Dr. Werner Weihs-Raabl Head of Group Infrastructure Finance

1. EU Subsidies in 2014-2020: Opportunities for PPP Projects within the Scope of Subsidies by the EU „Investing in Poland with a Focus on PPPs“ with President Dr. Christoph Leitl 5-6 November 2012 | Warsaw POLAND Erste Group Infrastructure Finance Dr. Werner Weihs-Raabl Head of Group Infrastructure Finance

2. Erste Group More than 17.7 million clients Total population 120mn Bankable population 92mn Erste Group clients 17.7mn whereof within EU 17.0mn Share of loans and depositswithin EU >99% Retail market shareof 20-30% AUT, CZ, RO, SKof 5-15% HU, CRO Clients: 0.9mn Market share based on: Retail deposits: 8.3% Retail loans: 14.5% Branches: 184 Bank position:3rd Clients: 5.2mn Market share based on: Retail deposits: 28.6%Retail loans: 24.7% Branches: 653 Bank position: 2nd Clients: 2.4mn Market share based on: Retail deposits: 26.1% Retail loans: 25.8% Branches: 289 Bank position: 1st Clients: 0.2mn Market share based on: Retail deposits: 0.3% Retail loans: 1.6% Branches: 131 Clients: 3.2mn Market share based on: Retail deposits: 18.9% Retail loans: 19.3% Branches: 1,051 Bank position: 1st Clients: 0.9mn Market share based on: Retail deposits: 12.8% Retail loans: 13.8% Branches: 145 Clients: 4.6mn Market share based on: Retail deposits: 23.1% Retail loans: 18.0% Branches: 667 Clients: 0.3mn Market share based on: Retail deposits: 2.4% Retail loans: 3.1% Branches: 65 All data as of January 2012. Position of banks according to number of assets Erste Group core markets Indirect presence (Savings Banks SLO, BiH) Minority stakes (RU) / Investment Bank (PL)

3. Group Infrastructure Finance Financing solutions to Public and Private Sector Clients in the following sectors: Transportation Social Infrastructure Energy & Environment Project Finance / Conventional Energy • Airports • Ports • Toll roads • Railways • Rolling stock • Electronic Tolling • Renewable Energy: • Hydro Power Plants • Wind Power Plants • Solar Power Plants • Biomass Power Plants • Biogas Power Plants • Geothermal Power Plants • Thermal Power Plants • Pump Storage Hydro Power Plants • Oil & Gas storage and infrastructure / Electricity transmission • Water / Waste treatment • Hospitals • Public Buildings • Schools, Universities • Prisons and Courts • Car parks • Sport Stadia Sector Expertise Areas of Expertise The Infrastructure Finance business comprises a large team of professional finance executives with a track record in Infrastructure Finance and Public Sector business in Vienna at Erste Bank Holding as well as in the region.

4. What are the advantages & disadvantages of using PPPs? Disadvantages Advantages • Deliver value for money • Project may become affordable within the annual public budget • Force the public sector to focus on output and benefit • Competition already in the design and engineering phases (achievement of performance-orientated prices and cost minimising effects) • Maximises the use of private sector skills • Adequate risk sharing • Delivers assets on time and budget • Partly or completely off public budget • Conclusion of fixed utilisation fee and defined price adjustment clauses • Loss of management control by the public sector • Voluminous agreement system especially on items like control, devolution, reversion of rights and events of default • Higher cost of finance • Long term, relatively inflexible contractual commitment • Risk of insolvency (selection rights to be agreed) • Higher efforts for control and monitoring of (quality standards) for the community • Tax duty PPPs are not “one size fits all” solutions (each individual project has to be assessed for its PPP suitability)

5. What is the situation of the PPP market in Poland?Although there still exist barriers to PPPs, a positive future development is expected in the long-run • PPP legislation in placefor 3.5 years (ActofDecember 19, 2008; ActofJanuary 9, 2009; Separate act on highway PPPs) • Since 2009, 29 PPP contractssigned(currentmarketvalueEUR 73m) • BUT still barriers in place(e.g. supportfromthepublicsector, incoherenceofthe legal framework,…) • Sectorswithpotential for PPPs: • - Municipalhousing(e.g. municipal housing PPP project in Krakow with a volume of EUR 22m) • - Waste management (e.g. waste plant in Gdansk) • - Energy • - Healthcare • - Transport sector (e.g. airports, national roads) • - Urban infrastructure Source: PPP Magazine Autumn 2012

6. When do banks finance PPPs?„Bankability“ of transport infrastructure projects Optimal Risk Allocation Strong revenue support e.g. through availability payment mechanisms Strong Political will / stable regulatory and legal framework Government Support Secure and Stable Cash-Flows Demand for Project Debt Service Reserve Bankability Issues Solid Private Partner and adequate Equity contribution Environmental Aspects Liability of Sponsors Technical Complexity Early- Termination Regulations e.g. Step-in Rights, compensation payments Problem: PPP schemes are often only considered to avoid budget limitations, therefore the pre-conditions are often insufficient causing failures and delays of projects

