Research guide to banking services in eastern Europe
| The GiroCredit Bank Group has traditionally regarded the markets of central and eastern Europe, and in particular the Czech Republic, as its extended core markets. The bank has therefore developed thorough know-how and experience in the region. As part of this strategy, the bank's representative office in Prague was opened in 1989, one month before the transition to a Western-style democracy. GiroCredit-Sparkassen Banka Praha, the bank's subsidiary in Prague, started operations in 1993 and offers the full range of corporate and commercial banking services and products to Czech, Austrian and international clients. In October 1994 the subsidiary opened its first branch in Ostrava, a major industrial region in northern Moravia, followed by a second branch in Ceske Budejovice which opened in December 1995. Today the bank employs approximately 100 professionals and has total assets of about Kr14 billion ($538 million). In line with GiroCredit Bank Vienna's role as central institution of the Austrian savings banks, Allgemeine Sparkasse Oberösterreich Bank AG, Linz, and Bank und Sparkassen AG Waldviertel-Mitte, Zwettl, acquired a stake in the Prague subsidiary in 1995. Banking and monetary systemThe Banking Law No. 21/92 created the legislative framework for the development of the banking sector under market economy conditions. The role of the central bank was defined under Law No. 22/92 on the State Bank of Czechoslovakia and amended by Law No. 6/93 on the Czech National Bank.The banking law lays down the conditions for establishing new banks (e.g. a minimum equity capital of Kr500 million) and regulates the activities a commercial bank may be engaged in. The Czech central bank, Ceska Narodni Banka (CNB), is in charge of supervising Czech banks and has set up capital adequacy, credit exposure and liquidity regulations that are in line with BIS rules. The minimum capital ratio is 8 %, but there are, however, some large Czech banks that are still exempt from this rule and which need only comply with it by December 31, 1996. With regard to liquidity, the Czech central bank has not laid down any specific rules. Banks are only required to fulfil their obligations within maturity and to submit a liquidity report to CNB on a quarterly basis. The credit risk exposure towards an individual client must not exceed 25% of the bank's capital. For a bank in the Czech Republic or an OECD member state the figure should not exceed 125% of the bank's capital and the total volume of credit risk exposure towards the 10 largest debtors must not exceed 230%. The five largest banks are Komercni Banka, Ceska Sporitelna, Investicni a Postovni Banka, CSOB and Agrobanka. In February 1996, the Czech central bank announced a widening of the fluctuation band of the Czech crown from +/- 0.5% to +/- 7.5% vis-a-vis a hard currency basket (weighted 35 % US dollar, 65 % Deutschmark). The intention behind this step was to decrease the inflow of speculative short-term foreign capital into the Czech Republic. The most important target of monetary policy, ie a reduction in the inflation rate, was achieved last year in spite of strong foreign capital inflows. The reasons behind the slow fall in Czech inflation are not only the foreign capital inflows but also the country's strong growth and low unemployment. On October 1, 1995, when the new foreign exchange act became effective, the Czech crown became in principle convertible. Any private or legal person can now open a foreign currency account with a Czech bank and the process for getting foreign currency loans was simplified, which means that Czech companies no longer need CNB approval. The export and import of cash was liberalized and residents can make direct investments abroad without any restrictions. Czech residents need, however, permission from the CNB to open an account with a foreign bank and to make portfolio investments. InvestmentThere are no restrictions on the quantity or value of securities that can be held by foreigners. Accounts can be opened with Czech banks in any currency, though stock exchange settlement is made in Czech crowns only. Returns can be freely repatriated.Dividends and interest received from investments in securities or deposits are subject to withholding tax at a rate of 25% for legal entities and 15% for private individuals. The Czech Republic has, however, concluded double taxation agreements with a number of countries, according to which non-residents are exempt from withholding tax in the Czech Republic. International tradeInternational trade is supported by EGAP, the Czech export insurance company. Depending on the country of origin of the importer, up to 90% of the credit risk can be covered by EGAP. While EGAP just issues guarantees, the recently founded Ceska Exportni Banka provides financing for export transactions.The banking services offered in the Czech Republic with regard to domestic and international payments as well as L/Cs are in line with European standards. All large and medium-sized banks are SWIFT members. There is high demand for factoring and leasing services in the Czech Republic. There are only a few factoring banks in the Czech Republic that provide factoring services as defined in western Europe. One of them is Transfinance a.s., the Czech affiliate of Intermarket Factoring, the GiroCredit Bank Group's factoring bank, which was the first company to offer factoring in the transitional economies of the region and which today plays a significant role among Czech financial institutions. About 70% of the receivables purchased are export receivables. Leasing services were until recently provided cross-border through the Vienna-based Leasfinanz in cooperation with GiroCredit-Sparkassen Banka Praha. At the beginning of the year, Leasfinanz Praha spol.s.r.o. was founded, a joint subsidiary of Leasfinanz Vienna and GiroCredit-Sparkassen Banka Praha. Should yourequire any further information on the Czech market or products and services offered by the GiroCredit Bank Group please contact: GiroCredit Bank Aktiengesellschaft der Sparkassen, International Business Development, Herrengasse 12, A-1010 Vienna, Thomas Modl, Area Manager. Tel.: +43 1 711 94, 2837 GiroCredit Bank Aktiengesellschaft der Sparkassen, Prague Representative Office, Vaclavske namesti 56, CZ-11000 Praha 1, Jiri Vrba, General Manager. Tel.: +42 2 2422 9911 GiroCredit-Sparkassen Banka Praha a.s., Head Office, Vaclavske namesti 56, CZ-11121 Praha 1, Christian Burger, Director Corporate Banking Division. Tel.: +42 2 2403 3356 Intermarket Factoring AG, Marokkanergasse 7, A-1030 Vienna, Theo Hibler, Deputy Chairman and Executive Vice President. Tel.: +43 1 717 65, 220 Transfinance a.s., Revolucni 3, CZ-110 00 Praha 1, Petr Marek. Tel.: +42 2 232 7723 Leasfinanz AG, Windmühlgasse 22-24, A-1060 Vienna, Manfred Wolf, Deputy Chairman and Executive Vice President. Tel.: +43 1 588 73, 2210 Leasfinanz Praha spolecnost s.r.o., Opletalova 4, CZ-113 76 Praha 1, Jarmila Tosovska. Tel.: +42 2 2424 1584 |