Summary of 2015 business plan and budget

Executive summary

The Bank’s Business Plan and Budget for 2015 reflects the final year of the implementation of the Fourth Capital Resources Review strategy and framework (CRR4), which covers the period 2011 to 2015.

Context

Twenty-five years after the fall of the Berlin Wall, the EBRD is confronting one of the most challenging operating environments in its history. Against that backdrop, the Bank has performed well, responding effectively to geo-political events and economic volatility. The Bank has remained focused on its transition mandate, maintained a high level of investments and continued supporting its clients at a difficult time.
 
With the support of shareholders the EBRD has managed this difficult situation and volatility elsewhere in its regions with dexterity and flexibility, and is on course to deliver results. In 2014 the EBRD continued its programme of internal modernisation aimed at maximising its impact in the countries where it invests.
 
Planning for the last year of the CRR4 period reflects this difficult and uncertain context. The proposed 2015 Business Plan and Budget requires the Bank to deliver on its mandate where possible, manage its Russian portfolio and clients and stand ready to resume new business activities there, should the shareholders’ guidance change. Within this context, the EBRD must in 2015:
 
  • respond flexibly to the challenges posed by the geopolitical environment in the region of operations by balancing its investments appropriately;
     
  • preserve our capacity in Russia to service clients, manage the existing portfolio and quickly resume business should guidance change;
     
  • be increasingly vigilant in managing risks at this time of heightened volatility;  and
     
  • optimise use of the existing resource base with no increase in real terms in the budget or the number of staff.
The EBRD approaches these challenges from a position of strength, with good levels of capital and liquidity, a low cost-to-income ratio, continuing strong shareholders support and a AAA rating reaffirmed by all three major rating agencies in 2104.
 
The Bank will seek to re-energise transition in its regions, with a focus on resilience, integration and common global and regional challenges. We will do so through projects and technical cooperation and by enhancing the effectiveness of our policy dialogue, further refining the Bank’s business model while working to better understand and measure the results and impact of our operations. We will also continue to implement actively the Bank’s strategic initiatives, namely the Early Transition Countries Initiative, the Sustainable Resource Initiative (including Sustainable Energy Initiative), the Local Currency and Capital Markets Initiative, and the Small Business Initiative.
 

Business Plan Objectives

The objectives within the Business Plan and Budget for 2015 include:
  • number of operations within a range of 350 to 415, of which 30 to 40 are planned to be in the Southern and Eastern Mediterranean (SEMED) region;
     
  • annual Bank investment within a range of €7.5bn to €9.1bn, of which €0.9bn to €1.1bn are planned for the SEMED region;

Budget

The budget proposed to support the delivery of the 2015 Business Plan reflects an effort to enhance flexibility in the use of resources, to prioritise investments and activities and to preserve a disciplined approach to resources and cost management.
 
The 2015 Budget in real terms for the existing region represents a ‘zero real budget growth’, except for marginal real cost growth related to the SEMED region which results in the 2015 Budget representing  real growth of 0.5%.
 
The Bank’s competitiveness and attractiveness as an employer, in job markets in both London and in several countries of operations including the expansion into the new region of operations, continues to require targeted recruitment efforts and compensation to ensure that the Bank can attract the necessary professional skills across functions and departments.
 
The approved budgets for the Bank consist of:
 
  • a 2015 Budget for Administrative Expenses of €399.5m (£319.6m), including operating expenses of €320.3m (£256.3m), depreciation of €28.4m (£22.7m) and retirement plan and related costs of €50.8m (£40.6m); and
     
  • a 2015 Capital Expenditure program of €56.9m (£45.5m).