gss newsletter - unicredit · taking loans instead of issuing new shares or bonds. in this...

GSSNEWSLETTERISSUE 131March 2012

Issue 131, March 2012

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INhaLT

EdIToRIaL 5

JohN’S CoRNER 6

aUSTRIa 7Vienna Stock Exchange wins Eurex derivatives exchange as customer 7

BELaRUS 8National Bank of Belarus decreases refinancing rate 8Government to take measures to improve investment climate 8

BoSNIa aNd hERZEGoVINa 9Central Bank of Bosnia and Herzegovina: events which marked the year 2011 9

BULGaRIa 11Parliament adopts amendments to the Financial Supervision Commission Act 11Social Insurance Code to be changed by FSC 11Central Depository initiates discussions on corporate actions standards 12CEO of UniCredit Bulbank elected to AmCham BoD 12

CRoaTIa 13Parliament adopts a set of tax bills 13Government presents 2012 budget proposal 14Fitch Ratings on Croatia’s proposed budget, structural reforms 14

CZECh REPUBLIC 15New Management Board team for CEE Stock Exchange Group 15Interest rates unchanged by CNB 15CNB and Ministry of Finance revised GDP outlook for 2012 16

hUNGaRY 17Changes in intra-day HUF clearing 17


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KaZaKhSTaN 19Bank risks minimization law introduced in January 2012 19

KYRGYZSTaN 20State Development Bank to be established in Kyrgyzstan 20

PoLaNd 21KDPW_CCP – Novation principle to be implemented in Poland 21

RoMaNIa 23Bucharest Stock Exchange reports RON 17 million net profit 23National Bank of Romania lowers monetary policy rate to 5.5% 23Romania’s economy grew by 2.5% in the past 12 months 24New Romanian Prime Minister – Mihai Ra zvan Ungureanu 24International Monetary Fund and EC representatives meet new Cabinet 24

RUSSIa 25FFMS creates expert counsel to fight market manipulation 25Government to exempt international financial institutions from approval requirements 25MICEX-RTS to offer new features during post-trading auction 26MICEX-RTS stock exchange to launch pension savings index 26

SERBIa 27Telekom Srbija now 100% Serbian-owned 27

SLoVaK REPUBLIC 28Bratislava Stock Exchange trading in January 2012 28Slovakia’s public finance deficit decreased 29Moody’s downgraded Slovakia’s government bond rating 29

SLoVENIa 30Janez Janša elected new Prime Minister 30CEE Stock Exchange Group increases stake in Ljubljana Stock Exchange 30Debate on the future of the Slovenian capital market 31

UKRaINE 32President of Ukraine signed privatisation programme 32Market regulator improves programme of stock market development 33


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GEoRGIa 34National Bank of Georgia decreased refinancing rate 34

MoNGoLIa 34S&P revised Mongolia’s outlook from Stable to Positive 34

aZERBaIJaN 34Institutional boost to trade in government securities 34

YoUR CoNTaCTS 35

dISCLaIMER 38

IMPRINT 39


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EdIToRIaL

Dear Clients, Partners and Friends,

Right from the beginning, the year 2012 promised to be a challenging one. We are facing a financial market depression, the eurozone debt crisis and an overall downgrading of bank credit ratings.

In this turmoil I would like to share with you an optimistic outlook on Kazakhstan’s securities market. The Government has elaborated a long-term plan to support and develop the country’s securities market, one part of this plan being the so-called “People’s IPOs”.

Today Kazakhstan’s securities market desperately needs more financial instruments issued by financially stable compa-nies and more investors willing to buy them. Foreign investors, however, show little interest in the country, while domestic investors prefer to invest abroad. The reason behind this is a lack of financial instruments in the market, as local com-panies, at least most of them, prefer to attract capital by taking loans instead of issuing new shares or bonds. In this situation, IPOs can be a solution for making the securities market more active and attractive.

The idea behind “People’s IPOs” is the public sale of state-owned companies’ shares on the Kazakhstan stock exchange during a four-year period. This will happen between 2012 and 2015. At the first IPO, which will take place in the second half of 2012, it is planned to sell shares of three state owned companies: Kaztransoil (the national oil transition system operator), KEGOK (the national electric network operator) and Air Astana, the national air carrier. In 2013, the Govern ment is planning to sell shares of Kaztransgas (national gas transition system operator), Kazmortransflot (national merchant fleet operator) and Samruk-Energo (national electric power assets management company). In 2014–2015 shares of the national rail carrier (Kazakhstantemirzholu), the national atomic energy operator, Kazatomprom, and of the national oil and gas pro-ducer, Kazmunaygas, will be sold on the Kazakhstan stock exchange.

