Download - Volksbank AG

60% of Austrian
local authorities are
customers of
Kommunalkredit
Strong growth due to
the purchase of
public sector
receivables
Growth in Central
Europe with
strategic partner
Dexia
“It is not only for what we
do that we are held
responsible, but also for
what we do not do.“
MOLIÈRE
LOCAL GOVERNMENTS.
Local governments
BUSINESS APPROACH. Kommunalkredit Austria AG, Austria’s only specialist bank for the public
sector, significantly enhanced its presence on the market in 2001. Today, more than 60% of
Austrian local authorities are customers of Kommunalkredit. In order to promote the development of
small and medium-sized local infrastructure projects, the European Investment Bank (EIB) in Luxembourg
has granted a first global loan to Kommunalkredit, with an increase being promised for 2002.
Kommunalkredit’s business operations are also affected by the plans of the Republic of Austria and of
individual Federal Provinces to resign from their function as lenders in order to optimise their budgets
and/or to reduce their Maastricht deficit and debt ratio.
FINANCING. In 2001, Kommunalkredit among other things sold a number of loans of the Republic of
Austria and of the Environmental and Water Management Fund as well as several housing loans in
Carinthia and was able to achieve considerable premiums in these cases. The rise in domestic lendings
by more than EUR 1 bn or 49% (see table “Financing in the local government segment“)
mainly derives from this area. Further sales of loans were already announced for 2002.
Similar developments – budget optimisation to accelerate structural reform processes – are likely to
occur in the Central European candidate countries. Kommunalkredit has been able to gain a firm
foothold in this market and has extended its exposure in 2001. The market is serviced jointly with
its co-owner Dexia Crédit Local (via Dexia Kommunalkredit Holding) or by Kommunalkredit alone
paving the way for the operations of the holding company. Kommunalkredit achieves stable earnings
in Slovakia (stake in Prvá Komunalná Banka) and in the Czech Republic (office in Prague) and has been
successful with several acquisitions in Poland, Hungary, Slovenia and Croatia. Hence, in 2002 Kommunalkredit
will increase its presence in these countries. Switzerland became Kommunalkredit’s
second “core market“ with respect to financing transactions with the public sector. Approximately
15% of all new transactions are concluded in Austria’s western neighbouring country. This trend
continued at the beginning of 2002. All in all, international
loans increased by EUR 300 m or 72% (see table “Financing
in the local government segment“).
In 2001, Kommunalkredit also succeeded in extending its
range of products, focusing more strongly on structured
financing transactions. A major break-through was achieved
in relation to the placement of special financing models: The
specialist bank was able to establish itself successfully in the
US lease business, and in its function as lead manager was
responsible for the structuring of the actual loan component
(“B-Loan“) of the world-wide largest US lease transaction of
the year. In the next few years, Kommunalkredit will strive
for the market leadership in Austria.
Unless there is an external rating, all Kommunalkredit customers are rated internally, with the bank’s
rating scheme modelled on the one used by international rating agencies. The internal rating process
and credit-risk-related data are already being adjusted to the requirements of Basel II both in conceptional
and in structural terms. The banking book risks are controlled and limited in the context of the
monthly meetings of the Asset Liability Committee (ALCO). The ALCO meeting constitutes the central
element of the risk management process and serves as a forum for providing information about
Kommunalkredit’s risk situation, for making all important risk-relevant decisions and for fixing and
monitoring the risk limits.
THE BANK FOR CORPORATES
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