Experience in implementing financial instruments 11/01/2017 Gedas Janėnas Project Manager at Department for Development of Financial Services
Šiaulių Bankas at a glance Position Rating Network Employees 829 Customers 1-3Q 2016 4th in the market (market share 7%) Ba1/Stable (Moody s) 69 branches, 209 ATMs 365,000 individuals; 26,000 corporates Net profit EUR 37m (+115% compared 1-3Q 2015) Assets, meur 14 309 1,545 1,695 1,793 LEASING AND CONSUMER CREDITS LIFE INSURANCE REAL ESTATE AND INVESTMENT MANAGEMENT (5 subsidiaries)
Business overview Funding of nearly EUR 100m has been granted to Šiaulių Bankas during the long lasting cooperation with the multinational institutions Financial instruments, managed by the EIF, support Europe's micro, small and medium-sized businesses (SMEs) and Small Mid-caps: FRSP. Under this facility the funds of the European Union structural funds and the Bank's funds are used in equal parts (50/50) and the credit default risk is shared FLPG. EIF covers 80% of the losses incurred by the Bank from loans under this portfolio guarantee facility InnovFin. EIF covers 50% of the losses incurred by the Bank from loans and leases between EUR 25thou and EUR 7.5m which Bank provide under the InnovFin SME Guarantee Facility. In this way, the EU and EIF allow the provision of more debt financing to innovative SMEs and Small Mid-caps The JESSICA holding fund in Lithuania, managed by the European Investment Bank (EIB), supports energy efficiency modernisation of residential buildings under the Lithuanian Government's Housing Renovation Programme
Šiaulių Bankas is a long time partner of renovation in Lithuania 1999 Housing and Urban Development Agency 2005 Mortgage loan insurance UAB 2009 INVEGA 2002 Central Project Management Agency 2010 EIB (JESSICA Holding fund)
Successful participation in Hausing Renovation Programme Leading player (60% market share) in the programme funded by the EIB Šiaulių Bankas contributed its own funds (Pre-financing agreement) in the amount of EUR 120m (preparing to contribute additional EUR 60m) Under the multi-apartment renovation programme decisions made to 1380 units (EUR 342m), out of which 1193 units (EUR 281m) already signed
Loan portfolio and disbursements (EURm) Contracted loans 114 111 Disbursed 98 89 69 33 12 11 3 3 1st call 2nd call 4th call (2007-2013) 4th call (2014-2020) 5th call
Implementation of the model (financing scheme) Government of the Republic of Lithuania+ EU funds EIB / JESSICA fund Administrator Final recipient
Financing conditions Maximum credit maturity 20 years Credit currency Euro Fixed credit annual interest rate 3 % p.a. Grace period for credit repayment up to 30 months Initial contribution not required Credit administration fees not applicable 8
Financing requirements Consent of the owners of the multi-apartment house flats and other premises must be endorsed by 50% + 1 vote. Šiaulių Bankas applies a requirement to receive consent from not less than 60% The number of flat owners of the multi-apartment house that are past due with their obligations exceeding EUR 170 for more than 60 days to at least one company rendering utility services or to the manager of the premises of common use should be less than 10% of all the apartment/premises' owners 9
Main elements of financing (1) One credit agreement per one multi-apartment house Agreement is signed by an Administrator A credit amount cannot exceed a value of the construction works Credit funds shall be disbursed directly to the contractor after completion of works A work acceptance-transfer deed is prepared in respect to the completed works and signed by relevant authorities 10
Main elements of financing (2) Credit repayment and interest payment - once a month The state subsidy is provided after completion of works A bank account is opened and e-banking service provided to an Administrator, which allows monitoring the movements in loan and accumulative accounts Credit repayment is implemented by an Administrator Debt recovery is implemented by an Administrator or by a debt administration/ recovery agency 11
Prie-financing Šiaulių Bankas provides its own funds for renovation programme by purchasing total reflows from Jessica fund which will be collected from owners of multi-apartment buildings. 12
List of documents to be submitted to the Bank (1) application of the multi-apartment house administrator in the form acceptable to the bank; a project regarding renovation (modernization) of a multi-apartment house made and approved by owners of flats or other premises and coordinated with BETA; the energy efficiency certificate of the multi-apartment house; a decision regarding renovation (modernization) of a multi-apartment house made by owners of flats or other premises; a certificate in a free form prepared and signed by the multi-apartment house administrator regarding multi-apartment house flats and other premises engaged in economic activity; a certificate from Hosing Energy Saving Agency about usage of de minimis aid ; certificates from the utility suppliers (heat, electricity, water, gas and companies rendering waste transportation services ) and from the manager of the objects of common us; 13
List of documents to be submitted to the Bank (2) an extract from the real estate register about the owners of the flats of the multi-apartment houses and other premises; the list of apartment and other owners; valid articles of association of the multi-apartment house administrator and registration certificate joint activity agreement certified by a notary public; agreement of assignment (if renovation (modernization) of a multiapartment house is implemented by a multi-apartment house administrator authorized by the resolution of the beneficiaries); resolution passed by the Municipality or its person in charge stating who is assigned to implement the multi-apartment house renovation (modernization) programme approved by municipality. a document evidencing the identity of the multi-apartment house administrator and a document proving the basis of representation. 14
Loan Repayment Following the loan agreement, the Administrator collects debts from beneficiaries under principles of debt prevention, debt collection obligation, legitimacy and economy as well as in compliance the bank's conditions below if the beneficiary: is late to perform their liabilities, the Administrator shall send a call for payment in the form prescribed; delays the payment for 60 calendar days, the Administrator shall send a payment request letter in the form prescribed; delays the payment for 90 calendar days (where the amount is over EUR 100), the Administrator shall initiate debt collection. 15
Debt Recovery (1) The Bank has signed cooperation agreements with three acceptable debt recovery companies. Administrators are invited to sign standard cooperation agreements with the acceptable debt recovery companies. Administrators decide themselves which of the three companies they are going to work with. Coordinated cooperation with debt recovery companies (partners) include the following: Pre-trial debt recovery - letters, phone calls, visits and etc.; Judicial debt recovery - in case of failure to recover a debt during the pre-trial recovery judicial recovery is initiated; Post-trail debt administration - administration of ordered debts is carried out in cooperation with bailiffs; 16
Debt Recovery (2) WORKING PRINCIPLE EXAMPLE: The Administrator shall pass on a debtor to the Executor (chosen debt recovery entity) in case the past due is between 30 and 90 days; Having received the information on the debtor the Executor shall carry out pretrial recovery actions from its own resources during the period up to 90 days; Failing to recover the transferred debt within the prescribed period of time, i.e. 90 days - the Executor shall make a recommendation to the Administrator and the Bank, where: It will be suggested to extend the period of pre-trial recovery until the period specified by the Executor in respect to particular debtors ; It will be suggested to start a judicial debt recovery; It will be recommended to ascertain hopelessness of a particular debt. 17
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