Access to People’s IPOs is limited to individuals who are citizens of Kazakhstan and to Kazakh pension funds. On the secondary market, however, there will be no limitations for selling and purchasing shares and foreign investors will be particularly welcome to trade on the secondary market.

People’s IPOs will allow injecting into the market new shares of financially stable companies supported by the Govern-ment. This will attract new - and especially foreign – inves-tors to the market. Involvement of local investors including pension funds in IPOs and the ability for foreign investors to trade with these shares will allow making the secondary market more active.

In 2012 alone, the Government is expecting to attract USD 300–500 million by selling shares of state owned com-panies.

With best regards,

Vladimir Vassilyev Head of GSS Kazakhstan

Vladimir Vassilyev Head of GSS Kazakhstan


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JohN’S CoRNER

John Gubert on the conflict between completeness and communication

We are just completing a review of our risk policies in UniCredit GSS. The challenge we faced, as indeed I have faced in similar exercises in my previous organisation or as Chairman of the Euroclear Risk Committee a few years back, is the conflict between a need for completeness and a need for communication.

Completeness drives one into a document that could rival the Dodd Frank Act in its length. Completeness requires detail. Although principles of risk management are usually generic across borders, details are not. In the detail, we come across process divergences from day counts, valuation rules and record dates through to different treatment of fiduciary risk, diverse approaches to the bare custodian’s duty of care, alternative interpretation of the role of a nominee or even the definition of the rights of legal and beneficial owners. And all that is before one tries to cover the challenges of anti-money-laundering policies, European law versus local regulation, issues of extraterritoriality in the law of the country of domicile of the investor or the need to understand the legal framework in the jurisdiction of the country under whose laws contracts may be governed. Who said custody was simple?

When contemplating such issues, I am reminded of the lawyer who seriously suggested that any custodian signing up to doing business in today’s environment needed a legal agreement that was not only monstrous in its detail but had to be live to allow for changes in law, especially from the G20 driven initiatives in flow at the moment. This recommendation had a happy side, for indeed it ensured a sizeable annuity for the lawyer in question as well as an initial fee that would have absorbed any likely annual profit from a large custody contract. The challenge, facing the lawyer and indeed any risk manager, is the fluid state of the legal and regulatory environment. Regulators have still to create a workable solution for much of Dodd Frank or the European Mar-kets Infrastructure Regulations. The target date for the migration of a substantial number of OTC derivatives to trading platforms and central clearing has definitely slipped.

More worrying is the lack of clarity on the complex rules which will accompany such initiatives. There is confusion around short selling rules. The mooted financial transaction tax is likely to be an administrative nightmare even if it is adopted in only a few locations. And US tax rules, where establishing fiscal residency has become an art rather than a science, appear to be appreciated by some European officials enticed by the revenue potential of a wider tax net.

All of this implies that the risk manual should be even longer and more complicated than Dodd Frank; and, let us be honest, few have managed to even read that! That brings me back to the core issue. Should one focus on completeness when preparing an organisational risk manual or on its effectiveness as a com-munication and behavioural tool? The reality is that neither option is mutually exclusive. But the measurement of the effectiveness of the policy is its ability to create a sound risk management ethos and ethical conduct across an organisation.

A short, sharp focused tool is the best method I have experi-enced to achieve that. The key is to identify the big picture risk features of the business. Let them be understood by all key executives and ensure that those executives are accountable for compliance, both in respect of the letter and the intent of the rules in their business area. The centre creates the policy and the business managers their rule books and work flows.

We have decided we need to agree on a series of key ques-tions and statements and that each local business head has to formally confirm their business area‘s compliance. Where they have an issue with doing this, then a senior risk manager has to review their processes in the impacted area more closely. It may be that a control is manual rather than automated (and scale of business could justify that). It may be an issue of local rules creating a two- track approach depending on whether the client is domestic or cross border. Or it may be one of those special cases that occur (ever more frequently) from time to time.

