Annual Report 2002 Annual Review

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Annual Report 2002 Annual Review Annual report 2002 Annual review Banking on the future Countries of operations At 31 December 2002 Albania Former Yugoslav Republic of Macedonia Russian Federation Armenia Georgia Slovak Republic Azerbaijan Hungary Slovenia Belarus Kazakhstan Tajikistan Bosnia and Herzegovina Kyrgyz Republic Turkmenistan Bulgaria Latvia Ukraine Croatia Lithuania Uzbekistan Czech Republic Moldova Estonia Poland 1 In February 2003 the Federal Republic of Yugoslavia was renamed ‘Serbia and Montenegro’. As this Report covers 2002, 1 Federal Republic of Yugoslavia Romania we refer to the country as FR Yugoslavia. Transmittal letter to Governors London, 18 March 2003 In accordance with Article 35 of the Agreement President Establishing the Bank and Section 11 of its Jean Lemierre By-Laws, the enclosed Annual Report of the Bank Directors Alternate Directors for 2002 is submitted by the Board of Directors Jan Bielecki Kalin Mitrev to the Board of Governors. Scott Clark David Plunkett António de Almeida Stefanos Vavalidis The Annual Report includes the approved and Joaquin de la Infiesta León Herrera audited financial statements required to be Jos de Vries Hidde van der Veer submitted under Article 27 of the Agreement Michael Flynn Torsten Gersfelt and Section 13 of the By-Laws. It also contains Susumu Fujimoto Osamu Sakashita a separate statement on the Special Funds Gerlando Genuardi Grammatiki Tsingou-Papadopetrou Laurent Guye Ays¸e Dönmezer resources, in accordance with Article 10 of the Sven Hegelund Martin Põder Agreement Establishing the Bank, and covers the Tor Hernæs Rauli Suikkanen environmental impact of the Bank’s operations, Byung-Hwa Jin Gary Johnston as required under Article 35 of the Agreement. John Kerby Jonathan Ockenden Igor Kovtun Mikhail Jernov Jean-Pierre Landau Marc Jullien Michael Neumayr Ohad Bar-Efrat Philippe Petit-Laurent Vassili Lelakis Yuri Poluneev Ionut Costea Enzo Quattrociocche Francesco Saverio Nisio Norbert Radermacher Clemens Kerres Jean-Louis Six Georges Heinen Mark Sullivan – Imre Tarafás Igor Ocˇka Annual report 2002 Annual review Contents 02 Introduction 49 Russia The EBRD Investment climate 2002 in numbers EBRD activities 2002 results Case studies President’s message 59 Central Asia 09 Banking on the future Investment climate Responding to evolving needs EBRD activities Responsible investment Case studies Promoting partnerships 69 Evaluating EBRD projects 23 Central Europe and the Baltic states Investment climate 75 Working in partnership EBRD activities Co-financing Case studies Technical cooperation funds TurnAround Management Programme 33 South-eastern Europe Legal Transition Programme Investment climate Nuclear safety EBRD activities Procurement Case studies 89 Projects signed in 2002 41 Eastern Europe and the Caucasus Eastern Europe 100 Structure of the EBRD Caucasus Governors and Alternate Governors EBRD Directors and Alternate Directors EBRD management Human resources Guide for readers The EBRD’s Annual Report 2002 comprises two separate companion Both volumes are published in English, French, German and Russian. volumes: the Annual Review and the Financial Report, which includes Copies are available free of charge from the EBRD’s Publications Desk: the financial statements and the financial results commentary. One Exchange Square London EC2A 2JN Tel: +44 20 7338 7553 Fax: +44 20 7338 6102 E-mail: [email protected] 2 European Bank for Reconstruction and Development The EBRD The European Bank for Reconstruction In parallel, the EBRD uses its status and Development invests in the banks as an international financial institution and businesses that are forming the core to work with the governments of post- of strong, growing market economies in communist economies to develop 27 countries in central and eastern Europe propitious investment settings, built and across the former Soviet Union. upon open markets and fair, efficient regulations, as well as the critical Its capital, provided by 62 shareholder components of rule of law and democracy. governments and public institutions, is invested using the tools and rules The EBRD signals the value it attaches of sound banking. EBRD investments, to a favourable investment environment in virtually every kind of enterprise and by publishing regular strategies that clearly financial institution, are mainly in the form relate the Bank’s approach and amount of of loans and equity, and transactions must investment in a country to that country’s incorporate international accounting best progress in economic and political reform. practice and strict transparency guidelines. By the close of 2002, after 11 years Investments are designed to set an of operations, the EBRD had invested example by benchmarking high environ- a total of €21.6 billion ultimately in the mental standards, demonstrating people of the region who will prosper sensitivity to communities affected by more as market economies grow and projects, turning old state enterprises democracies strengthen. into successful privatised operations, or encouraging investment in new sectors or regions. All are elements of the successful transition from centrally planned to modern market economies. 