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1 DenizBank 2013 EBRD Annual Meeting and Business Forum HAKAN ATEŞ CEO, DENIZBANK FINANCIAL SERVICES GROUP.

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Presentation on theme: "1 DenizBank 2013 EBRD Annual Meeting and Business Forum HAKAN ATEŞ CEO, DENIZBANK FINANCIAL SERVICES GROUP."— Presentation transcript:

1 1 DenizBank 2013 EBRD Annual Meeting and Business Forum HAKAN ATEŞ CEO, DENIZBANK FINANCIAL SERVICES GROUP

2 2 TURKEY AT A GLANCE

3 3 Turkey: Within 1 st 20 Biggest Economy and Population GDP (USD bn)Population (mn) Source: International Monetary Fund (IMF), TurkStat

4 4 Growing at a Fast and Sustainable Pace Source: International Monetary Fund (IMF), TurkStat Average Real GDP Growth (%)

5 5 The Model Works in Turkey: Growth Creates Jobs without Distorting Inflation Outlook Inflation (%, CPI) Source: Turkstat Growth creates jobs Unemployment is down to 10.6% from 16% at its peak during the crisis and below the 11% a the end of 2007 (before the crisis) High growth does not distort internal balance, i.e. inflation Inflation remains within the sustainable 5-10% band Labor Force

6 6 This is Due to Strong Fundamentals (I) Prudent Fiscal Policy Debt to GDP (%, EU Defined) Source: The Ministry of Finance Primary Budget Surplus Remained high at 3.4% of GDP a year since Public debt continues to go down; 36% at the end of Authorities target to decrease it further to 31% by 2015 according to the Medium Term Plan. Budget Balance

7 7 This is Due to Strong Fundamentals (II) Strong Banking Sector Loans and Assets Annual Growth (%) Source: BRSA Banking Sector is not leveraged with assets 7.5 times the equity (or 18% Capital Adequacy Ratio). Profitability is high enough to support the capital base to allow for high growth. The system grew by 19% CAGR a year in assets and 23% CAGR a year in loans since Client deposits make up 65% of the systems liabilities. ROE and CAR (%)

8 8 Rating Companies Recognized the Countries Successful Economic Performance and Strong Fundamentals Source: Bloomberg Turkeys Sovereign Ratings FitchMOODYSS&P BBB+Baa1BBB+ BBBBaa2BBB BBB-Baa3BBB- BB+Ba1BB+ BBBa2BB BB-Ba3BB- B+B1B+ BB2B B-B3B- Investment Grade

9 9 Rating Increases and Further Growth Potential Attract Foreign Investors Source: CBRT Foreign Capital Inflows and Current Account Deficit Higher inflows allow for the current account deficit to rise.

10 10 So it creates Current Account Deficit; but in fact it is mostly due to energy import Source: CBRT Current Account Balance Turkeys Non Energy Current Account SURPLUS was USD 5 bn in 2012

11 11 GREEN ENERGY SUSTAINABLE GROWTH ENERGY EFFICIENCY Energy The main driver of Growth Green Energy + Energy Efficiency The main drivers of Sustainable Growth

12 12 Energy The main driver of Growth Total Electricity Consumption of the World (2010): 19.3 bn kWh Developing countries (population: 5,7 bn) per capita consumption: 1,530 kWh p.a. Developed countries (population: 1,3 bn) Per capita consumption: 8,820 kWh p.a. Total Electricity Demand of the World (if electricity consumption per capita of the Developing Countries reaches that of the Developed Countries): 62 bn kWh x 3.2 Considering global warming; the World can not produce 62 bn kWh p.a. Only, technologic innovations in green energy and investments in renewable energy & energy efficiency will allow sustainable energy production and growth!

