA, March 2013:BRICS Development Bank
6 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
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Typical Development Banks– IINational DB
1
10
100
1000
Obi
m u
mrd
€
• INDUSTRIAL FINANCE CORPORATION OF INDIA (IFCI)• INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA (ICICI)• INDUSTRIAL DEVELOPMENT BANK OF INDIA (IDBI)• NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT
(NABARD).• SMALL INDUSTRIAL DEVELOPMENT BANK OF INDIA (SIDBI)
6 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
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Export Credit Agencies
MULTILATERAL NATIONAL (PUBLIC) PRIVATE
Global- MIGA/WB
Regional- ATI, Kenya
Direct Insurers- Atradius, Holland- Euler Hermes, Nemačka- Coface, Francuska
(Re)insurers- Munich Re- Swiss Re
Pure cover ECA- SACE, Italy- AIC, USA- Chubb, USA- Euler Hermes, Germany- Coface, France
Export Creditors- Czech Export Bank- Hungarian Export Import Bank
Insurance + Creditors- EDC, Canada- US EXIM, USA- Eximbank SR- OeKB, Austria- Finnvera, Finland
6 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
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Peer Comparison
HBOR
KfW Bankengruppe
OeKB ICO Korea
Development Bank
BNDES
Country Slovenia Croatia Germany Austria Spain Korea Brazil
Founded 2007 1992 1948 1946 1971 1954 1952
Ratings Baa2 (Moody's) Baa3/BB+ Aaa/AAA/AAA Aaa/AA+ Baa3/BBB/BBB- A1/A/A+ Baa1/BBB-/BBB
Ownership 100% State
Owned 100% State
Owned 80% Fed. Gov.
20% Fed. States
Wholly owned by Austrian
Banks
100% State Owned
100% Government
Owned
100% Federal Republic
State Support Guarantee to All
Obligations Guarantee to All
Obligations Guarantee to All
Obligations Authorized by
the State Guarantee to All
Obligations
Guarantee to Some
Obligations Implicit Support
Supervision Min. of Finance Bank of Slovenia
Parlament Parlament
Ministry of Finance
Ministry of Finance
Ministry of Economic
Affairs
Financial Services
Commision
Ministry of Economic
Development
Total Assets US$5.5 bn US$3.9 bn US$640.4 bn US$50.5 bn US$125.6 bn US$128.4 bn US$336.7 bn
Total Equity US$0.5 bn US$1.3 bn US$23.0 bn US$0.8 bn US$4.8 bn US$17.7 bn US$34.5 bn
6 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
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SID Bank Group
SID - First Credit Insurance Company
Inc., Ljubljana
Pro Kolekt d.o.o.,
Ljubljana
Prvi Faktor d.o.o.,
Ljubljana
CMSR - Centre for International
Cooperation and Development, Ljubljana
(Export) credit insurance (ST – marketable)
Debt collection, Credit information
Factoring
Research and analyses, Consulting, Information activities, Bilateral ODA, Soft loans, Mixed credits
100% of Total Assets 100% of Total Assets 50% of Total Assets 100% of Total Assets
6 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
SID Bank Group - Main Services
Export, promotional & development finance
Export credit and investment insurance(non-marketable), IREP – as national ECA
(Export) credit insurance (ST – marketable)
Debt collection, Credit information
Factoring
Research and analyses, Consulting, Information activities, Bilateral ODA, Soft loans, Mixed credits
186 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
Usage of SID Bank’s Services
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For the purpose of the Internalization - 8 bln €
ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
SID Bank’s response on crisis
InsuranceLoans
Support for 5.900 companies(small, middle, big, export oriented, project, new business models, develop,ment investments…)
Slovenian economy business financing and insurance
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The volume of supported Slovenian exports amounting to
EUR 25.3 billion
With € 4.5 billion financed projects across Slovenia
Financing 28 development projects of the automotive industry
- € 211 million
Implemented 3 guarantee scheme for the RS - the total quota €1.6
billion
6 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
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Contents
1. SID Bank’s Profile
2. Importance of Export for Slovenia
3. Export Promotional System
4. Export Financing
5. Export Credit Insurance
6. Other Supportive Services
7. Impact
8. Future role
6 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
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Openess of the Slovenian economy
Source: J. Mencinger
Relativelly open economies
Relativelly “closed”economies
6 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
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Merchandise trade – real
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ST indicators of economic activity
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Change in Slovenia’s market shares
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Global economic circumstances
Source: FT
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The New (Ab)normalNormal?- insolvent banking systems
- insolvent sovereigns (and sub-sovereigns) - zero-risks investments?
- rock-solid countries with 200% debt to GDP ratio
- misinformation and manufactured "News", mistrust and "violent" markets volatility
- expectation of "unexpected"? (no one knows anything...)
- downgrades, increased corporate defaults, "voluntary" haircuts
- flood of unregulated derivatives, high frequency trading
- higher anticipated inflation and subsequently erosion of wealth
- concentration of wealth among few
- unemployment insurance, mortgage debt restructuring, credit counseling, better access to health insurance?....
