State development bank of Poland Open days Workshop “Public Financial Institutions in Europe” (Conf code 11A23) Karina Kostrzewa Brussels, 11th October 2011

Introduction - Profile State 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 2

Introduction - Mission 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 Core Business Banking and Advisory services for the Public Sector Central Government Entities Government programmes and tasks based on capital guaranteed by the State Treasury Public Mandate Financing of Local Government 3

Introduction - Lending (2010) 4

Supporting key sectors: BGK activities Supporting key sectors: Exports Infrastructure Start-ups, entrepreneurship (SMEs) Innovation and development Financing municipalities Social housing

Intermediary Financial Institutions BGK Business Model Intermediary Financial Institutions Clients Local government entities SMEs Strategic enterprises Sources of Funding Equity International Financial Institutions EU Funds Debt markets Deposits Government funds BGK’s Branches State Liability Special „State Bank” status Act on BGK Public Mandate Management of Government Funds Management of Government Programs 6

BGK business model - instruments Government programs and tasks based on capital guaranteed by the State Treasury Servicing of Public Sector (Central Government Entities) Financing of Local Government & General Public Mandate Guarantee programs Servicing of appropriated funds Complete servicing of municipalities, healthcare: financing, PPP, transactional banking, liquidity management Support of EU investments Agent of State Treasury [ST] (public debt management) Support of strategic sectors (R&D, education, energy) and project finance Export finance support EU funds transfer from ST accounts (2007-2013 EU financial perspective) Financing the gap in social housing Export pre-financing, support for exporters, including liquidity and risk managementi Infrastructure financing (transport, municipal, social infrastructure) Servicing of central budget accounts (currently Central Bank of Poland [NBP]) Filling in gaps in credit-equity financing in the financial markets (e.g. VC, entrepreneurship) Realization of other tasks as part of assigned government programs Banking services for ministries, central agencies, NFZ, etc... BGK Group Venture Capital Innovative SMEs Guarantees Guarantee System in Poland Public-Private Partnership (PPP) Advisory and structured financing Export Finance Business support

Financing instruments for regions/municipalities BGK 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) 8

Leading position in local government financing 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 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. 9

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%   2009 2010 tenders 2340 2577 BGK participation (number) 484 783 BGK participation (volume) 41% 47% efficiency* 40% *percentage of tenders won by BGK out of all tenders with BGK offer (by volume)

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 SMEs Counter ciclical: providing financing for municipalities/SMEs during the crisis at low cost (loans, guarantees) providing liquidity for interbank market

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