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 2 The Free State of Thuringia in figures (2010): Founded 14th October 1990 Surface sq km Population 2.24 Mio. Capital Erfurt (~ 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. ( ) 352 employees (group: 618) Introduction 3 Thüringer Aufbaubank at a glance:

Public Financial Institutions in Europe – Open Days 2011 Brussels,11 October 2011 Introduction subsidiaries 4

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 5

Public Financial Institutions in Europe – Open Days 2011 Brussels, 11 October 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 Loans Guarantees Equity acts under public law acts under private law acts on behalf of the State as a public authority acts on its own behalf as a bank Thüringer Aufbaubank 7

Public Financial Institutions in Europe – Open Days 2011 Brussels, 11 October 2011 Business Model – Procedure for Granting Allowances Investment project Concept Development bank Investment Monitoring of application of funds granted allowance 8 House bank confirmation of permanent financing

Public Financial Institutions in Europe – Open Days 2011 Brussels, 11 October 2011 Business Model – Procedure for Granting Loans Individual applicant Concept House bank Development bank granted loan Final borrower Monitoring of application of funds 9 refinancing and interest subsidy interest subsidy

Public Financial Institutions in Europe – Open Days 2011 Brussels,11 October 2011 Business Model – Global Loans House bank Development bank granted loan Project 1 Project 1 low interest refinancing Project 2 Project 3 global loan 10 low interest advantage

Public Financial Institutions in Europe – Open Days 2011 Brussels,11 October 2011 Business Model - Refinancing Refinancing: Loans Bonds Equity Capital 11 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 12

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 13

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. 14

Public Financial Institutions in Europe – Open Days 2011 Brussels,11 October 2011 Contact Details Thank you for your attention ! Thüringer Aufbaubank Gorkistrasse 9 D Erfurt Telefon Fax