EUSBRS

1. The Role of Financial Institutions in Implementing the EU Strategy for the Baltic Sea RegionEIB NIB Promoting European objectivesTilman Seibert Harro PitkänenDirector Head of Lending

2. EUSBRS • The Role of Financial Institutions

3. The Role of Financial Institutions in the EUSBSRWhat can they offer? • - Finance But only for bankable projects (a vast part of the EUSBSR relates to other types of projects) ! • - Financial Expertise Including advise on how to put together effective financing solutions • - Policy and Sector Advise The IFIs have long experience from working in key sectors • - Management of Technical Assistance Trust funds managed by IFIs are a well-established mechanism

4. The Role of Financial Institutions in the EUSBSREIB Participation to EU Strategy for the Baltic Sea Region • Close co-operation with European Commission at the design and preparation phase • EIB presence in the implementation of the Strategy in close co-operation with other IFIs and organisations in the macro region • EIB operates in the macro region – extensive network • Three regional offices • Berlin • Warsaw • Helsinki • JASPERS, JEREMIE, JESSICA and EPEC presence in the Baltic Sea Region

5. The Role of Financial Institutions in the EUSBSRNIB Participation to EU Strategy for the Baltic Sea Region • Close co-operation with European Commission at the design and preparation phase • Close co-operation with EIB and other IFIs and organizations in the macro region, including participation in the Laboratory Group coordinated by Inter-Act • The BSR is NIB's home region, absorbing approximately 90 % of the Bank's lending • BSAP Trust Fund to support projects improving the marine environment

6. The Role of Financial Institutions in the EUSBSR In order to lend banks need: • Willing and able borrowers • Willing = Prepared to take loans at prevailing interest rates to finance part of their investments • Able = Creditworthy enough to be able to service the loan/s and with the other part of the financing secured – banks never (should) provide loans for a 100 % of the project cost • Good quality (feasible) projects • Financiers are focused on all aspects of project feasibility Economic Financial Technical Institutional Environmental • Adequate studies are necessary – the BSAP Fund can help for Baltic Sea projects

7. EUSBRS The Potential of Financial Institutions

8. The Potential of Financial Institutions in the EUSBSR Priority areas which are likely to include investment components: 1. To reduce nutrient inputs to the sea to acceptable levels 3. To reduce the use and impact of hazardous substances 4. To become a model region for clean shipping 5. To mitigate and adapt to climate change 7. To exploit the full potential of the region in research and innovation 10. To improve the access to and the efficiency and security of the energy markets 11. To improve internal and external transport links 14. To reinforce protection from major emergencies at the sea and on land

9. The Potential of Financial Institutions in the EUSBSRNordic Investment Bank • NIB promotes sustainable growth of its member countries by providing long-term complementary financing in support of projects that: • Strengthen competitiveness, and/or • Enhance the environment • The main part of NIB’s lending is targeted on the member countries of the bank (Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway and Sweden) as well as on the neighbouring region Poland, Russia and Belarus), with annual disbursements in support of investments in the region on the level of EUR 2 billion. • Projects are foremost found in the focus-sectors that the Bank has selected: Environment, Energy, Transport - Logistics - Communications, Innovation • NIB finances: • Large investments of the corporate and public sector • Small and medium-sized enterprises through financial intermediaries • NIB puts particular emphasis on projects which require long-term funding

10. The Potential of Financial Institutions in the EUSBSRNordic Investment Bank EU BALTIC SEA STRATEGY A "PROSPEROUS" BSR AN "ACCESSIBLE AND ATTRACTIVE" BSR AN "ENVIRONMENTALL SUSTAINABLE " BSR A "SAFE AND SECURE " BSR -competitiveness • maritime safety • cross-border crime • transport, logistics • energy • HELCOM BSAP • climate change • NIB "CLEERE" • 1000 MEUR • NIB "BASE" • 500 MEUR NDPTL NDEP INNOVATION ENERGY TRANSLOG & COMMUNICATIONS ENVIRONMENT COMPETETIVENESS ENVIRONMENT NIB STRATEGY

11. The Potential of Financial Institutions in the EUSBSREuropean Investment BankEIBPriority Lending Objectives a good match with the objectives of the EU Strategy for the Baltic Sea Region • “Prosperous Place” • Promoting a competitive Knowledge Economy; Education; Research and Development • Lending to Small and Medium Sized Companies • “Accessible and Attractive Place” • Trans-European Networks (TENs) • Cohesion and convergence (“regional development”) • “Environmentally Sustainable Place” • Environmental sustainability • Sustainable, competitive and secure energy