- liquidity-constrained consumers, low confidence, job insecurity, discount
retailers.... --- Abnormal is the new "normal"------
6 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
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Contents
1. SID Bank’s Profile
2. Importance of Export for Slovenia
3. Export Promotional System
4. Export Financing
5. Export Credit Insurance
6. Other Supportive Services
7. Impact
8. Future Role
6 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
• Preparing companies to enter foreign markets
• Support to companies entering
new markets • Strengthening of the presence
on traditional markets
• Ensuring safety and possibilities of competitive appearance on traditional and new foreign markets
• Introduction of higher forms of
internationalization
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Export support system
Source: MI 2011
PRESIDENT OF THE RSPREMIER
ME, MFA
SPIRIT, SPS, STO, UKOM
ASSOCIATIONS, CHAMBERS
COMPANIES
SID BANK, CMSR
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Goals I.
• Programme of the Government of the RS for Promoting Internactionalization of Companies 2010-2014
• Action Plan “International Challenges” – on yearly basis
• Supporting Activities (Economic Diplomacy; Informational and Institutional Support, Financial Support), Budget, Indicators, Volumes
• Priority Sectors
• Perspective
• Traditional
• Priority Countries/Markets
• Existing
• Markets with need for repositioning
• New Markets
• High Technology Advanced Countries
• Reconciliation of Work and Needs of all Participators
• Strategic Council fo Internationalization (Chambre of Commerce)
ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
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Goals II.
• Harmonized performance of all government institutions in the field of
international directing and promotion of the Slovenian economy
• Increase in Slovenian export growth
• Increase in new market entrance by Slovenian companies
• Increase in share of total export to selected markets
• Increase in number of exporters outside SEE and EU
• Increase in recognition of Slovenia as good location for foreign
investments; decreasing obstacles for FDI
• Increase in inward FDI to the level of 33% of BDPICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
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Academy of Internationalization
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Contents
1. SID Bank’s Profile
2. Importance of Export for Slovenia
3. Export Promotional System
4. Export Financing
5. Export Credit Insurance
6. Other Supportive Services
7. Impact
8. Future Role
6 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
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Financing facilities provided by SID Bank include:• Loans (incl. suppliers’ credit, buyer’s credit, syndicated
loans) • Project financing • Purchase of receivables • Acquisition of assets• Risks participation and guarantees• Mezzanine financing (in preparation)
Main characteristics:• Long-term financing• Multi-currency financing• Variable or fixed interest rate• Individual approach
Financing
6 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
Promotional Export Financing
Supported Export Projects and Outward FDI (2008-2012)
70 projects in total sum of 460 mio EUR2 projects with ODA included EU regulation – limitation; WTO and OECD Rules
INSTRUMENTS (for export companies financing, foreign buyer financing, investors investors
• Ensuring favourable long-term funds to domestic commercial banks (for export purpose)
• Coffinancing with commercial banks
• Direct lending to foreign buyer or foreign bank
• Outward FDI financing
• Credit lines for acceleration of Slovenian export
• Financing in combination with ODA
• In preparation: export credits refinancing
OTHER SUPPORTIVE FORMS
• In the frame of the Action plan on internationalization
• Cooperation with diplomatic – consular net
• Bilateral cooperation with other stakeholders
• Correspondent net of foreign banks and cofinancing with third countries banks
356 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
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Contents
1. SID Bank’s Profile
2. Importance of Export for Slovenia
3. Export Promotional System
4. Export Financing
5. Export Credit Insurance
6. Other Supportive Services
7. Impact
8. Future Role
6 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
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Insurance I.
Insurance services of SID Bank include:• Medium/short term export credit (re)insurance against
commercial/non-commercial risks.• Investment insurance against commercial/non-commercial risks.• Insurance of banking guarantees, linked to export transactions• Interest Rate Equalisation Programme (IREP).• Other transactions on special authorization
For the account and on behalf of RS (non-marketable risks)*
For the account and on behalf of SID-PKZ (marketable risks)Insurance services of SID-PKZ include:• Short term export credit insurance against commercial/ non-commercial risks.• Integral Risk Management
*Risk of the nature and level for which private (re)insurance market lacks either willingness or capacity to cover.
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SID Bank Group – Business insured (EUR million)
Insurance II.
