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UBI Banca Green Social and Sustainable Bond Framewo rk Presentation
December 2018
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Summary
1. UBI Banca at a Glance
2. UBI Banca Sustainability approach
3. UBI Banca Green, Social and Sustainable Bond Frame work
Appendix – Eligible Projects Examples
� 9M2018 Net profit of €210.5 million (261 million net of non re curring items)� CET1 ratio as at 30th Sept 2018: 11.79% phased-in and 11.42% fully loaded� Leverage ratio under Basel 3 at 5.37% phased-in, 5.17% fully loaded� LCR > 1 and NSFR > 1 (also net of TLTRO2)� The only Bank, amongst the main Italian players, to have always paid a cash dividend
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UBI Banca’s profile at a glance: Predominance of retail business, solid capital base and low risk profile
Strong competitive positioning
Solid Capital Solid Capital and Balance
Sheet Position
Sound Asset Quality
� Created in 2007 from the merger between Banche Popolari Unite and Banca Lombarda, as Cooperative Bank.Became Joint Stock Company in October 2015
� Over 4.2 million customers , 1,651 branches with a market share in Italy of 7.2% and over 20,600 headcounts� 125.2 bln/€ of Total Assets� 89.6 bln/€ of net customer loans, 94 bln/€ of direct funding , and 98.75 bln/€ of indirect funding� 66.6% of loans to customers granted in Northern Italy; in particular 58.8% of total loans are granted in the
North West of Italy , 21.2% in Central Italy and 11.2% in Southern Italy*� 61.6% of customer deposits from Northern Italy , 23.4% from Central Italy and 13.5% from Southern Italy*
� 71.5% of total assets represented by loans to customers80.6% of Performing Exposures in AIRB perimeter is low risk75% of net loans secured mainly by real estate
� Decreasing level of NPEs Gross NPEs/Total Gross Loans ratio of 11.1%. Target 2019 : gross NPEs lower than 10%Net NPEs/Total Net Loans ratio of 7.1%
� Cost of risk 57 bps annualised
* Data as at 30th June 2018
Abroad: 1.5% of customer deposits and 1% of loans to customers
As at 3 December 2018 STANDARD & POOR’S MOODY’S FITCH DBRS
SHORT TERM A-3 P-2 F3 R-2 (high)
LONG TERM BBB- Baa3 BBB- BBB OUTLOOK stable negative negative stable
Issuer Ratings
UBI Banca ranks amongst the major Italian banks by key indicators
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Total assets at 30 th September 2018 (bln/€)No. of domestic branches as at 30 th September 2018
Customer loans as at 30 th September 2018 (bln/€) Total direct funding as at 30 th September 2018 (bln/€)
* Data as 30th June 2018 net of #310 branches were closed as from 1st July 2018 ** Excluding reposSource: press releases, presentations on 9M2018 results
827797
71132164
4,363
1,597
2,516
1,651
# 4
# 5
1251,219
2,309*
103**
441
395
107
46
469425
5194 94
# 4 # 48790
(15th Oct 2018)
The key subsidiaries of UBI Banca: a complete service to the c ustomerand a strong value reserve
100% owned on-line bank
65% partnership with Prudential US Asset management company
100% owned leasing company
100% owned factoring company
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56.8 bln/€ AuMo/w 35.4 bln/€ from ordinary customers
(+8.2% on total AuM vs Sept ‘17)
100% owned salary backed loan company
ZHONG OUAsset Management
25% owned chinese parternship
1.5 bln/€ net loans granted
(+13.5% vs Sept ‘17)
Among the 3 major Companies by new flows and probably the 1st by direct distribution
6.4 bln/€ net loans granted
(-8.1% vs Sept ‘17)
3rd
by outstanding
8.9 bln/€ indirect funding> 700 financial advisors
Partnership with Cattolica Assicurazioneexpiring in 2020
40% owned life bancassurance company
20% owned life bancassurance company Partnership with Aviva expiring in 2020
9 bln/€ turnover
(+6.7% vs Sept ‘17)
6th
by outstanding
100% owned life bancassurance company Acquired with former Banca Etruria
37.1 bln/€ AuM
4th
among banking companies
23rd
in China
3rd
by traded equity volumes
5th
by insurance Portfolio and 2nd by bancassurance
RANKING IN ITALY
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Summary
1. UBI Banca at a Glance
2. UBI Banca Sustainability approach