13 13 Global warming is a great threat! Thanks to new technologies; devices are more energy efficient today. A refrigerator consumes 75% less electricity than a refrigerator in In order to produce $1 of GDP; we need 44% less energy than we needed in Energy efficiency should be adopted as an objective by both individuals and corporations! Renewable energy & energy efficiency are critical to sustainability, key to survival! For Sustainable Growth; CO2 emissions since 1850 (red); exponential growth (blue); cuts to hit climate target (dashed). Source: guardian.co.uk The world must limit the global temperature increase to 2˚C! We must rapidly decrease using fossil fuels to stop global warming!

14 14 Authorities are Taking Necessary Steps to Increase Energy Investments in Turkey

15 15 The New Investment Incentive Program Specifically designed to encourage investments with the potential to reduce dependency on the energy imports. According to the amended Renewable Energy Law at the end of 2010 the feed in tariffs are as follows:

16 16 Renewable Energy – Installed Capacity 2012: Current electricity consumption in Turkey: ~242 TWh Total installed capacity in electricity generation: ~57 GW Renewable energy plants share: ~ 39% Target: The envisaged electricity consumption in Turkey: ~500 TWh (CAGR: 7.5%) Total installed capacity in electricity generation envisaged: ~105 GW Renewable energy plants share: ~ 30% 15,000 MW additional nuclear capacity will shift the installed capacity mix.

17 17 Renewable Energy - Generation In terms of generation; renewables, natural gas, nuclear and other thermal power plants are expected to have an equal share of 25%.

18 18 Renewable Energy Installed Capacity Growth Turkish renewable energy market mainly consisted of hydro power plants. Starting from 2008, wind power plant investment have accelerated. In the coming years, solar power plants will further boost. Renewable installed capacity (MW) CAGR ( ) Total11,70022,2006% Hydro11,64019,7005% Wind182,20055% Geothermal % Other %

19 19 As DenizBank; our track record in energy is a testament to our commitment to support the sustainable growth objectives of Turkey.

20 20 DenizBank Key Facts & Figures Total volume of PF transactions: USD 20 bn; since 2006 Total outstanding exposure: USD 5 bn Diversified Loan Portfolio with Significant Growth ( ): 48% CAGR!!

21 21 Total outstanding energy exposure: USD 2.3 bn Total ENERGY transaction size: USD 7.3 bn Total Renewable energy transaction size: USD 6.5 bn DenizBank ENERGY loan amount: USD 2.3 bn. DenizBank Renewable loan amount: USD 1.7 bn 34%: Renewables 12%: Other DenizBank Renewable Energy Track Record

22 22 DenizBank has financed 1,900 MW of power plants where 63% is Renewable energy: 1,200 MW portfolio, 46 projects DenizBank Renewable Energy Track Record Thorough Environmental Due Diligences All complying Equator Principles !