But fundamental to risk management is a team that does not look to tick boxes, does not get lost in the minutiae or delegate responsibility for compliance to a risk department. It is a team of professionals who understand the right way to do business and meet the highest possible ethical and business standards (as defined - but only in part - by law and regulation) in fulfilling their critical duty of care and compliance to their customers.

John GubertChairman Global Securities Services Executive Committee UniCredit


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Written and edited by: Thomas Rosmanitz Head of Relationship Management Austria Global Securities Services, AustriaTel. +43-50505-58515 · [email protected]

Austria

Market Capitalisation HRK 397.2 bnYTD Dev. of Market Capitalisation 2.307Number of SE Transactions p.m. 96000YTD Dev. of SE Transactions 7.107SE Turnover (Zagreb SE) HRK 5977.5 mnMonthly Index Performance (Crobex/ZSE) 0.017GDP per Capita (2012e in EUR) 35,520GDP Real 2012e (Change against prev. year in %) 2.33-Month Money Market Rate (current in %) 0.92Inflation in 2012e (yearly average in %) 2.5.../EUR -Upcoming Holidays none

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Actual 38 Day moving average 200 Day moving average

2/27/2012 5:16 PM

Market Capitalisation EUR 69.8bn

YTD Dev. of Market Capitalisation 9.0%

Number of SE Transactions p.m. n.a.

YTD Dev. of SE Transactions n.a.

SE Turnover (Vienna SE) EUR 1.9bn

Monthly Index Performance (ATX/VSE) 9.8%

GDP per Capita (2012 in EUR) 35,520

GDP Real 2012 (Change against prev. year in %) 2.3

3-Month Money Market Rate (current in %) 0.92

Inflation in 2012 (HVPI yearly average in %) 2.5

Upcoming Holidays none

Source: Thomson Datastream

Source: UniCredit, National Statistics

ATX

AUSTRIA

Vienna Stock Exchange wins Eurex derivatives exchange as customerEurex Group, one of the largest derivatives markets world-wide, and the Vienna Stock Exchange have entered into a license agreement. Eurex Exchange acquired the license to issue financial products on the RDX, the Russian Depositary Index. The RDX tracks the price trends of the most liquid depositary receipts of Russian stocks listed on the London Stock Exchange and is one of the most widely recognized indices for Russia worldwide. At present, more than 130 international financial investors have issued financial products based on this index.

The Vienna Stock Exchange has been active as a regional expert for indices for Eastern Europe and Russia since 1996. At present, the Vienna Stock Exchange publishes 70 indices of which 53 have a reference to companies in CEE and CIS. The indices are highly appreciated by international investors due to their quality and preciseness. Most products have been issued on the indices RDX and CECE.

Source: Wiener Börse

Impact on investors For information purposes only.


8

Market Capitalisation BYR 8.4bn

YTD Dev. of Market Capitalisation n.a.

Number of SE Transactions p.m. (BCSE) 2,694

YTD Dev. of SE Transactions 57.9%

SE Turnover (BCSE) BYR 8,317bn

Monthly Index Performance (BCSE) -1.4%

GDP per Capita (2012 in EUR) 31


3-Month Money Market Rate (current in %) n.a.

Inflation in 2012 (yearly average in %) 1.9

BYR/EUR 0.00009

Upcoming Holidays 8 March


BELARUS

National Bank of Belarus decreases refinancing rateStarting from February 15, 2012 the refinancing rate of Belarus has been reduced by 2% to 43%. According to the National Bank of Belarus the rate decreasing, which will allow to reduce the credit load on borrowers,had become possible due to posi-tive trends such as the decrease of inflation to less than 2% per month and a stabilization of the Belorussian Ruble rate owing to the liberalization of the foreign currency supply on the local market.

If the current positive trends continue, the National Bank plans a further gradual reduction of the refinancing rate and common interest rates.

Impact on investors Turn of the negative trend of the Belorussian economic development, recognition of positive signs related to infla-tion slowing down and stabilisation of currency rates.