3. UBI Banca Green, Social and Sustainable Bond Frame work
Appendix – Eligible Projects Examples
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UBI Banca is present some of the major ethical and s ustainability indexes and ratings
� ECPI Euro ESG Equity Index
� Euro Ethical Index� Euro CSR Index� Sustainable Index
CCC, B, BB, BBB , A, AA, AAA
� FTSE4Good Index Series
� Italian Index� Italian Banks Index
Average performer
B, B+, B++, B+++, A, A+, A++, A+++
E-, E, E+, EE-, EE, EE+, EEE-, EEE, EEE+
Indices UBI Ratings Circled in Red
D-, D, D+, C-, C, C+, B-, B, B+, A-, A, A+Status Prime
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UBI Banca Sustainability approach overview UBI Banca has as objective of "Fare Banca per Bene” (to bank fairly and well) creating value for all it s
stakeholders and the environment by serving the loc al economy and the community
Under the 2016/2017-2020 Business Plan, UBI Banca has committed to:� Support the real economy through increased financing, including grants to support
enterprises operating in the third sector� Contribute to the local communities by maintaining a significant level of contributions
through donations and sponsorships in support of social, cultural, recreational, sports,health care and assistance projects for grassroots entities, organizations, and institutions
� Invest in the growth and well-being of employees staff membe rs throughprofessional training and development programs and benefits in connection with thecorporate welfare system
� Reduce the environmental footprint of the Group’s premises , increasing energyefficiency and renewable energy sourcing
� Support energy transition to develop a low carbon economy , by helping individualsand businesses to reduce their carbon footprint through dedicated loans and theparticipation in project finance initiatives
On the international front, the Group commits to promote universal principles such as:� Global Compact : signatory since 2003, UBI Banca is committed to the promotion
of the ten universal principles of Global Compact in the field of human rights, toprotect labor, the environment and to fight corruption and cooperate to build a moreinclusive and sustainable global economy
� Sustainable Development Goals (SDGs) : in context of achieving its objective of"banking fairly and well", the Group has committed to support the following SDGs
Internal policies
International standards
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UBI Banca commitment to community
As a retail bank, UBI Banca is primarily dedicated to thedevelopment of the local communities it serves, by activelyfinancing their economic and social needs
� SME’s account for 3/4 of UBI Banca’s lending tobusinesses
� Over half of the Group's business involves productioncompanies in a wide range of economic sectors, andprimarily manufacturing, property, trade, andconstruction activities
UBI Banca has created a dedicated commercial division tosupport entities operating in the third sector and the civileconomy with the objective of:
� Strengthening and diversifying support for theactivities of a number of different non-profitorganizations (NPOs)
� Promoting and supporting investments in projectswith the potential to produce social impacts andinitiatives with substantial social value withappropriately structured products and services
Source: 2017 Sustainability Report
BASTRA data on sub-group 51 (non-profit organization s). Lending to the private sector excluding general go vernment.Source: 2017 Sustainability Report
Support to local economies
Support to the third sector
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� Equal to the domestic electricity requirement of an entire region such as Liguria
UBI Banca commitment to environment
� Portfolio of renewable energy operations of €1,9billion at the end of 2017
� 49 projects financed in 2017 for a total of €234,2million disbursed
� Power output of 1,4 million MWh of electricity peryear
� 452 thousand tons of CO 2 emissions savings
For individuals:� Forza Sole (Sun Strength): installation of domestic
photovoltaic systems� Creditopplà Home Refurbishment : refurbishment and
energy-efficient retrofitting of homes
