Sid bank lecture

International Economic
Development for Slovene
Economy with instruments of
Long Term Financing and
Insurance
Sibil Svilan, President of Management Board
Roman Rojc, Director, Research and Strategy

Contents
1. SID Bank’s Profile
2. Importance of Export for Slovenia
3. Export Promotional System
4. Export Financing
5. Export Credit Insurance
6. Other Supportive Services
7. Impact
8. Future role
ICPE - NIFM International Training programme - SID Bank,
Ljubljana, Slovenia

Mission
We develope and provide long-term
financial services, designed to
supplement financial markets and in
such way stimulate competitive position
of the economy, creating new jobs and
sustainable development of Slovenia.
Ljubljana, Slovenia

• Established as a Stock Company, 1992, under the Law of Slovenian
export company for insuring and financing Slovenian export.
• Transformation to national Export and Development Bank 2005 –
2008.
• Ownership: Republic of Slovenia - 100%.
• Meeting customers’ demands and business needs in the area of
market gaps and failures.
• Current credit rating: Ba1 (Moody’s).
Company profile
46 June 2013ICPE - NIFM International Training programme - SID Bank,
Ljubljana, Slovenia

Key Figures
million EUR 2008 2009 2010 2011 2012
Rating / Aa2
(Moody’s)
Aa2
(Moody’s)
A1
(Moody’s)
Baa2
(Moody’s)
Total Assets 2.088 3.025 3.896 4.029 4.088
Equity 161 322 328 332 340
CIR
29,3 22,4 15,1 13,1 8,5
Net Profit
2,8 0,9 5,7 6,5 5,0
Capital
Adequacy
11,1% 16,7% 13,5% 14,4% 14,2%
No. of Employees
76 87 94 112 124
Ljubljana, Slovenia

Legal Status, Purpose & Visibility
6
SID Bank is a specialized promotion and development bank with its own legal nature of credit
institution and Export Credit Agency/Bank (ECA), equity and cash assets.
SID Bank has the legal status of a State-owned bank as has been established by:
• The Law of Slovene Export and Development Bank
• The Law on Insurance and Financing of International Business Transactions
It operates under the supervision of the Bank of Slovenia, Agency for Insurance Supervision, Ministry
of Finance and Ministry of Economy.
• Sustainable finance and insurance
• Good reputation - responsible lending
• SID Bank’s loan programs are offered through majority of Slovenia's commercial banks
• SID Bank’s extensive involvement in government’s anti-crisis measures confirmed its central and
leading role among all public-promotion institutions
• SID Bank’s importance for national economy and sustainable development of the Republic of
Slovenia is highly acknowledged among all stakeholders
SID Bank’s purpose is development and promotion of tasks and services that address market gaps and
failures across the following areas:
• International trade and economic cooperation,
• SMEs,
• RDI - Research, development and innovation,
• Enterpreneurial and educational activities,
• Ecology, energy and construction of infrastructure,
and other areas, which are important for development of Republic of Slovenia.
Visibility
Purpose
Legal Status
Ljubljana, Slovenia

Covering market gap – complementary services
Financing,
bonds/guarantees
Insurance
(as a national ECA)
Other financial &
information services
Strategy and business model
Specialized (public) export, promotion and development bank with
The Role of SID Bank
mandate for promotional and development financial services
Ljubljana, Slovenia

8
Position of SID Bank
TIME
YIELD
MARKET
Commercial banks,
insurance
companies…
RISKS
State
Funds
Agencies
Ljubljana, Slovenia

9
• Financing projects important for sustainable development, (Re/Co) financing banks
• Risk participation (funded, unfunded)
• Guarantees
• Credit rating information
Two Ways
On its own account, SID Bank's provides:
On account of the State, SID Bank offers:
• Insurance of
– medium/short term export credits against commercial and non-commercial risks
– outward investments against non-commercial and commercial risks
– Interest Rate Equalization Program
• Lead mandate on administrative procedures for state guarantees in financial crisis
• Other transactions on special authorization
Ljubljana, Slovenia

