Thüringer Aufbaubank A German example for a regional development bank Public Financial Institutions in Europe – Open Days 2011 Brussels, 11 October 2011.

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

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The Free State of Thuringia in figures (2010):Founded 14th October 1990Surface 16.172 sq kmPopulation 2.24 Mio.Capital Erfurt (~200.000 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. € (31.12.2010)

• 352 employees (group: 618)

Introduction

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Thüringer Aufbaubank at a glance:

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

Introduction

subsidiaries

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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

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Public Financial Institutions in Europe – Open Days 2011 Brussels, 11 October 2011 6

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

LoansGuarantees

Equity

acts under public law

acts under private law

acts on behalf of the State as a

public authorityacts on its own

behalf as a bank

Thüringer Aufbaubank

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

Business Model – Procedure for Granting Allowances

Investment projectInvestment project

ConceptConcept

Development bankDevelopment bank

InvestmentInvestment

Monitoring of application of fundsMonitoring of application of funds

granted allowancegranted allowance

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House bankHouse bankconfirmation of permanent financing

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

Business Model – Procedure for Granting Loans

Individual applicantIndividual applicant

ConceptConcept

House bankHouse bank Development bankDevelopment bank

granted loangranted loan

Final borrowerFinal borrower

Monitoring of application of fundsMonitoring of application of funds9

refinancing andinterest subsidy

interestsubsidy

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

Business Model – Global Loans

House bankHouse bank Development bankDevelopment bank

granted loangranted loan

Project 1

Project 1

low interest refinancing

Project 2Project 2 Project 3Project 3

global loan

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low interestadvantage

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

Business Model - Refinancing

Refinancing:

• Loans

• Bonds

• Equity Capital

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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

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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

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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.

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

Contact Details

Thank you for your attention!

Thüringer Aufbaubank

Gorkistrasse 9D-99084 Erfurt

Telefon +49 361 7447 - 519Fax +49 361 7447 - 571

[email protected]

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