Government to take measures to improve investment climateThe Belarus Government has approved measures to improve the investment climate by 2015; the strategy consisting of 31 points include the following:

■■ Attracting foreign investment to high-technology areas

■■ Defining for each area of the economy the strategically important investment structure

■■ Reforming the government sector, ownership structure, real estate and land acquisition

■■ Establishment of joint and foreign companies for green field and brown field investment projects as the priority form of direct foreign investment in Belarus

■■ Plans for privatisation of state companies for no less than USD 2.5 billion per year

■■ Development of investment agencies including franchising and consulting services

■■ Development of accounting standards in accordance with international best practice

■■ Additional analysis of the legislation in relation to the pro-tection of investors’ rights.

Impact on investors Potential development of investments possibilities.

Written and edited by: Evgenia Klimova Head of Product and Business Development Global Securities Services, RussiaTel. +7 495 232-5298 · [email protected]


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Source: Bloomberg

BOSNIA AND HERZEGOVINA


Bosnia_Herzegovina

Market Capitalisation HRK 397.2 bnYTD Dev. of Market Capitalisation 2.307Number of SE Transactions p.m. 96000YTD Dev. of SE Transactions 7.107SE Turnover (Zagreb SE) HRK 5977.5 mnMonthly Index Performance (Crobex/ZSE) 0.017GDP per Capita (2012e in EUR) 3,577GDP Real 2012e (Change against prev. year in %) 2.53-Month Money Market Rate (current in %) -Inflation in 2012e (yearly average in %) 2.6BAM/EUR 1.96Upcoming Holidays none

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2/27/2012 5:16 PM

BIFX

Central Bank of Bosnia and Herzegovina: events which marked the year 2011When looking at the events that marked the year 2011 we can say that for the Central Bank of Bosnia and Herzegovina (CBBH) they have been numerous and significant, and while crossing from one year to another, we take the opportunity to recapitulate the most important ones.

The CBBH started its activities in 2011 by the Governing Board’s decision on the decrease of the reserve requirement ratio on deposits which are included in the calculation of required reserve and whose maturity is up to one year, from 14% to 10%. The reserve requirement rate on deposits for a period longer than one year remains at 7%. The new ratio took effect on February 1, 2011. At the beginning of the year we also remembered the reform of the payment system in BH, as January 5, 2011 marked the 10th anniversary of the reform of the payment system, which was conducted in record time. Through its Central Office, Main Units and branches, the CBBH put into circulation an additional quantity of coins in denominations of 10 fenings and 5 fenings, minted in 2011. The coins have maintained their design; only the year of minting the coins was added to the design. Also, CBBH started producing new BAM banknotes in BAM, 10, BAM 20, BAM 50 and BAM 100 denominations once the required procedures were completed and the contract signed. The design of the new banknotes will not be altered, but changes have been proposed with regard to the improvement of paper quality and security features. The banknotes will be put into circulation during the second quarter of 2012.

The year 2011 was marked by visits from important del-egations to the Central Bank of Bosnia and Herzegovina, the most significant being visits by two governors whose countries are recording exceptional economic results – the Governor of the Central Bank of Turkey, Durmus Yilmaz and the Governor of the People’s Bank of China Zhou Xiaochuan, and by the governors of the central banks from neighboring countries, the National Bank of Serbia (NBS) Dejan Šoškic and the Central Bank of Montenegro (CBM) Radoje Žugic .

Two meetings of the Standing Committee for Financial Stabil-ity were held in August, which endorsed recommendations on potential measures to facilitate the position of debtors with loans indexed in Swiss Francs. At that time, credit commit-ments of debtors with loans indexed in Swiss Francs rose due to an increase in its value.

Market Capitalisation (Sarajevo SE) BAM 4.5bn


Number of SE Transactions p.m. 855

YTD Dev. of SE Transactions -28.7%

SE Turnover (SASE) BAM 4.0mn

Monthly Index Performance (SASX-10/SASE) 0.8%

Market Capitalisation (Banja Luka SE) BAM 3.8bn

YTD Dev. of Market Capitalisation -1.5%

Number of SE Transactions p.m. 1,095


SE Turnover (BLSE) BAM 3.7mn

Monthly Index Performance (BIRS/BLSE) -3.5%





BAM/EUR 1.96



10 BOSNIA AND HERZEGOVINA

One of the most important events was the completion of the 18-month programme of technical cooperation between the European Central Bank (ECB) and the CBBH on September 30. The programme was launched on April 1, 2010, was financed by the European Union (EU) through the Instru-ment of Pre-Accession Assistance (IPA) with EUR 1 million and was implemented by the ECB in partnership with seven Eurosystem national central banks. The completion of the programme is an important step forward in the CBBH’s efforts to join the European System of Central Banks before Bosnia and Herzegovina accedes to the EU.

