The Lower Austrian Raiffeisen banks

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34 Savings market Since April 2000 RLB has been acting as depository for eight investment funds administered by Raiffeisen KAG, with a total volume of ATS 5.6 bn. These form part of an umbrella fund set up as a vehicle for own investment by the Lower Austrian Raiffeisen banks, and are used by them for standard active and passive risk management operations. The main development in the savings deposit business in 2000 was the abolition of anonymous savings books. The relevant amendment to the law entered into force on 1 November 2000, requiring RLB to ascertain the identity of the holders of about 1.4 million savings books. Since this time it has not been possible to open a savings book without presenting an official identity document. Due to the continuing trend towards investment in securities, savings deposits were almost unchanged at about ATS 117 bn. The Raiffeisen Investment Card put in a good showing, with deposits rising by 69 percent to some ATS 2.3 bn. Home loan savings deposits rose by 5.6 percent to ATS 17.6 bn despite the fact that the market was heavily saturated. Treasury & Investment Products Insurance business in general, and whole life assurance sales in particular boomed. There was increased demand for the unit-linked life assurance products, offered in cooperation with MLP and the Raiffeisen securities based funds. Sales leapt by over 400 percent. Since 1996 the surrender Surrender value of whole life value of the whole life poli- policies sold by the Group cies – the measure of the ATS m, as of 31Dec. amount of capital invested in such products – has almost 1996 5,090 doubled, from ATS 5.1 bn to 19 97 5,343 ATS 9.6 bn (as of the end of 2000). 1998 6,438 RLB assumes responsibility for 1999 7,736 the insurance products sold 2000 9,573 via its wholly owned subsidiary Raiffeisen-Versicherungs- Maklerdienst GesmbH (RVD). Raiffeisen-Versicherungsagentur GesmbH (RVB) was founded on 1 January 2000 to handle the insurance business of the Raiffeisen banks in Lower Austria and Vienna. The agency and broking firm together employ a total of 31 people. In financial 2000 money under management by RLB, i.e. total security deposit accounts, primary and home loan saving deposits, and whole life assurance policies (surrender value) grew by 7.5 per- Money under management by the Group cent or ATS 18.9 bn to some ATS 270 bn. This amount excludes the deposits and ATS m, as of 31. Dec. security deposit account bal- 1996 219,583 ances of the Lower Austrian Raiffeisen banks and other 19 97 233,450 customers of RLB formally 1998 237,436 ascribable to its interbank business. 1999 250,952 2000 Treasury & Investment Products 269,830 Soaring insurance sales 35
36 Treasur y In the year just ended Treasury was reorganized, and its operations strategically realigned. The restructured Treasury Department comprises the Asset /Liability Management & Money Market, Foreign Exchange Trading & Sales, Securities Trading & Sales, and Treasury Support sections. At the end of 2000 the Bank established a new organizational unit called “Asset /Liability Management for Raiffeisen Banks”. 6,5 6,0 5,5 5,0 4,5 4,0 3,5 3,0 Interest rates in 2000 Jan. Feb. March April May June July Aug. Sept. Oct. Nov. Dec. Euribor 3M 5Yr Swap 10Yr Swap The reorganization is intended to strengthen the department’s focus on trading for customers’ accounts, and on Asset and Liability Risk Management for RLB. Centralizing order flows will play a key role in raising the Bank’s profile in the money, foreign exchange and capital markets. Greater attention is accordingly being given to product development, structured finance and investment. Equity trading on own account was terminated in February 2000. During the year under review RLB adopted the voluntary code of practice on “minimum requirements for the conduct of trading operations”. Compliance necessitated additional reporting and risk management activities. Treasury & Investment Products Financial 2000 was a difficult year on the capital markets. The rise in money market interest rates in the Eurozone led to a flattening in the yield curve. RLB’s own portfolio was largely unaffected by the turbulence on international stock markets. Meanwhile the weakening of the Euro against the main currencies brought gains on our long-term foreign exchange positions. Despite the adverse market environment Treasury succeeded in increasing the volume of its customer business by developing new investment and financing products. RLB is now one of the main issuers on the Austrian money market. Management of interest rate risk is playing an increasingly important part in modern banking, and RLB and the Lower Austrian Raiffeisen banks are no exception. During the year under review we developed appropriate control systems and tailor-made products. In addition, RLB’s range of services was enhanced by the creation of the Active and Passive Management for Raiffeisen Banks section, which will help the Bank to continue to upgrade its risk management systems in coming years. Treasury & Investment Products Operations on capital markets 37
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The Lower Austrian Raiffeisen banks

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