3 European Bank for Reconstruction and Development 2002 in numbers Annual commitments • €3.9 billion invested in 102 projects, 1998-2002 € billion the highest business volume in 4.0 3.5 the Bank’s history, in support of 3.0 2.5 transition across the region. 2.0 1.5 1.0 0.5 1998 1999 2000 2001 2002 Commitments by region • Geographic distribution: 2002 > €1.29 billion committed to Russia > €1.27 billion to the countries at the advanced stages of transition Central Europe and the Baltic states 32% (central Europe and the Baltic states) Russia 33% Central Asia 6% Eastern Europe and the Caucasus 7% > €1.35 billion to the countries at the South-eastern Europe 22% early and intermediate stages of Commitments by stage of transition transition (central Asia, southern and 2002 eastern Europe, and the Caucasus) Advanced countries 32% Early/intermediate countries 35% Russia 33% Gross annual disbursements • Disbursements reached €2.42 billion. 1998-2002 € billion 2.5 2.0 1.5 1.0 0.5 1998 1999 2000 2001 2002 4 European Bank for Reconstruction and Development • Sectoral focus: > Financial institutions and infrastructure represent about 55 per cent of business volume. > Sustained support to micro, small and medium-sized enterprises through a variety of financial intermediaries totalling €508 million in 2002. EBRD financing committed by sector in 2002 Number of % of total EBRD projects 1 € million investments Energy Energy efficiency 2 76 1.9 Natural resources 3 265 6.8 Power and energy 4 219 5.6 Subtotal 10 560 14.4 Infrastructure Municipal and environmental infrastructure 11 482 12.4 Transport 9 543 13.9 Subtotal 20 1,025 26.3 Specialised industries Agribusiness 12 425 10.9 Property, tourism and shipping 1 95 2.4 Telecommunications, information technology and media 6 241 6.2 Subtotal 19 762 19.5 Financial institutions Bank equity 7 311 8.0 Bank lending 13 541 13.9 Equity funds 6 126 3.2 Non-bank financial institutions 7 166 4.3 Small business finance 3 24 0.6 Subtotal 36 1,168 29.9 General industry General industry 17 385 9.9 Subtotal 17 385 9.9 Total 102 3,899 100 Note: The totals may not add up to the sum of the component parts due to rounding. 1 Sub-projects signed under framework agreements are counted as fractional numbers. • Pipeline of potential projects prepared for 2003: > in 2002 the Board of Directors approved a total of €4.16 billion. • Profit after provisions of €108.1 million. 5 European Bank for Reconstruction and Development 2002 results Cumulative business volume Cumulative funds mobilised EBRD portfolio 1998-2002 1998-2002 1998-2002 € billion € billion € billion 25 70 16 60 14 20 12 50 10 15 40 8 30 10 6 20 4 5 10 2 1998 1999 2000 2001 2002 1998 1999 2000 2001 2002 1998 1999 2000 2001 2002 Net cumulative business volume Cumulative funds mobilised Operational results The EBRD made a record €3.9 billion of new investments in 2002. About 55 per cent of new business was devoted to the financial The Bank committed €1.29 billion to Russia, €1.27 billion to the sector and infrastructure. By continuing to support financial advanced transition countries (central Europe and the Baltic states) institutions in the Bank’s regions of operations, we were able and €1.35 billion to countries at the early and intermediate stages to expand the financing network for small and medium-sized of transition (central Asia, southern and eastern Europe, and the businesses, which play a key role in generating growth. Among Caucasus). The increasing level of commitments in Russia and the most significant infrastructure projects over the past year the early/intermediate countries reflects our continuing efforts were a loan to extend the road network in Russia and financing to extend our operations further east and south. for the restructuring of Poland’s railways. Disbursements reached €2.42 billion in 2002, a slight decrease on the previous year. The EBRD’s investments in Russia increased by €485 million over the previous year in response to the country’s improving business The value of projects approved by the Board of Directors in 2002 climate and its progress in undertaking wide-ranging reforms. totalled €4.16 billion. This strong pipeline of potential projects We also significantly increased our commitments in south-eastern will ensure that the EBRD continues to invest in the coming years Europe, providing €865 million, a 26 per cent increase over 2001. in all of its sub-regions from central Europe to central Asia. Again this was partly due to improvements in the region’s economic performance and the introduction of reforms. Annual commitments 1998-2002 Cumulative 2002 2001 2000 1999 1998 1991-2002 Number of projects 102 102 95 88 96 906 EBRD financing (€ million) 3,899 3,656 2,673 2,162 2,373 21,647 Resource mobilisation (€ million) 4,862 6,212 5,188 4,862 7,541 47,516 6 European Bank for Reconstruction and Development Financial results The EBRD recorded a profit after provisions of €108.1 million for this impact, the EBRD recorded a profit after provisions of €146.4 2002 compared with a profit of €157.2 million for 2001.
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