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ExtraReport Economics Department www.ba-ca.com XP L I C I T Slovakia – From Truant to Star Pupil? February 2003 Members of HVB Group Contents Foreword ....................................................................................................................................................................................................3 Slovakia – From truant to star pupil? ......................................................................................................................................................4 New government steps up the pace of reform ................................................................................................................................4 Economic growth strong in 2002, weaker in 2003............................................................................................................................5 Outlook: “J-growth” ..........................................................................................................................................................................5 Direct investments: fourfold increase in three years...............................................................................................................................6 Some important investments in industry...........................................................................................................................................7 Euro: Introduction at the beginning of 2008?..........................................................................................................................................8 Slovakia at a glance .................................................................................................................................................................................10 Imprint: Published by: Bank Austria Creditanstalt AG http://www.ba-ca.com Economics Department e-mail: [email protected] Printed by: Uhl Graphics: Horvath Grafik Design February 2003 Foreword Slovakia’s integration efforts will peak in May 2004, when it officially joins the European Union. Since the beginning of the transformation process, Slovakia has achieved a number of milestones. One was the creation of the Slovak Republic on 1st January 1993. One of the foremost objectives of the young country was to achieve integration with the European Union as quickly as possible. In October 1993 the Europe Agreement was signed between the EU and the Slovak Republic (which came into force on 1st February 1995), and as early as June 1995 an official application was submitted for EU membership. On account of the changes in the country’s domestic and foreign policies which have occurred in the meantime, accession negotiations with the EU began in 2000, and were successfully concluded in December 2002. As was the case in the other reform countries, Slovakia’s economy had to (and in many areas must still) undergo a painful restructuring process. An additional burden was the fact that economic policies prior to the turnaround promoted large, capital-intensive companies which strongly focused on sales to the Comecon countries. These companies suffered disproportionately at the beginning of the transformation process on account of the economic weakness in these countries. Through the greater emphasis on privatisation since 1999, and with the help of foreign investors, there was a substantial increase in the influx of foreign direct investment (FDI). In 2002 alone, some EUR 4 bn entered the country, which represents almost half of the total inventory of FDI since the turnaround (just under EUR 9 bn). The Slovak Republic offers investors a number of attractive benefits, such as a highly-trained workforce and, particularly in the western part of the country, a well-developed infrastructure. Economic developments in Slovakia are currently being driven by a strong domestic economy which made GDP growth of an estimated 3.8 % possible in 2002. On account of strong private and public-sector demand, there was a slight improvement on the labour market. Despite the weak state of the global economy, we expect growth of 3 % or more in 2003 and 2004. Marianne Kager Chief Economist, Bank Austria Creditanstalt 3 Slovakia – from truant to star pupil? Slovakia – from truant to star pupil? New government steps up the pace of reform The new government, formed after the parliamentary elections in September and headed by former Prime Minister Mikulas Dzurinda, quickly began to implement important reform measures. Slovakia’s relations with the EU and the USA have continued to improve significantly under the new government. While prior to the EU’s December 2000 summit in Nice, Slovakia was in the second row of