Business Model of DFI
Source: UN-DESA, 2005
Ljubljana, Slovenia

DFI’s Main Functions
Ljubljana, Slovenia

Appearances of DFI
Ljubljana, Slovenia

Typical Development Banks - I
Multilateral DB
World Bank EIB + EIF CEB EBRD BSTDB NIB
0
50
100
150
200
250
300
350
400
VolumeofBusiness(blnUS$)
Durban, SA, March 2013:
BRICS Development Bank
Ljubljana, Slovenia

Typical Development Banks– II
National DB
KfW Group, Germany Development Bank of Japan HBOR, Croatia SACE + Mediocredito, Italy EXIM, USA
1
10
100
1000
Obimumrd€
• INDUSTRIAL FINANCE CORPORATION OF INDIA (IFCI)
• INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA (ICICI)
• INDUSTRIAL DEVELOPMENT BANK OF INDIA (IDBI)
• NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT
(NABARD).
• SMALL INDUSTRIAL DEVELOPMENT BANK OF INDIA (SIDBI)
Ljubljana, Slovenia

Export Credit Agencies
MULTILATERAL NATIONAL (PUBLIC) PRIVATE
Global
- MIGA/WB
Regional
- ATI, Kenya
Direct Insurers
- Atradius, Holland
- Euler Hermes, Nemačka
- Coface, Francuska
(Re)insurers
- Munich Re
- Swiss Re
Pure cover ECA
- SACE, Italy
- AIC, USA
- Chubb, USA
- Euler Hermes, Germany
- Coface, France
Export Creditors
- Czech Export Bank
- Hungarian Export Import Bank
Insurance + Creditors
- EDC, Canada
- US EXIM, USA
- Eximbank SR
- OeKB, Austria
- Finnvera, Finland
Ljubljana, Slovenia

Peer Comparison
HBOR
KfW
Bankengruppe
OeKB ICO
Korea
Development
Bank
BNDES
Country Slovenia Croatia Germany Austria Spain Korea Brazil
Founded 2007 1992 1948 1946 1971 1954 1952
Ratings Baa2 (Moody's) Baa3/BB+ Aaa/AAA/AAA Aaa/AA+ Baa3/BBB/BBB- A1/A/A+ Baa1/BBB-/BBB
Ownership
100% State
Owned
100% State
Owned
80% Fed. Gov.
20% Fed. States
Wholly owned
by Austrian
Banks
100% State
Owned
100%
Government
Owned
100% Federal
Republic
State Support
Guarantee to All
Obligations
Guarantee to All
Obligations
Guarantee to All
Obligations
Authorized by
the State
Guarantee to All
Obligations
Guarantee to
Some
Obligations
Implicit Support
Supervision
Min. of Finance
Bank of Slovenia
Parlament
Parlament
Ministry of
Finance
Ministry of
Finance
Ministry of
Economic
Affairs
Financial
Services
Commision
Ministry of
Economic
Development
Total Assets US$5.5 bn US$3.9 bn US$640.4 bn US$50.5 bn US$125.6 bn US$128.4 bn US$336.7 bn
Total Equity US$0.5 bn US$1.3 bn US$23.0 bn US$0.8 bn US$4.8 bn US$17.7 bn US$34.5 bn
Ljubljana, Slovenia

SID Bank Group
17
SID - First Credit
Insurance Company
Inc., Ljubljana
Pro Kolekt d.o.o.,
Ljubljana
Prvi Faktor d.o.o.,
Ljubljana
CMSR - Centre for
International
Cooperation and
Development, Ljubljana
(Export) credit insurance
(ST – marketable)
Debt collection, Credit
information
Factoring
Research and analyses,
Consulting, Information
activities, Bilateral ODA,
Soft loans, Mixed credits
100% of Total Assets 100% of Total Assets 50% of Total Assets 100% of Total Assets
Ljubljana, Slovenia

