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07.10.2005

BA-CA becomes active in building society business in Romania

Bank Austria Creditanstalt (BA-CA) becomes active in the building society business in Romania. Through HVB Banca pentru Locuinte, a newly established building society, BA-CA has started to offer loans on favourable terms for housing construction and refurbishment. BA-CA holds a 35 per cent interest in the building society, and BA-CA's Romanian subsidiary HVB Bank Romania owns just under 10 per cent. Vereinsbank Victoria Bauspar AG of Germany holds 55 per cent of the shares in HVB Banca pentru Locuinte.

The products of HVB Banca pentru Locuinte are planned to be available at some 1,000 offices by the end of 2005. The sales partner is CreditCoop, a savings and credit cooperative with a network of 900 branches and sales outlets located primarily in rural areas. Moreover, the products will be offered through HVB Bank Romania's and Banca Tiriac's networks of more than 70 branches and by some 500 mobile sales agents. There are plans to increase the number of mobile sales agents to 1,000 in 2006.

The objective for 2005 is to sell 15,000 building society savings contracts. From 2006, the number of new building society savings accounts is to rise steadily to 125,000 per year. "Through HVB Banca pentru Locuinte we can help people with small or average personal incomes to finance a home of their own. There is considerable potential for such business especially in Romania," says Regina Prehofer, the BA-CA Managing Board member responsible for operations in Central and Eastern Europe.

During the deposit accumulation period, HVB Banca pentru Locuinte pays interest at the rate of 3 per cent, the lending rate is 6 per cent. The premium paid on building society savings contracts is 15 per cent, the maximum amount being EUR 150. This is more than half the average monthly gross personal income of EUR 230.

The legal framework for the activities of building societies in Romania was created in 2003. In other countries of Central and Eastern Europe (CEE), building societies have been operating for quite a long time now. Slovakia introduced the building society savings system in 1992. The first building societies in Hungary commenced operations in 1996, in Croatia in 1997. In Croatia and Slovenia, less than 10 per cent of the population currently hold building society savings accounts. The Czech Republic, where the system was introduced in 1993, has experienced the fastest progress in this area: today more than half of the Czech population hold building society savings accounts. Slovakia is in second place, with one in five inhabitants having concluded a building society savings contract.

At the beginning of September, BA-CA made an agreement with Banca Tiriac to merge HVB Bank Romania with Banca Tiriac. The new bank will have total assets of EUR 2.1 billion, 72 branches and over 720,000 customers, making it a strong number 4 in the Romanian banking market. With a market share of 7.5 per cent, the new bank will rank ahead of CEC, the Romanian savings bank (5.9 per cent, number 5).

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