possible candidate countries, in the meantime the country has been able to pull forward, and was the second country after Cyprus and the first country in the CEE region to complete accession negotiations with the EU before the Copenhagen summit. Negotiations on the country’s future membership in NATO also began in early December. In the government’s program declaration from November 2002, the chapter on “Economic Policy” devotes considerable attention to the planned reform of public finances. During the first phase of the legislative period the budget deficit is to be lowered to 3 % of GDP by Maastricht standards. The state budget is to be consolidated by implementing reforms in key areas of expenditures, coupled with a simultaneous reduction in levies and direct taxes. Certain indirect taxes are scheduled to be increased and VAT rates will be consolidated into a single rate prior to EU accession. Plans call to make the conditions for obtaining state guaranties for loans much stricter, as this has been a major source of uncertainty for the development of the budget in the past. In addition to reforming public finances, the government plans to implement a wide range of other important measures: ◆ improvement of administration of EU funds; ◆ liberalization of the energy market; ◆ stronger efforts to combat corruption; ◆ reforming legal procedures in the court system in order to speed up the processing of cases; ◆ supporting greater utilization of modern information technology, by public administration as well (including the creation of a legal framework for electronic signature; ◆ the government intends to introduce a three-pillar system in the pension insurance administration and to reform the financing of the health care system with the goal of curbing the growing debt generation of the current system; ◆ ensuring that social benefits actually reach those who are entitled to them. The government’s reforms plans will not be possible without causing some social hardship, and the labor union association has already called for demonstrations. It is also likely that there will be tensions within the governing coalition when it comes to implementing some of the planned measures. In contrast to the previous government, in which certain elements of the SLD (which is now no longer part of the coalition) opposed the government’s policies on a number of occasions, the tensions expected in the current coalition will probably not seriously hinder the reform plans. Clear measures in the 2003 budget The first major test of the government and Parliament’s reform intentions was passing the budget for 2003 at the beginning of December. The new budget is based on measures aimed to increase revenues and to cut expenditures as well: ◆ reclassifying some goods and services, in particular in the hospitality and freight forwarding sectors, from the lowest VAT category (10 %) to the 23 % rate; ◆ raising petroleum and tobacco taxes; ◆ freezing wages and canceling certain bonuses, as well as freezing or reducing staff numbers in some branches of public administration; ◆ various laws affecting expenditures for welfare support and residential construction subsidies are to be revised. With these measures the central government’s revenues are targeted at SKK 235.4 billion (20.4 % of GDP), up SKK 15.5 billion on 2002 (an increase of 7 % in nominal terms). This includes plans for tax revenues to be 17 % higher than in the previous year’s budget. Expenditures (including SKK 10.7 billion for bank consolidation for the 4 Slovakia – from truant to star pupil? first time) are projected at SKK 291.4 billion (25.3 %of GDP), which is also nominally 7 % higher than in 2002. This increase is caused primarily by higher expenditures on wages and social transfers. Taking into account the government’s inflation estimates, both central government expenditures and revenues should decline slightly in real terms, which seems to be a realistic assumption. The budget calculations are based on GDP growth of 3.7 % for 2003, annual average of inflation of 8.8 % due to planned price and tax hikes and an unemployment rate of 18 %. We also project unemployment at 18 %, but our estimates for increases in GDP and price levels are somewhat lower, due to sluggish international economic recovery and weak private and public consumption. The central government deficit is targeted at SKK 56.0 billion, or 4.9 % of GDP. Without the consolidation measures the deficit would have grown to over 7 % of GDP. Some progress was already made by the previous government in terms of increasing budget transparency: for example, the number of off-budget funds was cut by integrating nine of the twelve funds into the budget. Now, plans call for achieving a surplus in the non-central government