Sub - Heading GRAIN FINANCING FROM THE BANKS POINT OF VIEW HARKÁNY June 22nd 2009 Papp Dániel – Trade Finance/ Raiffeisen Bank

Sub - Heading The grain market's volume and financing Million Tons of yield worth of Billion HUF grain financing worth of Billion HUF Supply financing secured by warehouse warrant - Warehouse warrant as stock - Warehouse warrant and liquidation - Warehouse control and intervention - Material and storage specialities of the grain Papp Dániel – Trade Finance/ Raiffeisen Bank

Sub - Heading The Raiffeisen Bank’s participation in the domestic grain financing Raiffeisen: focusing on grain financing for the last 10 years Key industry Market leader every year Credit stock yearly between Billion HUF Locally available customer service for higher flexibility. Papp Dániel – Trade Finance/ Raiffeisen Bank

Sub - Heading Season 2007/2008 a)In autumn drastic price increase, in spring drastic price drop Causes: - The EU puts intervention stocks on the market - In the neighbouring states the yield was good - Strong forint (weakening export) b) Increased fraud events Causes: - Intervention stock’s “chaos” - Effect of bank replenishment cover and forced liquidation - Lack of warehouse control (Bankruptcy of Danubius) Papp Dániel – Trade Finance/ Raiffeisen Bank

Sub - Heading Season 2007/2008 c) Trust crises among the market participants - customers – warehouses - customers – banks - banks – warehouses Papp Dániel – Trade Finance/ Raiffeisen Bank

Sub - Heading Season 2008/2009 consolidated circumstances, lower price volatility More careful bank approach 2008 Autumn : crises - Interbank liquidity crises - Economic crises Papp Dániel – Trade Finance/ Raiffeisen Bank

Sub - Heading Challenges of Season 2009/2010 Increasing price volatility, uncertain yield outlook Uncertain EUR/HUF exchange rate lack of resources at agricultural participants Situation of banks - expensive resources - focus on risk - there is no unlimited growth - trust crises towards the other market participants (customers, warehouses) Papp Dániel – Trade Finance/ Raiffeisen Bank

Sub - Heading The risk for banks in grain financing 1)Market risks 2) Fraud risks 3) Warehouse risks Papp Dániel – Trade Finance/ Raiffeisen Bank

Sub - Heading 1) Market Risks a) Development of market price - replenishment cover obligation according to the market price - decrease of financing ratio - involvement of external grantors (Hungarian Development Bank, HG) b) exchange rate risk for foreign currency credit - mainly HUF credits - lower fin. ratio in case of non HUF credit c) Liquidity risk - finding the right time Papp Dániel – Trade Finance/ Raiffeisen Bank

Sub - Heading 2) Fraud risks - transfer of goods without bank permission - continuous control (warehouse and bank) - find personal responsibility Papp Dániel – Trade Finance/ Raiffeisen Bank

Sub - Heading 3) Warehouse Risks - public warehouses work together - judging public warehouse guarantee, public warehouse limits Papp Dániel – Trade Finance/ Raiffeisen Bank

Sub - Heading Raiffeisen Bank’s grain season 2009/2010 Goal: Carry on as market leader. In season 2009/2010 Raiffeisen is still focusing on the agricultural companies -As the agricultural companies have liquidity problems, possibly high financing ratio, but at the same time -Daily price control -Very strict physical control in place -Personal responsibility Papp Dániel – Trade Finance/ Raiffeisen Bank

Sub - Heading Raiffeisen Bank’s grain season 2009/2010 -Short term HUF, (EUR) credits -Standard products: food grade wheat, feed grade wheat, feed grade sweet corn, feed grade barley, sunflower, rape -Between 75% - 95% financing rate (on basis of crop, customer credit, fix priced buyer contract or other warrant) -Hungarian Development Bank’s “grain current assets creditprogram” Papp Dániel – Trade Finance/ Raiffeisen Bank

Sub - Heading Thank You for Your Attention Raiffeisen Bank Partner of agricultural companies. For information about crop financing please visit our local branches. Papp Dániel – Trade Finance/ Raiffeisen Bank