For businesses� Nuova Energia Fotovoltaico (New Photovoltaic Energy):
installation of photovoltaic systems� Energie rinnovabili (Renewable Energy): installation of
systems for generating electricity and/or heat from wind,biogas and biomass and Full Power leasing for investments inrenewable energy
� Of which €1,2 billion in project finance
Source: 2017 Sustainability Report
Support to the environment – Key figures
Emblematic products
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Summary
1. UBI Banca at a Glance
2. UBI Banca Sustainability approach
3. UBI Banca Green, Social and Sustainable Bond Frame work
Appendix – Eligible Projects Examples
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UBI BANCA Green, Social and Sustainable Bond Framew ork at a glance
3 types of Bonds
1. Green Bonds – for which funds are exclusivelyallocated to Green Eligible Projects
2. Social Bonds – for which funds are exclusivelyallocated to Social Eligible Projects
3. Sustainable Bonds – whereby funds are allocated toGreen Eligible Projects and to Social Eligible Projects
Aligned with best market practices
Future Issuances
UBI Banca’s Framework is in line with the:� Green Bond Principles June 2018� Social Bond Principles June 2018� Sustainability Bond Guidelines June 2018
Before each issuance, a leading second opinion provider will provide a second opinion:
� to confirm the alignment of the bond to the ICMA’s Green Bond Principles, Social Bond Principles or Sustainable Bond Guidelines
� to assess the sustainable added value of the assets � to provide a review of UBI Banca’s sustainability
performance
� For its inaugural issuance, UBI Banca will focus on a Green Bond with the goal of financing a portfolio of project finance loans in renewable energy
With this Green, Social and Sustainable Bonds Frame work, UBI Banca equips itself with a dynamic platfor m allowing the bank to specifically raise funds to support initiatives aiming at fostering sustainable growth and well-bei ng in local communities
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Overview of UBI Green, Social and Sustainable Bond Framework
Management of Proceeds
Reporting
External verification
New or existing loans in the following Eligible Categories:
� Circular economy� Green Buildings
� Sustainable mobility� Sustainable Water
� Renewable energy � Energy Efficiency
� SMEs financing� Non-profit and civil economy
� An internal working group will be in charge of: reviewing, validating and monitoring the Eligible Projects managing also any future updates of the Framework
� Commitment to earmark and hold the balance of unallocated proceeds establishing also a dedicated Green, Social and Sustainability Register
� Annual allocation and impact reporting, until full allocation� Environmental and social impact to be reported through aggregated output and impact metrics
Process for Project
Evaluation and Selection
Use of Proceeds
� A leading second opinion provider will be involved on all the future issuances� Post issuance external verification will be provided annually by an external auditor
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Eligible Green Projects categories
Use of Proceeds
Eligible projects
Objectives Eligibility criteria
Renewable energy
Renewable energies aiming at replacing carbon-intensive energy sources and significantly reducing global warming emissions.
Infrastructures and plants generating and/or distributing renewable energy such as:� Offshore and onshore windmills� Solar photovoltaic� Bioenergy /biomass� Geothermal � Hydropower projects up to 20 MW in installed capacity
Energy efficiency
Investing in assets related to energy efficiency
� Energy storage � Smart grid � District heating� Efficient lighting (LED lighting, compact fluorescent lighting)� IT Optimization service, infrastructure and broadband
Sustainable mobility
Spreading eco-compatible means of transport� Private transportation: Hybrid/Electric vehicles and infrastructures� Public mass and freight transportation: Investment, acquisition, maintenance and
replacement of rolling stocks as well as infrastructure
Sustainablewater
Improving the efficiency of water management and water treatment.