public institutions, with the exception of the health insurance administration. According to preliminary calculations based on the Maastricht method the general government deficit in 2003 is projected at SKK 56.9 billion, or just under 5 % of GDP. For 2002, we estimate that the deficit was substantially over 7 % of GDP (calculated by the same standards), due to high expenditures prior to the September elections. Even if it does not prove possible to fully achieve the planned deficit reduction amounting to more than 2 % of GDP, the 2003 budget consolidation will have a considerable impact in terms of restricting growth. Economic growth strong in 2002, weaker in 2003 Despite the slow business cycle in Europe, over the first three quarters of 2002 Slovakia’s GDP growth was supported by a strong rise in public and private consumption and exportshare increases since the third quarter. Year-on-year GDP growth reached 3.9 % in Q1, 4.0 % in Q2 and continued increasing to 4.3 % in Q3. Domestic demand rose by 3.5 % in the third quarter, with the improvement in net external exports contributing 0.8 % to economic growth. The pace of private consumption slowed somewhat to 5 % in the third quarter, falling from 5.9 % in the second quarter and 5.2 % in the first. Growth in public consumption also declined, in Q3 coming back down to 2.7 %, after peaking at a high rate of 5.1 % for 2001 on average. The first two quarters of 2002 also saw very vigorous growth in public consumption, which hit 5.7 % in Q1 and 7.7 % in Q2. In contrast to consumption, gross fixed capital formation was weak, falling by 1.2 % in Q3 compared to the previous year, after having risen only 0.1 % in Q2 and contracting by 0.8 % in Q1. Strong GDP growth helped to keep unemployment down. The jobless rate in October 2002 was 16.4 %, almost one percent lower than 12 months earlier. Over the first ten months of 2002, real wages in industry were up 4.3 % on the previous year, whereas they only grew by 2.7 % in 2001. By November consumer price inflation had dropped to 2.9 % compared to a year earlier, whereas in 2001 the average annual rate reached 7.1 %. With the planned price hikes for 2003 real incomes and private consumption will rise considerably slower once again. The leeway for public consumption and public investment is also quite tight due to the budget consolidation measures. Gross fixed capital formation should recover somewhat on the heels of the poor figures for 2002, but will not increase too quickly because of tight corporate finances and moderate public investment. Outlook: “J-growth” The quick pace of reforms adopted by the new government will lead Slovakia’s economy to grow on a J-shaped curve: slow for the next one or two years and then accelerating rapidly based on the reforms. With unemployment likely to remain high, inflation on the rise and moderate increases in real wages, the current account deficit should not grow all too dramatically. Yet even though the path of rapid reform is promising for the future, it will not be devoid of problems. Over the longer horizon, increased flows of short-term foreign capital, due to Slovakia’s increasing attractiveness and the prospects for further narrowing the interest rate differential to the EU as soon as the euro is legal tender in Slovakia as well, will probably lead to considerable pressure for appreciation of the Slovak koruna. The National Bank of Slovakia will likely find it increasingly difficult to limit the volatility of the koruna, needed especially after the country joins ERM-II. Hans Holzhacker 5 Slovakia – from truant to star pupil? Direct investments: fourfold increase in three years Until 1999, direct investments to Slovakia remained meagre. Since then, however, significant progress has been made in integrating Slovakia in the world economy and in strengthening the country’s ties with the EU. Slovakia has become attractive for foreign investment. Total direct investment increased fourfold until 2002, and Slovakia has advanced to fifth place in a ranking of direct investment as a percentage of GDP in the CEE 11 countries (see the relevant table). Foreign investments have in particular supported the development of the automotive industry and the steel industry, besides stabilising the banking sector and helping to secure Slovakia’s important role in the transit of natural gas. Foreign Direct Investment 1999 2000 2001 2002E Stocks, end of period in EUR bn Estonia 2.5 2.8 3.6 4.2 2002E Population in mn 1.4 FDI per capita in EUR 3,010 GDP in EUR bn FDI in % of GDP 6.2 68.1 Czech Republic 17.5 23.3 30.3 39.6 10.3 3,840 72.9 54.3 Hungary 19.1 21.3 25.9 27.3 10.1 2,710 66.5 41.1 Bulgaria 2.8 4.2 5.1 6.3 7.8 810 16.6 38.2 Slovakia 2.3 4.0 5.3 9.2 5.4 1,700 24.9 36.9 Croatia 4.1 5.6 7.5 8.1 4.4 