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THE BANK FOR CORPORATES 22 Corporates SEGMENT REPORTING ACCORDING TO IAS. Services offered by Investkredit to optimise the capital structures of corporates Investments CORPORATES. In its capacity as a modern investment bank, Investkredit offers its corporate customers all the products which contribute to an optimisation of the capital structure. Depending on the strategic situation of a company and taking account of the new Basel capital adequacy requirements for banks (“Basel II“), the best suited financing instruments are selected. The consistent alignment of Investkredit’s fields of business with the requirements of corporates’ capital structure management is illustrated in the following diagram of a corporate balance sheet. Business fields are aligned with the corporate balance sheet pattern ASSETS LIABILITIES Intangible and Own funds tangible assets Financial Other equity-like investments liabilities Current assets Long-term outside funds Short-term outside funds Derivatives Treasury products Equity financing Mezzanine financing Loan financing Corporate bonds Major emphasis is still attached to long-term external financing intended to support investments. In this context, the main objective is to fix a maturity profile which is in line with the earnings and investment dynamics of the relevant corporate and to use derivative instruments (treasury products) to optimise interest rate and currency risks. Corporate bonds provide larger corporates with a solid base of bullet-maturity outside capital and at the same time offer the possibility of extending the group of debtors beyond the hitherto targeted banking community. Wherever classic external financing schemes reach their risk limits, subordinated capital instruments (mezzanine financing) come in useful. In certain situations connected with the sale or purchase of a corporate or with a more rapid technology-related growth, equity financing through pre-market risk capital instruments (venture capital and private equity) constitutes an ideal solution. Even though most financing products have an impact on the liabilities side of the corporate balance sheet, Investkredit also offers a selection of Investkredit investment funds for long-term investment themes appearing on the assets side of the balance sheet which is especially geared to corporates’ requirements. The following explanations contain more detailed information on the major fields of business within the core segment “Corporates“.
A euro financial market is emerging Corporate bonds are gaining significance The future of loan financing The bank for family businesses Basel II Investkredit rating CORPORATE LENDING. DEVELOPMENT OF THE FINANCIAL MARKET. Europe bears witness to the birth of a euro financial market, for which capital-market oriented rules are becoming increasingly important. This involves a re-orientation of the credit-based financing tradition. On the one hand, the classic loan – the core service of Investkredit Bank AG – plays a prominent role in corporate financing, on the other hand, financing instruments such as private equity, mezzanine financing and corporate bonds are gaining significance. In March 2001, Investkredit was the lead manager in charge of the issuance of corporate bonds of SPAR Österreichische Warenhandels AG launched with a volume of EUR 200 m. In addition, the bank was also represented in the issuing group for the corporate bond of BBAG – Österreichische Brau-Beteiligungs- Aktiengesellschaft. Investkredit received further mandates to prepare the launch of corporate bonds which will be issued in the current year, such as the Egger bond with a volume of EUR 100 m. These mandates have made the Bank for Corporates one of the leading banking partners for corporate bonds in Austria. With respect to this instrument, cross-departmental collaboration – particularly with the Capital Markets Team of the Treasury Department – is of vital importance. Especially in its capacity as specialist bank, Investkredit regards the further development of loan financing as a great task and challenge. According to the customers of Investkredit continuity and predictability are pivotal features of any external financing transaction which are realised by means of medium- and long-term loan agreements. Austrian medium-sized corporates, which in most cases are family businesses, show a stable demand for long-term bank loans. In view of their preference for independent decision-making structures – which are not influenced by the stock markets – loans are particularly well suited to meet their requirements. Another factor is the high level of trust they place in their financing banks and the lack of disclosure requirements to the wide-spread publicity. However, the ongoing orientation towards a capital market approach regarding the pricing of loans, is encouraging a more open disclosure practice of corporates vis-à-vis their banks. As regards the level of credit margins, an increasing differentiation according to corporates’ credit ratings and agreed collateralisation is being observed. Bank-internal and external ratings are gaining importance. Within the whole euro area, credit margins will converge along the risk profiles. In the run-up to the introduction of the new capital adequacy requirements for banks (Basel II), bringing the credit ratings of corporates in line with the ratings of large international rating agencies (e.g. Moody’s Investors Service and Standard & Poor’s) has already become a standard procedure followed by Investkredit. The discussion of ratings is a major component of the talks with our customers. The departure point for the rating process of Investkredit is the credit quality of the balance sheet, which is determined on the basis of balance sheet ratios. Qualitative factors such as inno- Corporates “A bank lives on the bad business it avoids.“ HERMANN JOSEF ABS THE BANK FOR CORPORATES 23
Page 1 and 2: THE BANK FOR CORPORATES. Annual Rep
Page 3 and 4: CONTENTS. Investkredit at a glance.
Page 5 and 6: INCOME DEVELOPMENT OF THE INVESTKRE
Page 7 and 8: LETTER FROM THE BOARD OF MANAGEMENT
Page 9 and 10: Letter from the Board of Management
Page 11 and 12: Board of Management. ALFRED REITER
Page 13 and 14: INVESTKREDIT SHARES. Investkredit s
Page 15 and 16: MANAGEMENT DISCUSSION. The members
Page 17 and 18: Management style allows for quick d
Page 19 and 20: Increase in business volume and ear
Page 21 and 22: Significantly improved capital rati
Page 23: Ensuring liquidity for corporate cu
Page 27 and 28: Deal structuring in the context of
Page 29 and 30: Competent consulting on aid-related
Page 31 and 32: Assistance in the acquisition and d
Page 33 and 34: Issuing focus on strengthening equi
Page 35 and 36: 60% of Austrian local authorities a
Page 37 and 38: Benefiting from advantages of Centr
Page 39 and 40: FINANCIAL STATEMENTS OF THE INVESTK
Page 41 and 42: STATEMENT OF CHANGES IN EQUITY. For
Page 43 and 44: Notes to the financial statements o
Page 45 and 46: (5) LOANS AND ADVANCES. Loans and a
Page 47 and 48: a fluctuation rate of 0% and assume
Page 49 and 50: (23) GENERAL ADMINISTRATIVE EXPENSE
Page 51 and 52: (32) RISK PROVISIONS. Risk provisio
Page 53 and 54: BWG- Investment Extent of investmen
Page 55 and 56: (36) PROPERTY AND EQUIPMENT. in EUR
Page 57 and 58: (42) PROVISIONS. in EUR m 31.12.200
Page 59 and 60: Expenses related to all subordinate
Page 61 and 62: Local go- Real Disclosure in EUR m
Page 63 and 64: (51) SUBORDINATED ASSETS. The asset
Page 65 and 66: (58) FAIR VALUE BALANCE SHEET. Fair
Page 67 and 68: (65) INFORMATION ON EMOLUMENTS OF A
Page 69 and 70: Equity capital. Equity held by outs
Page 71 and 72: REPORT OF THE SUPERVISORY BOARD. In
Page 73 and 74: Cost-income ratio. Index of the cos
Page 75 and 76:
Own funds to be taken into account.
Page 77 and 78:
INVESTOR RELATIONS. Margot Binder P
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