� Water collection, treatment, recycling, and related infrastructure
Circular economy
Pollution prevention and control � Infrastructures that turn waste into resources
Green buildings
Promoting urban sustainable growth
� Acquisition, construction, development, renovation of buildings that meet recognized environmental standards
� Real estate loans for energy efficient buildings that comply with the Energy Efficiency Class A
� Renovation of buildings that allow reaching Energy Efficiency class B or where at least 50% of the improvements are for energy efficiency purposes
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Use of Proceeds
Eligible Social Projects categories Eligible projects
Objectives Eligibility criteria Target Populations
SMEsfinancing
Supporting employment and access to the labor market
� SMEs financings located :� in regions with a GDP per capita
below national average, or � in areas impacted by natural
disasters in Italy
� SMEs which purpose is to maintain jobs or create new jobs in their place of settlement through projects that provide at least one of the following:
� partnerships or new production chains that involve public and/or Third Sector Entities ,
� welfare initiatives for employees and/or the community
� People working in SMEs, to maintain their jobs and to create capacity for new jobs
Non-profit and civil economy financing
Supporting general interest initiatives, which strive for civic, solidarity and social utility purposes
� Investments and day by day operations of Third Sector Entities and Religious Entities such as:
� Associations and NGOs,� Voluntary Organizations and Social
Development Associations,� NGOs Social Enterprises, and Social
Cooperatives and Mutual Aid Companies,
� Foundations and Philantropic entities,� Religious bodies for their social utility
purposes (including maintenance and renovation of historic heritage).
� Eligible Projects cannot include funding to organizations that discriminate in any way in carrying out their activities
Eligible Organizations are aiming at reducing exclusions and inequalities
Target Populations are linked to the sectors of general interest where the Eligible Organizations operate, such as:� healthcare,� education,� social, recreational and sports
activities,� welfare and solidarity,� art and culture,� public utility infrastructures and
services
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Process for Project Evaluation and Selection and Ma nagement of Proceeds
Dedicated internal ‘Sustainable
Finance’ working group
The working group will be in charge of:1. Reviewing and validating the selection of Eligible
Projects
2. Monitoring the Eligible Projects portfolio, during the lif eof the transaction
3. Managing any future updates of the Framework
� The working group is composed by representatives from :
� Corporate Social Responsibility department
� Relevant Business departments
� Treasury department� Investor Relation
department
Dedicated Green, Social and
Sustainability Register
UBI Banca commits to earmark and hold the balance ofunallocated proceedsUBI Banca will track the use of proceeds of its Bonds issuedunder this Framework through a dedicated Green, Social andSustainability Registe r for the Bonds issued
� Updates of the framework will only apply to Green, Social and Sustainable Bonds issued after the issuance of an updated Second Opinion
The working group can decide to replace some Eligible Projects inaccordance with, inter alia, the following Substitution Conditions:1. an Eligible Project no longer meets the eligibility criteri a2. Eligible Projects mature or are redeemed before each Bond’s
maturity
Replacement of Eligible Projects
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Reporting
Use of Proceeds
Allocation reporting
Impact reporting
UBI Banca will provide to investors an annual reporting until fullallocation, and that includes:� The total amount of proceeds allocated per Eligible Projects
category,� Share of financing and refinancing (in %), and� The amount of unallocated proceeds
UBI Banca will report on the environmental and social impact ofthe Bonds issued under this Framework through aggregatedoutput and impact metrics
Reporting Examples of Output ùetrics Impact metrics
Environment
� Expected annual renewable energy generation in MWh
� Expected Amount of energy saved (MWh)
� Expected capacity ( passengers / freight) of private and public transportation
� Energy Efficiency certification or Class, for Green Buildings
Estimated annual GHG emissions reduced/avoided, in tons of CO2e
� Environmental reporting indicators will include aggregated impact metric per Green Eligible Projects category, on an aggregated portfolio basis
Reporting Examples of indicators
SMEs financing
� Number of SMEs supported� Estimated number of employees of the financed SMEs
Non profit and civil economy financing
� Number of Eligible Organization supported� Estimate of the number of final beneficiaries supported by
the Eligible Organization
� On aggregated basis and broken-down per geography
� On aggregated basis and broken-down per category of essential services / Sector activity
� Reviewed by an external auditor and included in the Sustainability Report