1,830 23.7 34.0 Poland 38.7 53.1 61.1 65.9 38.3 1,720 199.9 33.0 Latvia 1.8 2.2 2.5 2.9 2.4 1,190 8.7 32.9 Lithuania 2.4 2.9 3.4 3.9 3.5 1,120 14.6 27.0 Romania 5.6 7.0 8.9 10.3 22.4 460 46.9 21.9 Slovenia 2.7 3.1 3.6 4.1 2.0 2,060 22.2 18.5 Sources: Austrian Federal Ministry of Economic Affairs and Labour; E: estimates of BA-CA Economics Department Foreign Direct Investments1 Sectoral structure Agriculture, hunting and forestry Mining and quarrying Manufacturing 2.5 % 0.0 39.4 0.7 2,351.1 40.6 Electricity, gas and water supply 11.7 0.2 Construction 38.1 0.7 724.4 12.5 37.5 0.6 Wholesale and retail trade Hotels and restaurants Transport, storage and telecommunications Financial intermediation Real estate, leasing and business activities Health and social care Other community, social and individual services Source: Slovakian Statistical Office / 1) stocks as of 30.9.2002 6 USD million 746.4 12.9 1,629.8 28.2 185.0 3.2 2.2 0.0 16.8 0.3 Slovakia – from truant to star pupil? As the most important privatisations have now been realised, inflows of direct investment will in the next few years no longer match the levels reached in 2002. Follow-up and greenfield investments will nonetheless amount to EUR 1– 3 bn each year. The significance of follow-up and greenfield investments has grown in the last few years. In view of the favourable economic developments which are expected for Slovakia and what appears to be the gradual formation of an automobile and electronic cluster in the region (Czech Republic, western Hungary, southern Poland), this trend will also continue in the future. To date, more than 60 % of investments are concentrated in Bratislava. But other regions such as Nitra and Banska Bystrice are likely to attract investors in increasing measure. Although the privatisation process has passed its zenith, a number of projects are still outstanding. The government is currently considering what should be done with the remaining majority shareholdings in SPP, the oil pipeline Transpetrol and the three electricity distribution companies. The discussions conducted in this regard could also influence the privatisation of the Slovakian electricity company Slovenksa Elektrarne (SE). Since the privatisation of SPP generated relatively large sums which can be used for the forthcoming pension reform, the government is considering the possibility of taking a more cautious approach and waiting until the market recovers before proceeding with the privatisation. Hans Holzhacker Some important investments in industry PSA Peugeot Citroen It is envisaged that the new plant of the French automobile manufacturer in Trnava will be producing 300,000 cars annually from 2006. The construction of the plant will commence in September 2003. The project will create 3,500 jobs and an additional 6,000 jobs among suppliers and for the purpose of meeting regional demand. Investment volume amounts to EUR 700 mn. Volkswagen Volkswagen Slovakia was founded in 1991 by Volkswagen AG and BAZ (Bratislava Automobile Factories). Today, Volkswagen Slovakia is wholly-owned by the Volkswagen group. In 2002 more than 225,000 vehicles were produced in Slovakia, and 301,000 gearboxes. The company employs a workforce of 9,000 persons. 18.2 million gearbox components were produced at the special production facility in Martin in 2002. Matsushita After a greenfield investment in 1998, the Japanese electronics company opened a second plant in 2002 with annual output of 60,000 DVD players. Matsushita employs about 1,000 persons. The production programme focuses on the manufacture of circuits and electronic components. Matsushita has invested some EUR 10 mn since 1999. Woo One The Korean company built a production facility for the manufacture of plastic casing for computer monitors on the site which previously housed the plant of the refrigerator manufacturer Idaf. The company is planning to invest EUR 10 mn in the next three years and will operate with a workforce of 300– 500 persons. US Steel In 2002, the largest US steel company took over the steel operations of the almost bankrupt eastern Slovakian company VSZ, based in Kosice. With annual capacity of 4.5 million tonnes of raw steel, US Steel Kosice accounts for about one-third of the capacity of the US Steel group. With a workforce of about 16,000 persons, the company is one of Slovakia’s largest employers. Gaz de France, Ruhrgas, Gazprom In 2002, a 49 % stake in the “Slovakian Gas Industry” (SPP) was sold to a consortium of Gaz de France, Ruhrgas and Gazprom, and general management control was conferred on the new shareholders. Gaz de France and Ruhrgas currently each hold 24.5 % of the shares of SPP, and Gazprom has an option to purchase one-third of their collective stake. Gasprom accounts for one quarter or 