SID Bank Group - Main Services
Export, promotional & development finance
Export credit and investment insurance
(non-marketable), IREP – as national ECA
(Export) credit insurance (ST – marketable)
Debt collection, Credit information
Factoring
Research and analyses, Consulting, Information activities,
Bilateral ODA, Soft loans, Mixed credits
Ljubljana, Slovenia

Usage of SID Bank’s Services
For the purpose of the Internalization - 8 bln €
Ljubljana, Slovenia

SID Bank’s response on crisis
InsuranceLoans
Support for 5.900 companies
(small, middle, big, export oriented, project, new business models,
develop,ment investments…)
Slovenian economy business financing and insurance
The volume of supported
Slovenian exports amounting to
EUR 25.3 billion
With € 4.5 billion financed projects
across Slovenia
Financing 28 development
projects of the automotive industry
- € 211 million
Implemented 3 guarantee scheme
for the RS - the total quota €1.6
billion
Ljubljana, Slovenia

Openess of the Slovenian
economy
Source: J. Mencinger
Relativelly open economies
Relativelly “closed”economies
Ljubljana, Slovenia

Merchandise trade – real
Ljubljana, Slovenia

ST indicators of economic activity
Ljubljana, Slovenia

Change in Slovenia’s
market shares
Ljubljana, Slovenia

Global economic circumstances
Source: FT
6 June 2013 ICPE - NIFM International Training programme - SID Bank,
Ljubljana, Slovenia

The New (Ab)normal
Normal?
- insolvent banking systems
- insolvent sovereigns (and sub-sovereigns) - zero-risks investments?
- rock-solid countries with 200% debt to GDP ratio
- misinformation and manufactured "News", mistrust and "violent" markets volatility
- expectation of "unexpected"? (no one knows anything...)
- downgrades, increased corporate defaults, "voluntary" haircuts
- flood of unregulated derivatives, high frequency trading
- higher anticipated inflation and subsequently erosion of wealth
- concentration of wealth among few
- unemployment insurance, mortgage debt restructuring, credit counseling, better
access to health insurance?....
- liquidity-constrained consumers, low confidence, job insecurity, discount retailers....
--- Abnormal is the new "normal"------
Ljubljana, Slovenia

Contents
1. SID Bank’s Profile
2. Importance of Export for Slovenia
3. Export Promotional System
4. Export Financing
5. Export Credit Insurance
6. Other Supportive Services
7. Impact
8. Future Role
Ljubljana, Slovenia

• Preparing companies to enter
foreign markets
• Support to companies entering
new markets
• Strengthening of the presence
on traditional markets
• Ensuring safety and
possibilities of competitive
appearance on traditional and
new foreign markets
• Introduction of higher forms of
internationalization
Export support system
Source: MI 2011
PRESIDENT OF THE RS
PREMIER
ME, MFA
SPIRIT, SPS, STO, UKOM
ASSOCIATIONS,
CHAMBERS
COMPANIES
SID BANK, CMSR
Ljubljana, Slovenia

Goals I.
• Programme of the Government of the RS for Promoting
Internactionalization of Companies 2010-2014
• Action Plan “International Challenges” – on yearly basis
• Supporting Activities (Economic Diplomacy; Informational and
Institutional Support, Financial Support), Budget, Indicators, Volumes
• Priority Sectors
• Perspective
• Traditional
• Priority Countries/Markets
• Existing
• Markets with need for repositioning
• New Markets
• High Technology Advanced Countries
• Reconciliation of Work and Needs of all Participators
• Strategic Council fo Internationalization (Chambre of Commerce)
Ljubljana, Slovenia

Goals II.
• Harmonized performance of all government institutions in the field of
international directing and promotion of the Slovenian economy
• Increase in Slovenian export growth
• Increase in new market entrance by Slovenian companies
• Increase in share of total export to selected markets
• Increase in number of exporters outside SEE and EU
• Increase in recognition of Slovenia as good location for foreign
investments; decreasing obstacles for FDI
• Increase in inward FDI to the level of 33% of BDP
Ljubljana, Slovenia

