Local capital has to be used in developing countries in order to finance long-term projects

Predictability of the regulatory environment and project transparency (project consistency and choice of providers) are essential in order to achieve financing more easily

The knowledge of banks such as UniCredit can be very useful for regional economies

Banks will continue to play a primary role in financing infrastructure projects in developing economies since capital markets in most countries are not well developed and there are not enough funds to implement long-term projects. The interest of institutional investors in such projects can be attracted and If CEE countries “do their homework” and ensure a transparent and consistent regulatory environment, the role of institutional investors in the economy will become more important. This was at the core of the discussion of the growing importance of institutional investors panel at the EBRD Annual Meeting in Warsaw which finished on May 16, 2014.

“I believe that the interest of institutional investors will grow in the years to come and they will become more and more active in financing CEE projects in cooperation with banks. Groups such as UniCredit which are familiar with the economies of the countries in which they operate through local banks can be very good partners to institutional investors”, said Gianni Franco Papa, Head of CEE Division, UniCredit.

He said that capital markets are not well-developed in the better part of the countries where UniCredit operates and therefore cannot be used as a source of funding of the much-needed infrastructure projects. “Furthermore, the credit ratings of these countries often deter institutional investors from increasing their activities in transition countries”, stressed Papa. According to him, these countries should work hard to achieve stronger commitment of institutional investors so that “from a portfolio of investors they can turn to structural investors in the long run”.

“Developing countries should be aware of the fact that there are many opportunities and very good projects which compete with each other to achieve financing. While a given project can be the most important for a country, investors consider it as one of the many”, said Papa.

Danny Truell, CIO of the Wellcome Trust, also shared this opinion. He stressed that there were two conditions of crucial importance for institutional investors: consistency regarding what project should be implemented next and a stable and predictable regulatory environment.

According to panelists Canada and Australia are a good example of committing institutional investors in developing infrastructure projects. “In these countries pension funds and the funds of insurance companies are used actively for financing infrastructure projects”, said Manfred Schepers, Vice President of EBRD.

“We have been working hard and are doing the utmost to turn the savings of the Polish population into a source of funding of long-term projects. Despite the problems with our pension system, we are aware of the importance of creating a pool of local capital which will be used to finance the country’s development”, said Paweł Tamborski, Under-Secretary of State, Ministry of the Treasury in Poland. He shared Gianni Papa’s opinion that the differences in maturity of banks make it difficult to finance individually infrastructure projects, and yet their knowledge can be useful to markets.

UniCredit

UniCredit is a leading commercial bank in Europe which has strengthened its position in 17 countries. Our global network includes approximately 50 markets with about 9 000 branches with more than 147 000 employees (as of December 31st 2013).

In CEE UniCredit manages the largest and most diversified international banking network with more than 3 600 branches.

The Group operates in Austria, Azerbejdżan, Bosnia and Herzegovina, Bulgaria, Croatia, the Check Republic, Germany, Hungary, Italy, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Turkey and Ukraine (as of December 31st 2013).

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