130 billion cubic metres of Europe’s gas imports, of which a little over 70 billion cubic metres is carried by the pipelines of SPP. Sources: Slovak Investment and Trade Development Agency (Sario), Slovak media reports 7 Slovakia – from truant to star pupil? Euro: Introduction at the beginning of 2008? The government declaration issued in November 2002 states that the Slovak government, together with the central bank, wants to introduce the euro in 2006 given a favourable economic climate. However, the accession date for the EU candidate countries has in the meantime been postponed to May 2004, and the countries must then join the Exchange Rate Mechanism II (ERM II) before introducing the euro. From the central bank’s perspective, the beginning of 2007 is therefore technically the earliest when the euro could be introduced. ERM II is the “waiting room” prior to adoption of the euro, a time when the currencies of the accession countries may not fluctuate by more than +/– 15 % for two years from a central parity in terms of the euro. The purpose of ERM II is to determine whether the real economy and the financial markets are sufficiently aligned with those of the other euro countries for the introduction of the euro to succeed in the long term. Data from the Monetary Programme of Slovakia’s Central Bank 2002 2003 2004 2005 2006 4.2 4.4 4.6 GDP, real % y/y 3.8 3.7– 4.1 Consumer prices % y/y 3.3 – 3.4 8.2– 9.3 7.5 3.9 3.0 Current account balance % of GDP – 8.4 – 6.2 – 5.6 – 5.1 – 4.7 Budget deficit pursuant to Maastricht % of GDP – 7.8 – 4.9 – 3.8 – 3.3 – 3.0 Source: Slovak central bank The data of the central bank’s monetary programme for 2003 and the forecast for the years 2004– 2006, which are based on the government’s medium-term budget forecast, show that Slovakia ought to be ready to adopt the euro in 2006: both inflation and the budget deficit, the two most difficult goals, are assumed to be sufficiently low to meet the Maastricht criteria. In such a scenario Slovakia could from the viewpoint of the centralbank in 2007 submit an application for an extraordinary verification of its fulfillment of the convergence criteria, and then join the monetary union at the beginning of 2008. However, the monetary programme also leaves open the possibility that accession to the monetary union could already take place in 2007 if the budgetary goal is achieved earlier, which would in turn accelerate the disinflation process. How realistic is such a scenario, and what could the rate be, with which the crown will be converted into euros? According to reports in the media, Marian Jusko, Governor of the Central Bank, stated on 22nd January this year that Slovakia should adopt the euro at the same time as its neighbouring countries. If the forecasts of stronger exports, improvements in the budget and sufficient growth should turn out to be true, the crown may gradually strengthen before Slovakia joins ERM II, said the Governor. In view of the substantial reductions that are required in the budget deficit (especially with the help of a politically sensitive reform of the health sector), the parliamentary elections in 2006 and the slow approach in the Czech Republic, we today consider 2008 as a realistic date for the adoption of the euro. The exchange rate of the crown against the euro may have by then also strengthened somewhat. Chart 2 shows the appreciation of the crown in real terms to date, and its further appreciation given a constant rate of exchange and inflation as forecasted in the programme of the central bank. On account of the productivity gains which can still be achieved by the Slovak economy, the real appreciation resulting from a fixing of the exchange rate and higher inflation than in the EU would not present a problem. An appreciation in nominal terms, if not too high, would also not be a cause for concern. This should not exceed 35 against the euro until 2008, or an average of about 2.8 % per annum. An appreciation of the crown over and beyond this figure would impair the competitiveness of the Slovakian economy and could require a painful adjustment-related recession. It may be assumed that the central bank will seek to 8 Slovakia – from truant to star pupil? prevent such a strong appreciation, although this may not be too easy on account of the expected strong inflows of foreign direct investment and short-term capital. A fundamentally different approach for accession to the monetary union would only be possible if strong currency fluctuations also in other accession countries, which require substantial efforts to keep the currencies in ERM II, convinces the EU that a shortening of the ERM II period and a more rapid adoption of the euro would be simpler and less expensive for all concerned. Exchange Rate of