7. Why do banks finance airports?Critical factors in Airport valuations • Traffic potential • Catchment area, population size, propensity to fly • Natural traffic flows (tourism, diaspora) • Domestic and regional competition • Key clients • Strategy towards airlines: Anchor airline, Airline mix, Low Costers • Malev effect • Capex • benchmark of capex volume, costs per m², considering complexity, number of bridges etc. • Opex • Efficiency in operations, staff, outsourcing Importantairportextensionsplanned in Poland (e. g. Krakow, Bialystok, Olsztyn)

8. Renewable Energy in Poland New regulation: Wind energy support regime (I) • Draftlawwithtransitionalprovisions. • introducestheRES law: thenewEnergylawandtheGas law. • Published on October 12th bythePolishMinistryof Economy • Tobeenactedby end Q1 2013 • Tocomeintoforcearoundmid 2013, after notificationtothe European Commission, including the identification of potential elements for state aid

9. Renewable Energy in Poland New regulation: Wind energy support regime (II) Most important changes: For running projects: RES installations that were operational before the effective date of the RES law to get green certificates for a period of 15 years (from date since operational) . N.B.: Correction factor = 1. For new projects : Correction factors exist for the years 2013-2017. Correction factors for onshore wind with installed capacity >500 kW are:  

10. WtE Projects in Poland Poland aims at building 11 WtE plants with the capacity to burn 2,337,000 t/a. (2013-2015) - Facilitated through the “Law on Maintaining Cleanliness and Order in Municipalities” (in force since 01/01/2012): allows municipalities to implement waste projects financed by debt incurred directly by municipalities or by private partners - Expected that EUfunds 61% of the total €1.516b - PPP structure possible - Project costs: 600-660 million zł (ca. 165 million EUR) - EU Funding: 135 million EUR (60% of total costs) - Capacity: appr. 250,000 t/a - Start: expected in 2015 - Concession period: 30 yrs The planned Polish WtE plants Example: WtE Project Gdansk Source: ASK – Access to Sustainable Knowledge

11. Medicover Hospital in Poland Structured Debt Finance • In 2011, Erste Group originated, structured and • provided a EUR 32m investmentloanfor10 years • fortheacquisitionofMedicover Hospital in WarsawbyCelox Group • Medicoverhospital was thefirstmedicalfacility in Polandoffering such a widerangeofhospitalservices, with a capacityof: • 180-beds • Fivefullyequippedsurgeryrooms • Six-room private hotel (forfamilymembersor private treatment) Erste Group aims at financing projects in the healthcare sector as we deem that crucial for the economic growth of the whole country.

12. Road Transport Infrastructure in Poland PPPs so far only considered as a supplementary and not major financing approach • National roaddevelopmentset out in the„National RoadsBuildingProgramfortheyears 2011 – 2015“ • Between 2011 – 2013: expenditurelimitwithinthe National Road Fund (guaranteedbythe State Treasury andfiscallymanagedbythe BGK bank) setatEUR 19.8b  So far, theindroductionofmotorwaysbased on PPP legislationhasfailed (e.g. A1 betweenStrykówandPyrzowice) Reasons: • Lack ofexperience in structuringbankable PPP projects • Off-balance sheettreatmentfromEurostat not achieved • Insufficientpoliticalsupportfortheimplementationof PPP projects Accordingtothe„National Roads Building Program for the years 2011 – 2015“, the following motorway projects could potentially be structured as PPPs: • A2 motorway from Warsaw to Belarus • A1 section from Tuszyn to Pyrzowice Source: PPP Magazine Autumn 2012

13. PPP support by EU/ international institutions and programmes? • JASPERS (Joint Assistance in Supporting Projects in European Regions): The main objective of this programme is to provide technical expertise to the twelve EU Member States which joined the EU in 2004 and 2007  Aimed at accelerating the absorption of the available funds (absorption level of EU funds till the end of 2015 in Poland: EUR 67bn) • JESSICA (Joint European Support for Sustainable Investment in City Areas): This fund supports sustainable urban development and regeneration through financial engineering mechanisms. • Ten–T ( Trans-European Transport Networks) projects are financed by the EU/ international institutions through: • Grants from the Trans-European transport budget (Funding rules) • Grants from the Cohesion Fund budget, in the countries eligible for its intervention • Grants from the ERDF, majorly for convergence objective regions • Loans and guarantees from the European Investment Bank (EIB) EIB plays a crucial role in the development of PPPs on the European level.

14. Where do we see a potential for enhancing PPPs with EIB’s support?Europe 2020 Project Bond Initiative - Structure Public Procurer „Unitary Charge“ / „Lease“ Payment Public Sector Private Sector PPP Contract Investors buy or underwrite Senior Debt in form of Project Bonds Special Purpose Vehicle SPV Equity Europe 2020 Project Bond Initiative Subordinated Debt Project Bond Guarantee Facility Construction Company Operator EIB Risk sharing EU

15. How can projects be made more attractive? (I) • Strong political consensus on a cross-regional master plan (What? When? How?) • Realistic project planning & budgeting • Awareness that PPPs are not a magic formula: bad projects cannot become good PPPs • Awareness that private partners need certain returns & stable Cash-Flows • Feasibility Studies and Public Sector Comparator crucial for choosing the right projects and appropriate financing structure (Public Procurement vs. PPPs) • Increase absorption of EU funds & make use of general support from EU institutions (e.g. EIB, EPEC, Jessica, Jaspers, T-Ten,..)

