Financing of railways

using ERTMS as a case

Den Danske Banekonference 2016

København , 17. maj 2016

European Investment Bank Group

Presenting the EIB

European Investment Bank Group 2

• Natural financing partner for

the EU institutions since

1958

• Around 90% of lending is

within the EU

• Shareholders: 28 EU

Member States

• Investing in Europe’s growth

09/11/2015

EIB at a Glance

We are the world’s largest

International Financial Institution

Source of funds We raise long-term funds

on the international

capital markets and as

a non-profit organisation

we pass favourable

borrowing conditions

to our clients.

1958 Established to support

long-term investments

primarily in the

European Union. We

have over 50 years’

experience in

financing sustainable

projects.

AAA-rated We’re triple-A rated by

all major rating

agencies and have a

sizeable callable

capital of €221bn.

Shareholders Owned by the 28

Member States of

the European Union.

The EIB Group

provides finance and

expertise for sound

and sustainable

investment projects

that promote EU policy

objectives

specialist provider of

risk finance to

benefit innovative

SMEs

Lending priorities and lending volumes

EIB Transport Lending Policy

The EIB, as a European institution, continually seeks to focus on

activities that are likely to have the greatest impact on furthering

EU policy goals and has integrated these policy indications in its

Transport Lending Policy.

In financing the transport sector, the EIB prioritises its support to

technologies and infrastructures with the objective of

developing a more efficient and sustainable European

transport system with a further use of renewable sources,

contributing to reducing oil dependency and enhancing the

competitiveness of the European industry.

6

EIB and Transport Lending

European Investment Bank Group 7

0

10

20

30

40

50

60

70

80

90

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

EU

R b

n

EIB lending in the EU

Other lending

Total transport

Providing long-term lending: EUR 653 bn from 2004-2014.

Transport lending 20–25 % of total; TEN-T is 60% of transport lending.

8%

51%

35%

6%

Transport Lending

Air transport

Railways + Urbantransport

Roads, motorways

Sea transport

09/11/2015

Examples on EIB railway projects

European Investment Bank Group 8

Project Promoter Type of

operation

Project cost /

Authorised loan amount

(EUR m)

French Regional Trains

Programme (2013-0208)

French Regions/

SNCF

Programme

(8 investment

loans)

2000 / 750

Warsaw Railway Node

Phase 1 (2014-0434)

PKP PLK Investment

loan

230 / 115

ÖBB Infrastructure

Renewal (2014-0253)

ÖBB Infrastruktur Investment

loan

1900 / 600

Mitsui Locomotive

Leasing II (2010-0710)

Mitsui Rail Capital

Europe

Investment

loan

280 / 100

Thameslink Rolling Stock

(PPP) (2008-0610)

Cross London

Trains LTD

Investment

loan

2000 / 560

Examples on ERTMS

Project Promoter Type of

operation

Project cost /

Authorised loan amount

(EUR m)

Rolling Stock and

ERMTS equipment

(2006-0472)

Renfe Operadora “Standard”

investment loan

1 064 / 530

GSM-R France

(20080615)

SYNERAIL (SPV) Availability-

based PPP

745 / 355

Signalling HSL

Albacete- Alicante

(20100511)

ADIF/Albali

Señalización (SPV)

Availability-

based PPP

220 / 110

ERTMS & Safety

infrastructure

(20140262)

ADIF AV “Standard”

investment loan

370 / 180

Evolution of EIB financial products

Majority of transport lending is through public sector or backed by guarantees.

European Investment Bank Group

Investment Plan for Europe

Målsætning : at mobilisere mindst €315 mia. i investeringer i EU.

11

The Investment Plan for Europe consists of three strands:

1. Improved investment environment: regulatory and structural reforms at EU and

national levels for predictability, removing obstacles, aiming at a friendlier investment

environment

2. Making finance reach the real economy: stepped-up technical assistance /

advisory by establishing European Investment Advisory Hub (EIAH) in EIB and by

EC facilitating a project directory

3. Mobilising finance for investment: The EFSI, via EIB, to better address the

current shortage of (higher) risk-financing in EU

European Investment Bank 12

The EIB On-Board ERTMS RU lending programme could be

designed to facilitate financings to be provided to railway

undertakings in a timely fashion for rolling stock related

investments including retrofitting with ERTMS, taking into

consideration small loan size and fragmentation of ultimate

beneficiaries.

Advantages: Transfer of EIB financial advantage

Possible longer tenors, in accordance with the economic life of the

investment

Possible grace period, in accordance with the implementation period

Financial Intermediary to link loans to on-board ERTMS equipment or rail

related investment loans to RU’s

Increased lending capacity for RU’s that would not be possible in the

absence of EFSI support.

RU’s could benefit from grants in combination to the EIB ERTMS/rail

loan programme.

Potential Challenges Include: Eligibility of final beneficiary

Risk sharing arrangements with FI, TBD

EFSI and EIB lending criteria to be met, etc.

*Note: for discussion purposes only, similar structures have been used by the

EIB, however the On-Board ERTMS Programme will require specific adaptations.

Possible*: Dedicated On-Board ERTMS & Other Rail Financings

Eligible Under Transport Lending Guidelines

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Possible Instrument to pool and pre-finance RU on-board

investments*

SPV pools on-board investments of

RUs and contracts with (an) equipment

provider(s) to install (and maintain) the

on-board units. The RU make regular

payment to SPV. RUs have a free

choice to participate

Advantages:

Economies of scale (cheaper

equipment)

Efficient way to channel beneficial

EIB /EFSI loan to RUs (cheaper

financing)

Possibility to blend loans/EFSI

/CEF/grants

Financial conditions could be

improved for RUs (eg. grace

period,….)

* Note: for discussion purposes only

European Investment Bank 13