1. European Bank for Reconstruction & Development
South East Europe Corporate Governance Roundtable
Bucharest
Lindsay Forbes
September 2001 1

2. EBRD : Active in Corporate Governance
Direct Investments
Active Participation on Boards
Legal Transition
Direct
Through Technical Co-operation

3. EBRD Equity Portfolio: (1991 to end Q2 2001)
Listed Equity €680m (21%)
Unlisted With Agreed Exits €1014m (31%)
Equity Funds €680m (21%)
Unlisted Equity €877 (27%)

4. Current Equity exposure by Country (i)
Related to Policy Framework score
3.5
4 = High
1 = Low
2.5
EURO million
3.5
3.8
3.3
2.8
3.0
3.2
2.5
3.0
3.0
3.5
2.0
Poland
Russia
Czech Rep
Hungary
Slovak Rep
Romania
Bulgaria
Lithuania
Ukraine
Slovenia
Estonia
Uzbekistan
Regional
Croatia

5. Current Equity exposure by Country (ii)
Related to Policy Framework score
2.9
4 = High
1 = Low
3.1
2.7
1.3
2.6
2.9
EURO million
2.8
2.4
2.0
1.5
2.8
N/A
2.2
2.6
Kazakhstan
Albania
Georgia
Kyrgyzstan
Azerbaijan
FYROM
Belarus
Moldova
Tajikistan
Armenia
Latvia
Turkmenistan
Bosnia
FRO Yugoslavia

6. Current Equity exposure by Country (i)
Commitment per head of population related to Policy Framework score
3.3
3.5
3.8
3.2
EURO
3.0
3.5
3.0
3.5
3.0
2.9
3.1
2.8
Czech Rep
Hungary
Lithuania
Slovenia
Estonia
Bulgaria
Poland
FYROM
Latvia
Romania
Croatia
Slovak Rep

7. Current Equity exposure by Country (ii)
Commitment per head of population related to Policy Framework score
2.6
2.5
2.9
2.8
1.3
2.5
EURO
2.0
2.4
2.0
2.7
2.8
1.5
2.2
2.6
N/A
Albania
Russia
Georgia
Azerbaijan
Tajikistan
Kyrgyzstan
Uzbekistan
Kazakhstan
Moldova
Belarus
Armenia
Turkmenistan
Ukraine
Bosnia
FRO Yugoslavia

8. Impact of Policy Framework on Business Environment
Critical Determinant of FDI
Ukraine FDI $460 million
If Ukraine had Slovak PF* FDI + $500 million
If Ukraine had Hungary PF* FDI + $1.25 bn
FDI - Important source of equity transactions
*PF - Policy Framework
Source: Economist Intelligence Unit

9. BorsodChem, Hungary - Example
Acquisition of 25% by Milford
Offer by CEOG to minorities
AGM Change of control
Sep 99
Jan 00
Nov 99
Jul 00
May 00
Mar 00
Nov 00
Sep 00
Jan 01
Apr 01
Feb 01
Sep 01
Jun

10. Corporate Governance:
EBRD Nominees on Boards of Investee Companies:
115 EBRD employees and 12 Consultants;
23 EBRD Nominees in 21 Listed Companies;
97 EBRD Nominees in 126 unlisted Companies;
48 EBRD Nominees in 57 Equity Funds

11. EBRD: Legal Transition Programme
Objective: Improve overall investment climate in Bank’s countries of operation
Focus Areas:
Bankruptcy law
Company Law and Corporate Governance Issues
Regulation of Financial Markets
Secured transactions laws
Telecoms - Regulatory reforms
Concessions

12. Why Corporate Governance is important to EBRD
EBRD is biggest investor in region (€2 bn plus);
EBRD is always a MINORITY investor;
EBRD’s exits from investments crucially depend on new investors being comfortable with legal environment;
EBRD believes that good policy framework and active corporate governance is critical to the transition;
Major victims of poor corporate governance are the countries themselves and their citizens.