16. How can projects be made more attractive? (II) • Openness for alternatives to bank loans for financing (e.g. Project Bonds) • Sufficient capacity and skills on the public sector side (PPP Task Force) & experienced private partners (e.g. advisors) • Legislation and regulatory framework to allow the proper execution of concession projects (concession law, expropriation issues etc.) • “Best Practice”: replicate the process of successfully realized projects available in the market  “Best Practice” (even if it is in another country)

17. Karlovy Vary Hospital Czech Republic Pardubice County Hospital Czech Republic Emergency Care Centre Czech Republic Courthouses Czech Republic Zlin Congress Centre Czech Republic Multifunctional Centre Czech Republic PPP methodology Slovak Republic Financial advisory Financial Advisory and Project Management Financial advisory Financial advisory Financial advisory Financial Advisory and Project Management Financial advisory EUR 30,000,000 EUR 80,000,000 EUR 65,000,000 EUR 75,000,000 EUR 20,000,000 EUR 55,000,000 Amount undisclosed 2006 2006-2007 2006-2008 2006-2008 2007-2008 2007-2008 2007 PPP methodology Slovak Republic City Town Hall Czech Republic DPP - Fleet renewal financing strategy Czech Republic Cultural Center of Trnava Region Slovak Republic R1 - Motorway Slovak Republic D1 - Highway Slovak Republic Stabilization plan of KNTB hospital Czech Republic Aquapark Velesin Czech Republic Parking house Ostrava Poruba Czech Republic Parking house FNO Czech Republic System of Transport Infrastructure Financing Czech Republic D1 Highway Czech Republic M3 - Highway Hungary Kiev Ringroad Ukraine Advisory on preparation of methodology Financial advisory Financial advisory Financial advisory Financial advisory Financial advisory Financial advisory Financial advisory Financial advisory Financial advisory Financial advisory Financial advisory Financial advisory Financial advisory EUR 40,000,000 EUR 45,000,000 EUR 1,6bn EUR 1bn EUR 1bn EUR 8m N/A EUR 10m EUR 400m EUR 7,2m EUR 2,6bn N/A EUR 7,6m EUR 2bn 2008 2008 2008-2011 2010-2011 2010 2009-2010 2011 2011-2012 2010 2011 2010 2008-2010 2010 2009 Selected Credentials Infrastructure Financial Advisory

18. Aquapark Luka nad Jihlavou Czech Republic Communal Services Liptovsky Mikulas Slovak Republic Strategy of financing, Kolin city Czech Republic Financial advisory Financial advisory Financial advisory EUR 3,3m EUR 13,6m N/A 2011 2009-2010 2011 Selected Credentials Infrastructure Financial Advisory

19. Jelačićka Sports Hall Croatia MEP/ Energy 21 Czech Republic Fersa Poland Sportski Grad Croatia IWP Windpark valuation in 6 different countries R1 Slovakia Bina Istra Croatia Enerji SA Turkey Sale process of photovoltaic assets in Bulgaria Dubrovnik Airport RenoEnergie, a.s. Czech Republic Hospital Vienna North Austria HT WIND, s.r.o. AZM Croatia Energy Finance Energy Finance Financial Advisory on wind park portfolio valuation in different development stages Energy Finance Financial Advisory Energy Finance Energy Finance Investment loan for PV Power Plant project pipeline 28y Investment Loan Investment loan for 24 MW Wind Power Plant Financing Financing Phase II Financing Financing Financing Identification of investors for photovoltaic Power Plants Hydro Power Plant In Tender Investment Loan Supported by IFC Guarantee Phase I Financing Financing vol.: EUR 1.2b ERSTE participation: EUR 85,000,000 Financing vol.: EUR 693m with ERSTE participation: EUR 30,000,000 EUR 1bn. Financing vol.: EUR 46,000,000 Financing vol.: EUR 18,800,000 Financing vol.: EUR 605,000,000 Financing vol.: EUR 375,000,000 European Power Portfolio Deal of the Year 2008 EUR 29,000,000 CZK 1.820 mln PLN 116 mln 2010 2010 2009-2010 2009-2010 2008 S&M CZ, s.r.o. M6 Hungary Medicover Hospital Warsaw Poland Energy Finance Infrastructure Acquisition Finance Financing Investment loan Supported by IFC Guarantee Investment Loan EUR 32,000,000 Financing vol.: EUR 445m ERSTE participation: EUR 60,000,000 2008 2011 Selected Credentials Infrastructure Financing

20. Thank you for your attention!

21. Contact Werner Weihs-Raabl Erste Group Head of Group Infrastructure Finance 1060 Vienna, Mariahilfer Straße 41 - 43 Tel.: +43 (0) 50100 - 18010 Fax: +43 (0) 50100 - 9 18010 mobile: +43 (0) 664 818 05 27 werner.weihs-raabl@erstegroup.com