Certainly most important for the work of the CBBH has been the decision of the BH Presidency to support the further implementation of the BH monetary policy model. According to the statement of the BH Presidency, during the previous period of implementation this model has ensured macroeco-nomic stability, convertibility of the local currency, relatively low inflation and economic growth.

Two significant projects were begun this year. Firstly, the Central Registry of Credits of business entities and individuals in BH has been upgraded. As a consequence, data on credit indebtedness of individuals and legal entities in the Regis-try of Credits will be updated on a daily basis, rather than monthly, which has been the practice so far. And secondly, new statistics of interest rates, applying the methodology of the eurozone, have been introduced in 2011 and will be implemented from January 2012 onwards in cooperation with commercial banks. As a result, interest rates will be directly comparable with rates in the eurozone.

And finally, this year saw the beginning of the construction works for the building of the Main Bank of Republika Srpska of the CBBH (MBRS CBBH) in Banja Luka. The new build-ing of the MBRS will provide the facilities required for normal functioning.

Source: Central Bank of Bosnia and Herzegovina


Written and edited by: Amra Telac evic Relationship Manager Global Securities Services, Bosnia and Herzegovina Tel. +387 33 491 816 · [email protected]


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Market Capitalisation BGN 12.8bn




SE Turnover (Bulgarian Stock Exchange) BGN 62.5mn

Monthly Index Performance (SOFIX) 0.2%





EUR/BGN 1.96


BULGARIA



Bulgaria

Market Capitalisation HRK 397.2 bnYTD Dev. of Market Capitalisation 2.307Number of SE Transactions p.m. 96000YTD Dev. of SE Transactions 7.107SE Turnover (Zagreb SE) HRK 5977.5 mnMonthly Index Performance (Crobex/ZSE) 0.017GDP per Capita (2012e in EUR) 5,434GDP Real 2012e (Change against prev. year in %) 3.53-Month Money Market Rate (current in %) 1.70Inflation in 2012e (yearly average in %) 3.3EUR/BGN 1.96Upcoming Holidays none

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2/27/2012 5:16 PM

SOFIX

Parliament adopts amendments to the Financial Supervision Commission ActThe National Assembly has adopted at first reading amend-ments to the Financial Supervision Commission Act, which introduces the obligation for the commission to cooperate and provide information to their European counterparts, to the European Systemic Risk Board and to the European Com-mission. The bill stipulates the obligation of the commission to disclose to the European financial supervisory authorities and to the European Systemic Risk Board information which represent professional secrets, when this is necessary for the implementation of their functions.

Impact on investors Alignment of the Regulator to EU institutions.

Social Insurance Code to be changed by FSCThe Financial Supervision Commission (FSC) proposed changes to the Social Insurance Code (SIC), which were adopted by the FSC at second reading. The main objective of the changes is to improve the regulation of pension funds’ investments as well as the structure and size of fees and charges paid by insured persons.

This has become necessary because the return on invest-ments and the fees paid formed the major part of the accu-mulation of funds in the individual accounts of insured per-sons. The proposed changes shall also regulate how pension companies and their intermediaries are to be set up.

In a next step, the adoption of the changes is to be reviewed by the Council of Ministers and subsequently submitted to Parliament.

Impact on investors Changes to the SIC provide greater consistency with other regulations governing the financial sector and its supervi-sion.


12 BULGARIA

Central Depository initiates discussions on corporate actions standardsThe Central Depository initiated discussions on Market Standards for Corporate Actions Processing as developed at EU level by the Corporate Actions Joint Working Group, which covers the main participants in the process – issu-ers, market infrastructures and intermediaries. The initiative was supported by the Association of Banks in Bulgaria. The Central Depository invited for participation in the discus-sions the Bulgarian Stock Exchange and other representative market associations, such as the Association of Investment Intermediaries (BALIP), the Bulgarian Association of Asset Management Companies (BAUD), the Bulgarian Investor Relations Society (BIRS) and the Association of Bulgarian Investor Relations Directors (ABIRD).