Academy of Internationalization
Ljubljana, Slovenia

34
Financing facilities provided by SID Bank include:
• Loans (incl. suppliers’ credit, buyer’s credit, syndicated
loans)
• Project financing
• Purchase of receivables
• Acquisition of assets
• Risks participation and guarantees
• Mezzanine financing (in preparation)
Main characteristics:
• Long-term financing
• Multi-currency financing
• Variable or fixed interest rate
• Individual approach
Financing
Ljubljana, Slovenia

Promotional Export Financing
Supported Export Projects and Outward FDI (2008-2012)
70 projects in total sum of 460 mio EUR
2 projects with ODA included
 EU regulation – limitation; WTO and OECD Rules
INSTRUMENTS (for export companies financing,
foreign buyer financing, investors investors
• Ensuring favourable long-term funds to domestic
commercial banks (for export purpose)
• Coffinancing with commercial banks
• Direct lending to foreign buyer or foreign bank
• Outward FDI financing
• Credit lines for acceleration of Slovenian export
• Financing in combination with ODA
• In preparation: export credits refinancing
OTHER SUPPORTIVE FORMS
• In the frame of the Action plan on
internationalization
• Cooperation with diplomatic – consular net
• Bilateral cooperation with other stakeholders
• Correspondent net of foreign banks and
cofinancing with third countries banks
Ljubljana, Slovenia

37
Insurance I.
Insurance services of SID Bank include:
• Medium/short term export credit (re)insurance against
commercial/non-commercial risks.
• Investment insurance against commercial/non-commercial risks.
• Insurance of banking guarantees, linked to export transactions
• Interest Rate Equalisation Programme (IREP).
• Other transactions on special authorization
For the account and on behalf of RS (non-marketable risks)*
For the account and on behalf of SID-PKZ (marketable risks)
Insurance services of SID-PKZ include:
• Short term export credit insurance against commercial/ non-commercial risks.
• Integral Risk Management
*Risk of the nature and level for which private (re)insurance market lacks either willingness or
capacity to cover.
Ljubljana, Slovenia

38
SID Bank Group – Business insured (EUR million)
Insurance II.
Ljubljana, Slovenia

Export Coverage
SID EDC CESCE COSEC ECGC Euler Hermes EKF OeKB SACE Finnvera
0
5
10
15
20
25
PEER Comparison
%
*
*
Source: Berne Union
*
* Activities in more countries; SID Bank = only Slovenian exports
Ljubljana, Slovenia

40
Volume of Business – State Account
mio €
Ljubljana, Slovenia

41
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 11/2012
0
2
4
6
8
10
12
0
20000000
40000000
60000000
80000000
100000000
120000000
140000000
Cash flow Cumulative cash flow Claims paid Contingency reserves
CashFlow(000EUR)
ContingencyReserve(000EUR)
Cash Flow and Contingency Reserves
Ljubljana, Slovenia

Business cycle – export credit
insurance (OECD - 2g+)
Source: OECD
6 June 2013 ICPE - NIFM International Training programme - SID Bank,
Ljubljana, Slovenia

Claims Insurance
WHY TO INSURE?
• Risk Management - Business Philosophy
• Sales Multiplying - Existent and New Buyers
• Favourable Financing Conditions - Assignment of Insurance Rights
to Commercial Bank
WHAT TO INSURE?
 OBJECT OF INSURANCE:
• Claims on open account with payment terms up to 180 days
(exceptionally up to 360 days)
- to foreign buyers - to domestic buyers
 INSURED RISKS:
• Permanent insolvency or bankruptcy of the buyer
• Protracted default
Ljubljana, Slovenia

Claims Paid (SID-PKZ)
Paid claims (mio €) and y-o-y change
Ljubljana, Slovenia

Services:
• Out-of-court debt settlements
• Assistance with legal procedures abroad
• Credit reports, monitoring
Global Appearance:
• Cooperation with debt-colection agencies all over the world
• Special emphasis on SEE
Debt Collection
Ljubljana, Slovenia

