Lista Wind Farm

Regulatory Developments within
the Banking Sector
NORWEA Finance Seminar 2013
Lysebu, 31 January 2013
Sigurd Kayser
Senior Vice President
Power & Renewables
Table of Contents
SECTION 1
DNB
SECTION 2
Regulatory requirements within the Banking Sector
SECTION 3
Financing possibilities
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Banking with DNB – Banking the Norwegian way
•
•
An International Bank based on
Norwegian Values
Extensive knowledge of the
industries that shaped our Nation
(Fisheries, Shipping and Energy)
•
Servicing domestic and international
Energy Clients focusing on LongTerm Relationships
Cool Headed and Warm Harted!
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Energy is one of DNB’s most important sectors
Key facts
Energy sectors
5%
 More than 40 years of industry
experience
27 %
30 %
 Energy commitments worldwide
represent about 9% of DNB’s
total expected Exposure at
38 %
Default
 Approx. 60 % of portfolio consist
of exposure to non-Norwegian
clients
Power & Renewables
Oil & Gas
Oil Service
Other
Segments divided by commitments
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Selective transactions within the wind sector
MLA
MLA
SEK 103 mill
Project Financing
2011
SEK 570 mill Senior
SEK 95 mull Junior
Project Financing
2011
Joint Lead Arranger
SEK 938 mill
Construction and Term Loan
2011
MLA
EUR 63.5 mill
Project Financing
2012
Joint Lead Arranger
Joint Lead Arranger
Financial Advisor,
MLA, Agent
MLA
EUR 60.3 mill
SEK 132.6 mill
Project Financing
EUR 53 mill
SEK 149 mill
Project Financing
EUR 250 mill
SEK 110 mill
Project Financing
SEK 230 mill
Project Financing
Two Wind Parks
2010
2011
2011
2011
MLA
MLA
MLA
MLA
EUR 15 mill
Construction and Term Loan
EUR 20 mill
Project Financing
SEK 142.5 mill
Construction and Term Loan
SEK 221 mill
Project Financing
2009
2009
2010
2010
EUR 41,590,000
5
LINCS
Project Finance Facility
MLA
MLA
EUR 41.59 mill
Project Financing
GBP 1.0 billion
Project Financing
2011
2011
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Table of Contents
SECTION 1
DNB
SECTION 2
Regulatory requirements within the Banking Sector
SECTION 3
Financing possibilities
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Where is international banking heading?
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The History
•
Requirement on how much capital banks should have as security behind
the money they lend out
Basel I (1988)
•
dot.com, globalisation and more complex financial markets - review of the
rules
Basel II (1990s)
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… then came the financial crisis in 2007 and the debt crisis in 2011
•
•
•
The banking sectors of many countries
had built up excessive on and off-balance
sheet leverage
At the same time, many banks were
holding insufficient liquidity buffers
Public gross debt
In billion euro
2000
A couple of years later, the
sovereign debt crisis hits Europe
1600
1200
800
400
0
Italy
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Spain
Ireland
Portugal
Greece
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… need for improved regulatory requirements - Basel III
Basel III proposals have two main
objectives:
•
•
More solid and resilient
banking sector
Improve the banking sector’s
ability to absorb shocks
arising from financial and
economic stress
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Basel III – More core Capital
•
Minimum core capital as per June 2012: 9%
•
Expected Basel III requirements in 2015: +/- 13.5%
2012
vs
2015
•
Assumptions:
Price of loans: 5%
Cost of funding: 4%
Risk margin: 1%
Required return on equity: 14%
•
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 Result: 50% increase
in risk margin
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Basel III – More liquidity and stable funding
•
Liquidity Coverage Ratio (LCR) - highly-liquid assets / net cash flow over 30 day period
will require banks to have sufficient high-quality liquid assets to withstand
a 30-day stressed funding scenario
•
Net Stable Funding Ratio (NSFR) - available stable funding / total need for stable funding
a minimum amount of stable sources of funding relative to the liquidity
profiles of the assets and off-balance sheet commitments, over a oneyear horizon
Increased cost to be covered by the Customers
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Basel III – Consequences
Regulatory requirements:
Consequenses:
•
•
Reduced lending capacity
•
Higher loan margins
More solid banking industry
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Table of Contents
SECTION 1
DNB
SECTION 2
Regulatory requirements within the Banking Sector
SECTION 3
Financing possibilities
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Bank financing still available … but more limited and more expensive
Decisive factors to attract bank financing:
•
•
•
•
•
•
Available and well documented natural
resources
Strong cash flow and key ratios
Experienced and solid sponsors / owners
Top league suppliers and proven
technology
Grid availability
Environmental issues
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More use of Multilaterals and ECAs
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More use of Life Insurance and Pension Funds
• Risk taker: EKF
• Funding Source: Pension Denmark
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Bond Market will become more important as funding source
•
•
•
2012 was a record high year for the Norwegian Bond Market
The Norwegian Bond Market is of to a very strong start in 2013
With 12 new issues YTD, 6 high yield and 6 investment grade, we expect continued
high activity
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More “the American way” in the European Bond Market?
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Summing up



Stricter banking regulations ensure a more solid banking industry,
but lending capacity will become constrained
Debt financing will be available for the good projects, but at a
higher price and with shorter tenor
Strong sponsors with diversified banking needs will be the winners
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Thank You
P&D_WQ_2011
Easy access to DNB Renewable Energy Team
Renewable Energy Team Oslo
Name
Sven Bakken
Øyvind Rustad
Sigurd Kayser
e-mail
[email protected]
[email protected]
[email protected]
Project Finance:
Per Aage Jacobsen
[email protected]
Internet:
www.dnb.com
Direct line
Cellular
(+47) 992 60 684
(+47) 957 34 801
(+47) 992 53 361
(+47) 905 99 308
International Energy team
Name
Ulf Lindahl
Kelton Glasscock
Jan Erik Berre
Erik Gundersen Papp
e-mail
[email protected]
[email protected]
[email protected]
[email protected]
Direct line
(+46) 84734140
(+1) 8322145803
(+44) 2076216022
(+65) 62120714
Cellular
(+46) 7096 15150
e-mail
Direct line
Cellular
[email protected]
(+47) 22 94 88 69
(+47) 959 94 711
Debt Capital Markets
Jarl Henrik Brevik
[email protected]
(+47) 22 01 78 14
(+47) 976 69 916
VRR Risk Advisory
Karl Magnus Maribu
[email protected]
(+44) 7584583070
DnB NOR Markets, Investment Bank Team Oslo
Name
Corporate Finance
Lars Hjermann
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(+47) 994 01 145
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Disclaimer
The presentation is based on information believed to be reliable, but DNB Bank ASA (“DNB”) does not
represent that the information in the presentation is accurate or complete, and it should not be relied
upon as such. Any opinions expressed reflect DNB’s judgment at the time the presentation was
prepared and are subject to change without notice.
The presentation is not to be construed as a representation or solicitation to buy or sell any financial
instrument. No liability whatsoever is accepted for any direct or consequential loss or expense arising
from the use of this presentation. DNB and/or its affiliated companies and/or its officers, directors and
employees may be a market maker or hold a position in any instrument or related instrument discussed
in this presentation, and may seek to perform financial advisory and banking services related to such
instruments.
Confidentiality rules and internal rules restricting the exchange of information between different parts of
DNB may prevent employees of DNB who are preparing this presentation from utilizing or being aware
of information available in DNB and/or affiliated companies and which may be relevant to the recipients
decisions.
This presentation is for clients only, and not for publication. DNB is registered in Norway number
NO 984 851 006 (the Register of Business Enterprises).
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