the Crown 25 2nd Dzurinda government 1st Dzurinda government 30 1999 stability programme 35 EU invitation 40 45 50 55 1995 1996 SKK/USD 1997 1998 1999 2000 2001 2002 SKK/Euro Real Effective Exchange Rate 150 May 2004 Accession to EU 140 1.1.2008?? Euro 130 May 2004?? Accession to ERM II 120 110 100 90 95 96 97 98 99 00 01 02 Assumed inflation: Slovakia: 2003: 2004: 2005: 2006: Trading partner: 03 04 05 06 07 08 09 8.8% 7.5% 3.9% 3.0% 2% Nominal effective rate assumed to be constant as from 2003 Hans Holzhacker 9 Slovakia at a glance Slovakia at a glance Structural Indicators Area (km2) 49,034 Population in mn 5.4 President Rudolf Schuster Prime Minister Mikulás Dzurinda GDP (2002 in EUR bn) 20.8 Per capita GDP (2002 in EUR) 4,100 Exports in % of GDP 69.3 Economic Indicators GDP real (yoy, in %) Industrial output (real, yoy, in %) 1999 2000 2001 2002E 2003F 2004F 1.3 2.2 3.3 3.8 3.0 3.2 – 2.7 8.8 6.8 6.3 5.0 5.5 – 18.5 1.2 9.6 4.3 6.0 5.0 Consumer prices (yearly average) 10.6 12.2 7.1 3.3 8.1 5.3 Unemployment (yearly average) 17.5 18.2 18.3 17.8 18.0 17.8 Gross fixed capital formation (real, yoy, in %) Budget balance (in % of GDP) – 3.6 – 3.9 – 4.8 – 7.0 – 5.5 – 5.0 Merchandise exports (in EUR mn) 9,592 12,782 14,102 15,360 16,500 17,800 Merchandise imports (in EUR mn) 10,617 13,740 16,486 17,820 18,700 20,200 – 5.7 – 3.3 – 8.6 – 8.8 – 7.4 – 7.3 FDI (inflow, net in EUR mn) 666 2,077 1,674 4,020 1,400 2,000 Gross foreign debt (in % of GDP) 52.1 54.9 55.1 51.3 41.3 41.7 Current account (in % of GDP) Average exchange rate: SKK/EUR 44.3 42.6 43.2 42.7 41.1 41.0 Average exchange rate: SKK/USD 41.4 46.2 48.3 45.1 39.8 40.2 E: BA-CA estimate, F: BA-CA forecast Gross Domestic Product by Economic Sectors 2001 Agriculture and forestry Industry Construction Services 10 4.1 24.4 4.6 66.9 HVB Bank in Slovakia HVB Bank in Slovakia Zilina Zilina Branch Zilina Bottova 6 011 67 Zilina 1 Tel.: +421 41 7070 111 Poprad Trencin Banska Bystrica Malacky Trnava Nitra Bratislava Dunajska Streda Kosice Zvolen Banska Bystrica Banska Bystrica Branch Na Troskach 16 P.O.Box 509 974 01 Banska Bystrica 1 Tel.: +421 48 471 52 11 Zvolen Zvolen Branch Roznavska Branch Headquarters HVB Bank Slovakia a.s. Mostova ul. 6 814 16 Bratislava 1 Tel.: +421 2 5969 1111 Fax: +421 2 5969 9406 Bank code: 8080 SWIFT: BACX SKBA ICO: 31372503 DIC: 31372503/500 Bratislava Mostova Branch Roznavska 34 814 16 Bratislava 1 Tel.: +421 2 4341 0536 Zelezniciarska Branch Zelezniciarska 13 814 16 Bratislava 1 Tel.: +421 2 5969 5256 Trnava Trnava Branch Hviezdoslavova 14 PO Box 108 917 01 Trnava 1 Tel.: +421 33 590 34 11 Dunajska Streda Dunajska Streda Branch Lazaretska Branch Postova 1 929 01 Dunajska Streda Tel.: +421 31 590 33 11 Lazaretska 24 814 16 Bratislava 1 Tel.: +421 2 5969 4253 Nitra Nitra Branch Westend Branch Frana Mojtu 16 PO Box 57 D 949 01 Nitra 1 Tel.: +421 37 6920 711 Mostova 6 814 16 Bratislava 1 Tel.: +421 2 5969 2111 Westend, Dubravska 2 814 16 Bratislava 1 Tel.: +421 2 5941 8300 Pallehner Branch Malacky Branch Trencin Trencin Branch Hurbanovo sq. 1 814 16 Bratislava 1 Tel.: +421 2 5930 5411 Zahoracka 60, PO Box 31 901 01 Malacky Tel.: +421 34 796 71 10 Pribinova 2 911 50 Trencin 1 Tel.: +421 32 7480 411 Hviezdoslavova 16 P.O.Box 78 960 01 Zvolen Tel.: +421 45 524 14 11 Poprad Poprad Branch Namestie sv. Egidia 64 PO Box 119 058 01 Poprad 1 Tel.: +421 52 787 09 11 Kosice Mlynska Branch Mlynska 7 040 43 Kosice 1 Tel.: +421 55 7281 900 Sturova Branch Sturova 14 P.O.Box B-45 041 25 Kosice 1 Tel.: +421 55 6112 501 www.hvb-bank.sk HVB Bank is the fifth largest bank in Slovakia, with total assets of about 980 million Euro. It serves nearly 20.000 retail and corporate customers and holds a market share up to 4 per cent. HVB Bank is a universal bank, serving corporate and retail customers, and offers additional financial services through its partners HVB Leasing and CA IB Corporate Finance Advisory. HVB Bank holds a particularly strong position in corporate customer business in Slovakia. One-third of Slovakia’s Top 100 companies are customers of HVB Bank in Slovakia. In retail banking, the bank launched a process of fast expansion in 2002: it is planned to increase its network from currently 17 to 25 offices by the end of 2003. Within the HVB Group, one of Europe’s largest banking groups, Bank Austria Creditanstalt is responsible for the markets in Central and Eastern Europe. Its network comprises 900 offices in 15 countries and serves of 3.5 million customers. Bank Austria Creditanstalt’s know-how and quality of service have earned it a number of awards. In 2002, the financial magazine Euromoney named Bank Austria Creditanstalt “Best Bank in CEE”. The renowned publication The Banker rated the Group as “Bank of the Year 2002” in Central and Eastern Europe. 11