2020 Energy Finance. Ray O Neill Head of Energy & Clean Technologies Business Banking

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1 2020 Energy Finance Ray O Neill Head of Energy & Clean Technologies Business Banking

2 AIB Material Change and Restructuring Since 2008 Restructure Rebuild Sept 2008 May 2009 Jun 2009 Mar 2010 Sept 2010 Dec 2010 Jan Feb Mar Apr Jul Dec May 2012 Jul 2012 Dec 2012 Jun 2013 Introduction of State Guarantee LME - 1bn Sale of M&T- 0.9bn LME - 1.5bn Sale of BZWBK 2.3bn 1,900 Staff exit 3.5bn Preference Share Injection 3.7bn Capital Injection PCAR Exercise 14.8bn capital required Severance Programme Launched Profit (preprovisions) 162m PCAR Exercise bn capital requirement LME - 0.4bn Anglo Deposit book acquisition - 1.4bn -Merger with EBS -LME - 2.1bn -Equity/Capital Contrib/CoCo New Strategy & Structure Announced CEO & CFO Resign Man. Dir Appointed MD & Chairman Resign Exec Chairman Appointed New Leadership Team appointed CEO Appointed New Leadership Team appointed -2-

3 A New Customer Focused Operating Structure Delivering our customer management framework and approach across channels that focuses on value, customer needs, enhances proactive engagement and reduces cost to serve Re-orient around distinct customer segments, sectors & treatment strategies Our best people engaging with customers Develop deeper customer insights around needs and economics Sectoral Strategy Focus for 2013 onwards Deliver superior customer experience supported by people, technology and innovation Business & Corporate Banking to adopt sectoral approach (agri/food, ICT, energy) and target increased market share Creation of a new sector team with resources focused on the energy sector Leverage supra-national funding to match market demands i.e. long tenor funding for wind farms Execute and close transactions efficiently

4 Energy and Our Customers - 1b by 2017 Home Retrofits c.1m homes Energy Efficiency SME Energy Efficiency (500 surveyed) Electric Vehicles Water & Waste Electric Vehicles Target 250k Renewable Energy 100m EIB Framework Loan Storage Services

5 Finance for Wind Farm Developers 100m EIB Renewable Energy Framework Loan Blended with AIB funding w/ pass through rate benefit Supports up to 200m of new renewable energy projects ( ) Focus on on-shore wind (other sectors like biomass eligible) Up to 15 year amortising facility including 2 year grace period Small and medium size projects up to 50m in project cost Pipeline development underway

6 Enercon Partnership Roadblock or Opportunity? Limited project finance resources -> bigger transactions Same amount of effort for less reward Transaction costs high as a proportion Under prepared developers BES/EIIS raising and calls an issue AIB think this is an opportunity for projects less than 12m Standardise the terms between developer, bank, turbine supplier Streamline the due diligence process in partnership with Enercon Mitigate some risks by including them under a long term O&M agreement Centralise the AIB processing to create a Centre of Excellence Utilise the AIB distribution to create leads, form relationships and manage dayto-day Mitigate impact of curtailment -> controllable v non-controllable assets

7 Unlocking funds to fuel renewable energy in Ireland Bank debt Shorter funding horizons Supra-national support (EIB, EIF etc.) is a shot-in-the-arm Bond market Only for utility scale Credit ratings Institutional investors Demand and match with yield/tenor Low levels of direct infrastructure investment (1% OECD) Sovereign Wealth Funds (NPRF 6%) more focused but still too little to fund the domestic and export plans To unlock more funding we need Appropriate low cost vehicle w/ appropriate leverage A product that they want i.e. Green Bond Remove regulatory barriers Brownfield investments w/ alignment of incentives Better and more consistent data to enable comparisons

8 Summary AIB has new focus on energy sector Appetite for 1bn lending to the sector Funding, with support from EIB, to meet demand from wind farm developers Continue to explore other opportunities to unlock finance to fuel growth to 2020 to fuel 8

9 Contacts within AIB Projects under 12m Luis Duran, Sector Specialist John Harney, Business Banking Projects above 12m Jim Arigho, Corporate Banking Dermot Hughes, Corporate Banking

10 Thank You