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Summary
1. UBI Banca at a Glance
2. UBI Banca Sustainability approach
3. UBI Banca Green, Social and Sustainable Bond Frame work
Appendix – Eligible Projects Examples
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Project Examples in Solar
Location
Location
Picture
Picture
Description - Quantitative features
� Technology: ground-mounted solar photovoltaic� Commercial Operation Date: 20/12/2012� Operating status: in regular commercial
operation� Loan tenor: dec-2028� Total Capacity installed: 8.4 MWp� Total energy produced: 13,440 MWh/year� Tons of CO2 equiv. emissions avoided, weighted
to UBI financing: 4 462 tons/year
Description - Quantitative features
� Technology: ground-mounted solar photovoltaic� Commercial Operation Date: 23/03/2011� Operating status: in regular commercial
operation� Loan tenor: dec-2029� Capacity installed: 14.1 MWp� Total energy produced: 19,035 MWh/year� Tons of CO2 equiv. emissions avoided, weighted to
UBI financing: 3,160 tons/year
Ragusa, Sicilia
Macerata, Marche
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Project Examples in Wind
Location
Location
Picture
Picture
Description - Quantitative features
� Technology: onshore wind� Commercial Operation Date: 15/07/2010� Operating status: in regular commercial
operation� Loan tenor: jun-2025� Capacity installed: 26 MW� Total energy produced: 52,000 MWh/year� Tons of CO2 equiv. emissions avoided, weighted
to UBI financing: 9,495 tons/year
Description - Quantitative features
� Technology: onshore wind� Commercial Operation Date: 30/06/2011� Operating status: in regular commercial
operation� Loan tenor: dec-2027� Capacity installed: 97.5 MW� Total energy produced: 203,000 MWh/year� Tons of CO2 equiv. emissions avoided, weighted
to UBI financing: 10,042 tons/year
Foggia, Puglia
Catanzaro, Calabria
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Project Examples in Biomass
Location
Location
Picture
Picture
Description - Quantitative features
� Technology: solid biomass� Commercial Operation Date: 14/07/2010� Operating status: in regular commercial
operation� Loan tenor: dec-2023� Capacity installed: 12.2 MW� Total energy produced: 76,000 MWh/year� Tons of CO2 equiv. emissions avoided, weighted
to UBI financing: 9,588 tons/year
Description - Quantitative features
� Technology: biogas� Commercial Operation Date: 17/12/2012� Operating status: in regular commercial
operation� Loan tenor: dec-2027� Capacity installed: 1 MW� Total energy produced: 7,500 MWh/year� Tons of CO2 equiv. emissions avoided, weighted
to UBI financing: 2,490 tons/year
Frosinone, Lazio
Latina, Lazio
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Disclaimer
This document has been prepared by Unione di Banche Italiane Spa ("UBI") for informational purposes only and for use in the presentation ofNovember 2018. It is not permitted to publish, transmit or otherwise reproduce this document, in whole or in part, in any format, to any third partywithout the express written consent of UBI and it is not permitted to alter, manipulate, obscure or take out of context any information set out inthe document.
The information, opinions, estimates and forecasts contained herein have not been independently verified and are subject to change withoutnotice. They have been obtained from, or are based upon, sources we believe to be reliable but UBI makes no representation (either expressedor implied) or warranty on their completeness, timeliness or accuracy. Nothing contained in this document or expressed during the presentationconstitutes financial, legal, tax or other advice, nor should any investment or any other decision be solely based on this document.This document does not constitute a solicitation, offer, invitation or recommendation to purchase, subscribe or sell for any investmentinstruments, to effect any transaction, or to conclude any legal act of any kind whatsoever.This document contains statements that are forward-looking: such statements are based upon the current beliefs and expectations of UBI andare subject to significant risks and uncertainties. These risks and uncertainties, many of which are outside the control of UBI, could cause theresults of UBI to differ materially from those set forth in such forward looking statements.Under no circumstances will UBI or its affiliates, representatives, directors, officers and employees have any liability whatsoever (in negligenceor otherwise) for any loss or damage howsoever arising from any use of this document or its contents or otherwise arising in connection with thedocument or the above mentioned presentation.
For further information about the UBI Group, please refer to publicly available information, including Annual, Quarterly and Interim Reports andConsolidated non financial declarations – Sustainability Reports.
By receiving this document you agree to be bound by the foregoing limitations.Please be informed that some of the managers of UBI involved in the drawing up and in the presentation of data contained in this documentpossess stock of the bank. The disclosure relating to shareholdings of top management is available in the annual reports.