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Export Coverage
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SID EDC CESCE COSEC ECGC Euler Hermes EKF OeKB SACE Finnvera0
5
10
15
20
25
PEER Comparison
%*
*
Source: Berne Union
*
* Activities in more countries; SID Bank = only Slovenian exports
ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
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Volume of Business – State Account
mio €
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2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 11/2012
20,000
40,000
60,000
80,000
100,000
120,000
140,000
Cash flow Cumulative cash flow Contingency reserves
Cas
h F
low
(00
0 E
UR
)
Co
nti
ng
ency
Res
erve
(00
0 E
UR
)
Cash Flow and Contingency Reserves
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Business cycle – export credit insurance (OECD - 2g+)
Source: OECD
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Contents
1. SID Bank’s Profile
2. Importance of Export for Slovenia
3. Export Promotional System
4. Export Financing
5. Export Credit Insurance
6. Other Supportive Services
7. Impact
8. Future role
6 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
Claims Insurance
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WHY TO INSURE?• Risk Management - Business Philosophy• Sales Multiplying - Existent and New
Buyers• Favourable Financing Conditions - Assignment of
Insurance Rights to Commercial Bank
WHAT TO INSURE? OBJECT OF INSURANCE:
• Claims on open account with payment terms up to 180 days (exceptionally up to 360 days)
- to foreign buyers - to domestic buyers
INSURED RISKS:
• Permanent insolvency or bankruptcy of the buyer
• Protracted defaultICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
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Claims Paid (SID-PKZ)
Paid claims (mio €) and y-o-y change
6 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
Services:
• Out-of-court debt settlements• Assistance with legal procedures abroad• Credit reports, monitoring
Global Appearance:
• Cooperation with debt-colection agencies all over the world• Special emphasis on SEE
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Debt Collection
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Factoring
• Factoring is a financial service that makes possible to seller:
- financing (80% - 90 % - 100 % of the claim),- claims insurance (100 %),- bookeeping (open items, received payments, delay and
administrative monitoring of claims),- Monetization of claims (repeated remining and debt
collection).
Factoring is flexible and state-of-the-art financial service, which offers companies of all sizes and industries sollutions with doing business with deffered payments on local and foreign markets.
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CMSR:• Non-profit institution in the frame of SID Bank Group,
which offers wide range support and promotion of Slovenian export
• According to the Law on International Development Cooperation and government resolution CMSR is authorized for performing a part of technical-operative activities under international development cooperation
• Central institution in Slovenia for country risk evaluations and information about foreign markets (market and sector analyses)
• Business portal offers all needed information about Slovenian Business environment in english (www.poslovniportal.si)
ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
CMSR enables grants for investment projects in ODA recipient countries (as a rule up to 30% of the project with grants and concessional loan in cooperation with SID Bank if needed)
CRITERIA FOR ODA ALLOCATION:•ODA recipient country (OECD standard)•Partner country of RS•Final recipient is a public institution •Development project (commerxialy non-viable)•Priority sector (environment protection, energetics...) •Transfer of knowledge or technology
Performing bilateral development cooperation in the form of official development aid (ODA)
496 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
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Contents
1. SID Bank’s Profile
2. Importance of Export for Slovenia
3. Export Promotional System
4. Export Financing
5. Export Credit Insurance
6. Other Supportive Services
7. Impact
8. Future role
6 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
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Global appearence
Supported export in red countriesSupported export in red countries
Supported Export in 115 countries Supported Export in 115 countries
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SID Bank Group Impact
34,54 bn € of sales
13,86 bn € of GDP
15,53 bn € of export 84.000 new jobs
Source: Independent study, Faculty of Economics
(2007-2010) (2013)
9,03 bn € of sales
3,63 bn € of GDP
4,12 bn € of export 21.800 new jobs
6 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
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Contents
1. SID Bank’s Profile
2. Importance of Export for Slovenia
3. Export Promotional System
4. Export Financing
5. Export Credit Insurance
6. Other Supportive Services
7. Impact
8. Future role
6 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
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SID Bank in the Future
2030
A new development model RS - Financial Pillar SID Bank:• One Stop Shop: integration /
consolidation• return assets / grants - sustainable
lending• horizontal objectives• quality and sustainable
development
2011 2020
The slovenian economic
crisis
2000 2007
Regional Development Institutions
in RS
2010
Changes / EU entry
The intern. financial and
economic crisis
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The transformation factors:• Combining resources• More favorable financing
conditions• Provision of long maturity• Adjusted funding
instruments• Targeted promotion of
sectors areas• Synergies within the group
SID fin. institutions
SOURCES OF ASSETS
Banking sources• Unions• Promissory notes• Bonds (domestic
Eurobonds)• Other
Special banking sources
EIB• CEB• KfW
Possible to combine with fiscal resources:
• EU funds• State budget
SID Bank – future role
A D D E D VA L U E R E A L I S AT I O N O F D E V E L O P M E N T P R O J E C T S
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Sustainable Lending
Future as a consequence of past decisions
Selection of priorities and projectsLong term vs. short term view
RESPONSIBLE LENDING IS SUSTAINABLE LENDING
6 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia
Basic principles Responsible Lending
Accessible, honest and understandable informationAffordability, Accountability
An in-depth risk assessment (in particular credit rating)
Verified cash flow,income and assetsImprovements in assessing credit worthiness
Improved disclosure Adaptability to changing circumstancesDifferent collateral options
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The sustainability web
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DFI Role in Future
BORROWER SIDE
LENDERSIDE
NEED OF SUSTAINABLE FINANCEwith:
Special assessment &Careful review
Of
CompanyIndustryCountry R
ISK
DFI should play important role to:1.Overcome credit crunch2.Financial crisis3.Reduce risk4.Reduce financial costs5.Promote sustainable development
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Thank you for your attention!
www.sid.si
6 June 2013 ICPE - NIFM International Training programme - SID Bank, Ljubljana, Slovenia