Factoring
• Factoring is a financial service that makes possible to seller:
- financing (80% - 90 % - 100 % of the claim),
- claims insurance (100 %),
- bookeeping (open items, received payments, delay and administrative
monitoring of claims),
- Monetization of claims (repeated remining and debt collection).
Factoring is flexible and state-of-the-art financial service, which offers companies
of all sizes and industries sollutions with doing business with deffered payments
on local and foreign markets.
Ljubljana, Slovenia

CMSR:
• Non-profit institution in the frame of SID Bank Group, which offers
wide range support and promotion of Slovenian export
• According to the Law on International Development Cooperation and
government resolution CMSR is authorized for performing a part
of technical-operative activities under international
development cooperation
• Central institution in Slovenia for country risk evaluations and
information about foreign markets (market and sector analyses)
• Business portal offers all needed information about Slovenian
Business environment in english (www.poslovniportal.si)
Ljubljana, Slovenia

CMSR enables grants for investment projects in ODA recipient countries (as a rule up to
30% of the project with grants and concessional loan in cooperation with SID Bank if
needed)
CRITERIA FOR ODA ALLOCATION:
•ODA recipient country (OECD standard)
•Partner country of RS
•Final recipient is a public institution
•Development project (commerxialy non-viable)
•Priority sector (environment protection, energetics...)
•Transfer of knowledge or technology
Performing bilateral development cooperation in the form of
official development aid (ODA)
Ljubljana, Slovenia

Global appearence
Supported export in red countries
Supported Export in 115 countries
Ljubljana, Slovenia

SID Bank Group Impact
34,54 bn € of sales
13,86 bn € of GDP
15,53 bn € of export
84.000 new jobs
Source: Independent study, Faculty of Economics
(2007-2010) (2013)
9,03 bn € of sales
3,63 bn € of GDP
4,12 bn € of export
21.800 new jobs
Ljubljana, Slovenia

SID Bank in the Future
2030
A new development model RS -
Financial Pillar SID Bank:
• One Stop Shop: integration / consolidation
• return assets / grants - sustainable lending
• horizontal objectives
• quality and sustainable development
2011 2020
The slovenian
economic
crisis
2000 2007
Regional
Development
Institutions
in RS
2010
Changes / EU
entry
The intern.
financial and
economic
crisis
Ljubljana, Slovenia

The transformation factors:
• Combining resources
• More favorable financing
conditions
• Provision of long maturity
• Adjusted funding
instruments
• Targeted promotion of
sectors areas
• Synergies within the
group SID fin.
institutions
SOURCES OF ASSETS
Banking sources
• Unions
• Promissory notes
• Bonds (domestic
Eurobonds)
• Other
Special banking sources
EIB
• CEB
• KfW
Possible to combine
with fiscal resources:
• EU funds
• State budget
SID Bank – future role
A d d e d v a l u e r e a l i s a t i o n o f d e v e l o p m e n t p r o j e c t s
Ljubljana, Slovenia

Sustainable Lending
Future as a consequence of past decisions
Selection of priorities and projects
Long term vs. short term view
RESPONSIBLE LENDING IS
SUSTAINABLE LENDING
Ljubljana, Slovenia

Basic principles
Responsible Lending
Accessible, honest and understandable information
Affordability, Accountability
An in-depth risk assessment (in particular credit rating)
Verified cash flow,income and assets
Improvements in assessing credit worthiness
Improved disclosure
Adaptability to changing circumstances
Different collateral options
Ljubljana, Slovenia

The sustainability web
Ljubljana, Slovenia

DFI Role in Future
BORROWER
SIDE
LENDER
SIDE
NEED OF SUSTAINABLE FINANCE
with:
Special assessment &
Careful review
Of
Company
Industry
Country
RISK
DFI should play important role to:
1.Overcome credit crunch
2.Financial crisis
3.Reduce risk
4.Reduce financial costs
5.Promote sustainable
development
Ljubljana, Slovenia

Thank you for your attention!
www.sid.si
Ljubljana, Slovenia

Sid bank lecture

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