23 23 DenizBank Renewable Energy Track Record HYDRO Power Plants ENDA Refinancing of Tuzla GPP $ 22M Sole Arranger 2010 ENDA Refinancing of Tuzla GPP $ 22M Sole Arranger 2010 GEO- THERMAL Power Plants ZORLU Rotor WPP Osmaniye Wind Farm 135 M MLA & Coordinator 2009 ZORLU Rotor WPP Osmaniye Wind Farm 135 M MLA & Coordinator 2009 AKSA Term Loan for Kapıdağ WPP 39 M MLA 2011 AKSA Term Loan for Kapıdağ WPP 39 M MLA 2011 WIND Power Plants AKSA Term Loan for Ayres WPP 39 M MLA 2011 AKSA Term Loan for Ayres WPP 39 M MLA 2011 SANKO Term Loan for Çatalca WPP 42M MLA 2007 SANKO Term Loan for Çatalca WPP 42M MLA 2007 RENAISSANCE Refinancing of Filyos HEPP $ 32.5 M Sole Arranger 2011 RENAISSANCE Refinancing of Filyos HEPP $ 32.5 M Sole Arranger 2011 PETA Term Loan for Mursal HEPP $ 15 M MLA 2010 PETA Term Loan for Mursal HEPP $ 15 M MLA 2010 ERNA Term Loan for Suçatı HEPP $ 11M MLA 2012 ERNA Term Loan for Suçatı HEPP $ 11M MLA 2012 KADOOGLU Term Loan for Kale HEPP $ 22 M MLA 2011 KADOOGLU Term Loan for Kale HEPP $ 22 M MLA 2011 YPM Term Loan for Suşehri HEPP $ 19 M MLA YPM Term Loan for Suşehri HEPP $ 19 M MLA Y.ULUSOY Term Loan for Vizara HEPP $ 16 M MLA 2009 Y.ULUSOY Term Loan for Vizara HEPP $ 16 M MLA 2009 MNG Term Loan for BGT HEPP $ 16 M MLA 2009 MNG Term Loan for BGT HEPP $ 16 M MLA 2009 AKFEN HEPP Portfolio Financing 222 M MLA 2009 AKFEN HEPP Portfolio Financing 222 M MLA 2009 SANKO Term Loan for Yedigöze HEPP $ 425 M MLA 2008 SANKO Term Loan for Yedigöze HEPP $ 425 M MLA 2008 AS INSAAT Financing of Muratlı HEPP $ 59.4 M MLA 2011 AS INSAAT Financing of Muratlı HEPP $ 59.4 M MLA 2011 LİMAK Financing of Kirazlık HEPP $ 90 M MLA 2011 LİMAK Financing of Kirazlık HEPP $ 90 M MLA 2011 SERKA Term Loan for İncirli HEPP $ 59 M MLA 2009 SERKA Term Loan for İncirli HEPP $ 59 M MLA 2009 İŞBA Refinancing of 2 HEPPs $ 55 M MLA 2012 İŞBA Refinancing of 2 HEPPs $ 55 M MLA 2012 MNG TURKON Financing of Hamzalı&Reşadiye HEPPs $ 149M Sole Arranger 2011 MNG TURKON Financing of Hamzalı&Reşadiye HEPPs $ 149M Sole Arranger 2011

24 24 PARTNERSHIP WITH EBRD

25 25 I.Cofinancing: ROTOR WPP, IDO acquisition, TAV Izmir Airport. Ongoing pipeline: natural gas distribution and production, healthcare PPP, ports II.Funding: MidSEFF &TurSEFF: The objective of MidSEFF & TURSEFF is to reduce Turkeys dependence on fossil fuels by financing private sector investments in mid-size renewable energy projects. MidSEFF: EUR 150 million (EBRD & EIB) TurSEFF I: USD 40 million (EBRD & CTF) TURSEFF II: EUR 40 million I (EBRD & JBIC) III. Other/Equity: Ongoing deal to be closed (Graniser) where EBRD will be the equity investor. Awarded Strategic Partnership with EBRD Excellence in Sustainable Energy Financing 2013 Sustainability Award 2012 Zorlu Enerji Rotor WPP 2009 EUR 130 mn IDO Privatization 2011 USD 750 mn IDO Privatization 2011 USD 750 mn testimony to the best-in-class service provided by DenizBank and the harmonious collaboration with EBRD; contributing to DenizBanks brand recognition!! Internationally recognised transactions in cooperation with EBRD!!

26 26 Project Location : Osmaniye / Gökçedağ, Southeastern Turkey. Project cost: EUR 210 mn Loan Amount: EUR 130 mn Tenor: IFI tranche 14 years, commercial loan tranche 12 years Turbines: GE 2.5 XL MLAs: EBRD, IFC, EIB, HSBC, DenizBank DenizBank Role: Coordinator, MLA, Bank Guarantee Facility Agent, Hedging Bank, Onshore Account Bank I. Cofinancing 135 MW Zorlu ROTOR Wind Farm EBRDS FIRST FINANCING IN TURKEY! Rotor WPP 2009 EUR 130 mn