12. The Potential of Financial Institutions in the EUSBSREuropean Investment BankEIB Lending in Baltic Sea Region Member States • EIB lending covers all six priority objectives • New loans signed for EUR 11,511 m in 2009 and EUR 10,955 min 2010 • EIB borrowers are: • Public sector entities: Sovereign Member States, municipalities and other sub-sovereign public entities • Private sector entities: leading corporates in all countries requiring financing for their capex and R&D investments • Financial institutions as Intermediaries for EIB’s Loan for SMEs and Mid-Cap Loans • In Finland, Sweden, Denmark and Germany, a large proportion of EIB lending is in favour of private sector (knowledge economy and RDI) • In Estonia, Latvia, Lithuania and Poland, main emphasis is on (i) the public sector through loans to meet the national co-financing requirements for the implementation of the EU Funds supported project and (ii) major capital expenditure projects to enhance Cohesion and convergence • In Iceland and Norway emphasis is on renewable energy lending

13. The Potential of Financial Institutions in the EUSBSREuropean Investment BankEIB Lending in Baltic Sea Region Member States • EIB co-financing with EU Structural Funds in the Baltic Sea Region to improve absorption capacity • 2007-2013 key objectives of ERDF, ESF and Cohesion Fund are to contribute to Convergence, Regional Competitiveness and Employment, Territorial Cooperation in the EU • EIB co-financing agreed to date EUR 5.4 bn financing on average 13% of project cost • Examples are EU Funds Co-Financing 2007-2013 loans to Estonia, Latvia, Lithuania and Poland and numerous individual loans to Polish municipalities and regions • Focus also on providing finance to small-and-medium sized enterprises to strengthen the economic texture and innovation potential of the regions and create employment

14. The Potential of Financial Institutions in the EUSBSREuropean Investment BankEIB Lending in the EU’s Eastern Neighbours • The EIB finances projects in Ukraine, Moldova, Armenia, Azerbaijan, Georgia and Russia on the basis of an EU mandate of EUR 3.7 billion for the period 2007-2013* • EIB has signed and approved financing operations totalling over EUR 1.3 billion for major investment projects in the region in the past three years. • Sectors financed: transport, telecoms, energy and environment • Eastern Partners Facility -the EIB has set up a facility for Ukraine, Moldova, Belarus, Georgia, Armenia, Azerbaijan and Russia up to an amount of EUR 1.5 billion, with a ceiling of EUR 500 million for projects financed in Russia. The facility will enable the EIB to provide loans and/or guarantees that, sector-wise, go beyond the scope of the Mandate. This should help support EU investment in the region, notably by European corporates, as well as facilitate equity investments in infrastructure funds of EU interest • Projects financed in Russia under the Mandate: • St. Petersburg Vodokanal III: Neva Direct Discharges Closure Programme in St. Petersburg, EUR 18 m • Modernisation of Nevinnomyssk GRES power plant in Southern Russia, EUR 250 m • Rollout of third-generation UMTS-based mobile broadband services, EUR 115 m * Operations in Belarus are subject to joint EU Parliament/Council decision. Azerbaijan will also be eligible for EIB financing following the signature of the framework agreement with the Bank

15. The Potential of Financial Institutions in the EUSBSR • NDEP – Northern Dimension Environmental Partnership • Established in 2001. • Cooperation on concrete environmental projects in Russia and Belarus. • Also nuclear safety projects in Russia. • IFIs (loans) and donors (grants) combined in each project. • Support fund EUR 275 million (125 million for environmental, 150 for nuclear safety projects). • NDPTL - Northern Dimension Partnership for Transport and Logistics • New initiative , established in 2010. • Regional cooperation on policy and projects. • Linked to EU transport policy via Northern Axis and Motorways of the Seas. • Linked to sub-regional cooperation projects such as Barents Corridor. • Aim to remove bottlenecks and to take a pan-regional perspective on transport corridors – project list under preparation. • NIB hosts the NDPTL secretariat.

16. EUSBRS Some Lessons Learnt

17. Summary and Conclusion • Key prerequisites for efficient implementation of EUSBSR: • Best use of existing instruments and structures • Clear selection guidelines / eligibility for the Baltic Sea Region relevant projects • Clear prioritisation of the eligible projects (priority should be given to cross-border projects and interconnectivity, avoidance of fragmentation) • Strengthening of institutional capacity / capability • Effective exchange and dissemination of information and best practices, promotion of the cooperation (between the funding sources, MS and non-MS) • Effective blending of different financial sources (grants, loans) • Clear understanding of the project cycle and the relevant issues at each stage