The 21st Baltic Sea Parliamentary ConferenceEnergy, Ecology and Social Welfare: Cooperation for a Sustainable Development of the Baltic Sea Region

Saint Petersburg, Russian Federation, 26 – 28 August 2012Conference Venue: Mariinsky Palace, Grand Hall

PILOT FINANCIAL INITIATIVE (PFI). A NEW PROJECT FOR REGIONAL COOPERATION

AND SUSTAINABLE DEVELOPMENT

Daniil AlgulyanElected Chairman of the PFI Steering Committee

Head of the KfW Representative Office in Moscow

© KfW • KfW Bankengruppe presents itself • Frankfurt am Main 244

60 years of KfWFinancing with a public mission

• Promotional bank of the Federal Republic of Germany

• Founded in 1948 asKreditanstalt für Wiederaufbau

• Shareholders: 80% Federal Republic,20% federal states

• Headquarters: Frankfurt am MainBranches: Berlin, Bonn and Cologne

• Representative offices: around 70 offices and representations worldwide

• Balance sheet total at end 2011: EUR 494.8 billion• Financing volume 2011: EUR 70.4 billion• Around 4,763 employees (2011)• Best rating: AAA/Aaa/AAA

© KfW • KfW Bankengruppe presents itself • Frankfurt am Main 322

A bank with a wide array of functions

Promotion of developing and

transition countries

International business

Promotion construction

of new housing and modernisation

as well as education

Promotion SMEs, business founders,

start-ups

Financing municipal infrastructure projects and global loans

Germany/Europe agency business for Federal Government

We promote Germany

International project and

export finance

We ensure internationalisation

We promote development

Promotion of environmental and climate protection

Business Area Mittelstandsbank

Business Area Privatkundenbank

Business Area Kommunalbank

Business AreaExport and Project

Finance

Business Area Promotion of

Developing and Transition Countries

Domestic promotion

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Worldwide presence over 70 representative offices

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1000

2000

3000

4000

5000

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1948 1950 1960 1970 1980 1990 2000 2010 2011

KfW employees

© KfW • KfW Bankengruppe presents itself • Frankfurt am Main 5

Reliable partner for the Baltic Sea Region (BSR)

Portfolio in the BSR (without Germany): 7.5 bn EUR

Supporting economies in transition in the 90-ies and in the beginning of this century:

KfW was mandated by the German Federal Government to coordinate the Transform

technical assistance program, which was successfully implemented in following countries of

the region: Estonia, Latvia, Lithuania, Poland, Russia

Current activities in the Eastern part of BSR:

- More than 30 active finance projects in Estonia, Latvia and Lithuania

- Activities in the Baltic sea territories of Russia gain increasing importance within KfW

portfolio, incl. infrastructure projects (Pulkovo airport), trade and export finance, SME

support

Key sectors: - Environment and Renewable Energy - Small and Medium-sized Entrepreneurs - Infrastructure and Transportation- Energy supply

© KfW • KfW Bankengruppe presents itself • Frankfurt am Main 6

Pilot Financial Initiative (PFI)General information

Memorandum of Understanding (MoU) on PFI was signed at the Baltic Sea States Summit in Stralsund, Germany, 31 May 2012

Initial PFI Partners: Council of the Baltic Sea States (CBSS) Secretariat, Russian promotional bank Vnesheconombank and KfW

Key sectors: - PPP (special attention to a climate friendly urban infrastructure, waste treatment) - Innovation and modernisation projects of the small and medium-sized enterprises

Structure of financing: KfW (upon mandate of the German Federal Foreign Office) intends to provide Vnesheconombank with long-term loans, for on-lending to projects. It is envisaged that the PFI will be extended to other financial institutions from the CBSS region joining the PFI as well.

Non-financial cooperation and know-how transfer: conferences, seminars, trainings

Pilot geographical regions: in the first phase Russian parts of the South Eastern Baltic Sea Area and on North West Russia, but shall be expanded to other parts of the BSR, depending on interest, and depending on accession by additional partner financial institutions to the PFI.

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Pilot Financial Initiative (PFI)Phase I SME Finance structure

Vnesheconombankgroup

SME

SME

SME

SME

SMELocal banks partners

of the program

KfW

Local banks partners

of the program

Local banks partners

of the program

Promotional Long-term Loans

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Pilot Financial Initiative (PFI)Phase I. PPP Finance structure

Vnesheconombankgroup

PPP projects(Waste treatment)

KfW

Promotional Long-term Loans

PPP projects(Water and Energy)

PPP projects(Local transport)

Thank you for your attention