27 27 Project Description: Financing the privatization of Istanbul Ferries Acquisition Value: USD 861 mn Acquisition finance facility amount: USD 858 mn Tenor: 12 years DenizBank Role: MLA, Account Bank I. Cofinancing IDO Privatization 2011 USD 750 mn IDO Privatization 2011 USD 750 mn IDO Istanbul Ferries Privatization

28 28 Project Description : Financing of TAVs new concession of Izmir International Airport Loan Amount: USD 325 mn Tenor: 15 years DenizBank Role: MLA, On-Shore& Off-Shore Account Bank, Hedging Bank I. Cofinancing TAV Izmir Adnan Menderes Airport

29 29 MidSEFF & TurSEFF lines: Objective: to reduce Turkeys dependence on fossil fuels by financing private sector investments in mid-size renewable energy projects. MidSEFF: EUR 150 million (EBRD & EIB) TurSEFF I: USD 40 million (EBRD & CTF) TURSEFF II: EUR 40 million I (EBRD & JBIC) ~ 90 diversified renewable energy & energy efficiency transactions Mainly SME & commercial banking segment clients benefiting from a systematic approach: Due diligence & double checking of the technical assumptions ESAP (Environmental&Social Action Plan): Road map with concrete actions & supervision of environmental and social issues Enhanced awareness of environmental standards More Clean, Conscious and Sustainable!!! II. Funding: MidSEFF &TurSEFF

30 30 THANK YOU.

31 31 APPENDIX

32 32 Electricity Overview - 1

33 33 Turkeys electricity consumption per capita is 3,226 kwh while EU, OECD and Russias are 6,700 kwh, 9,600 kwh and 6,600 kwh as of 2012 year end. Installed capacity of Turkey has reached app. 57 GW as of 2012 year end with a CAGR of % 6.4 (last 5 years) where the share of renewable energy plants stands at 39%. Annual electricity consumption in Turkey has reached 242 TWh as of 2012 year end, showing a CAGR of ~8.5% during the last 5 years. The envisaged electricity installed capacity in Turkey will be 105 GW for the year In order to meet the electricity demand in the following period, an additional installed capacity of 48 GW is planned to be added to the system during the next 10 years and reach to a level of 105 GW by 2023 with a CAGR of ~6.1%. The total investment amount required for an additional installed capacity of 48 GW can be envisaged as USD bn with the assumption of investment cost per MW is around USD 1.5 – 2.0 mio. The share of renewable energy plants within the total installed capacity is envisaged as at least 30% in In terms of share in total energy generation; renewables, natural gas, nuclear and other thermal power plants are expected to have an equal share of 25% in Electricity Overview - 2

34 34 Electricity Overview - 3 Liberalization in Energy started with the new power plant licenses given to the private sector. The government stopped building power plants and handed the business to private sector in BO or BOT type. Also the existing power plant portfolio began to be privatized, starting with the renewable (mostly HEPP) portfolio. After the spin-off of Turkish Electricity Authority (TEK) into production, distribution, wholesale and transmission activities (EÜAŞ, TEİAŞ, TEDAŞ, TETAŞ) the distribution & transmission activities began to be privatized, by transferring the rights of operations in 21 regions nationwide. By the new Energy Market Law, incentives are given to the renewable energy in terms of feed-in tariffs. Power plants of hydro, wind, geothermal, solar biomass and biogas enjoy 10-year purchase guarantee with high level feed-in tariffs.

35 35 Under the Law on Utilization of Renewable Energy Resources enacted in 2005 and amended in 2007, companies holding retail distribution licenses were to purchase electricity from renewable producers at the average wholesale electricity price of the previous year. This price was varying between a minimum of EUR 5 cents/kWh and EUR 5.5 cents/kWh converted into TL. The Parliament has amended the Law at the end of 2010 again. According to the new amendment, the final feed in tariffs per renewable source is presented in the table below. Moreover, in the event that operators use locally made equipment and technology in renewable energy facilities, an additional support of 0.4 cents to $ 2.4 per kilowatt can be provided for a five-year term to companies that started producing energy before the end of Electricity Overview - 4


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