UniCredit Bulbank actively takes part in the discussions and contributes significantly with notes and proposals on the review of the standards. The outcome of the discussions is planned to be a detailed gap analysis with proposed follow-up steps.

Impact on investors Spreading awareness of the corporate actions market standards among all market participants.

CEO of UniCredit Bulbank elected to AmCham BoDThe Chairman of the Management Board and CEO of Uni-Credit Bulbank, Mr. Levon Hampartzoumian, was elected member of the Board of Directors at the American Chamber of Commerce in Bulgaria (AmCham) during the General Meet-ing held in February 2012.

In his address before the General Meeting Mr. Hampart-zoumian stated that his solid background in the private busi-ness, and particularly in the banking sector, will be helpful in supporting AmCham projects and initiatives in an effective way.

In 2011 Mr. Hampartzoumian was elected for a second man-date as Chairman of the Association of Banks in Bulgaria. He is also Deputy-Chairman of the Confederation of Employers and Industrialists in Bulgaria.

Impact on investors Strengthening the lobbying power of UniCredit Bulbank in the Bulgarian market.

Written and edited by: Veselin Stefanov Relationship Manager Global Securities Services, BulgariaTel. +359 2 923 2818 · [email protected]


13

CROATIA

Market Capitalisation HRK 183.2bn




SE Turnover (Zagreb SE) HRK 326.3mn

Monthly Index Performance (Crobex/ZSE) -0.7%





EUR/HRK 7.58




Croatia

Market Capitalisation HRK 397.2 bnYTD Dev. of Market Capitalisation 2.307Number of SE Transactions p.m. 96000YTD Dev. of SE Transactions 7.107SE Turnover (Zagreb SE) HRK 5977.5 mnMonthly Index Performance (Crobex/ZSE) 0.017GDP per Capita (2012e in EUR) 11,160GDP Real 2012e (Change against prev. year in %) 2.03-Month Money Market Rate (current in %) 5.3Inflation in 2012e (yearly average in %) 2.8EUR/HRK 7.58Upcoming Holidays none

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2/27/2012 5:16 PM

CROBEX

Parliament adopts a set of tax billsCroatia’s Parliament adopted a set of tax bills raising the general value added tax rate from 23% to 25%, non-taxable salaries from HRK 1,800 to 2,200 and non-taxable pensions from HRK 3,200 to 3,400, reducing the health care contribu-tion from 15% to 13%, introducing a 12% dividend tax rate and tax benefits on re-invested profit.

As of March 1, 2012, foreign legal persons, domestic and foreign physical persons will have to pay a 12% tax on divi-dends and shares in profit. The finance minister said special provisions would regulate tax benefits for private persons as small shareholders, so that they would not have to pay tax on dividends of up to HRK 12,000.

According to amendments to the Law on Profit Tax, all profits re-invested into stock capital will be exempt from profit tax as of 2013.

According to the amendments, the general VAT rate will go up to 25% as of March 1, 2012. In order to cushion its negative effects, the Government is imposing a 10% VAT rate on edible oils and fats, children’s food and cereal-based processed food for babies and small children, on water, except in bottles and other packaging, and on white sugar. As of next year, the 10% VAT rate will also apply to food, soft drinks, wine and beer in hospitality establishments.

Also as of 2013, the annual revenue threshold for businesses which have to pay VAT will be increased from HRK 85,000 to 230,000.

As of March 1, amendments to the Income Tax Act will increase monthly tax deductions for employees by HRK 400 to 2,200 and for pensioners by HRK 200 to 3,400. The amendments also envisage changes to taxation classes but the tax rates (12%, 25% and 40%) remain the same. This would result in higher incomes for about 800,000 employees and about 200,000 pensioners. The Government also sent to Parliament amendments to the Contributions Act which envisage a decrease from 15% to 13% of the general health care contribution as of May 1, 2012.

Along with the draft budget discussion, the Government would also put forward bills aimed at reducing non-tax fees, annuity rates, water supply and forest taxes.

Impact on investors A 12% tax on dividends for foreign investors will be intro-duced as of March 1, 2012.


14 CROATIA

Government presents 2012 budget proposalThe Croatian Government introduced a 2012 budget proposal, projecting expenditures at HRK 118.84 billion (HRK 3.4 billion less than last year) and revenues at HRK 108.95 billion (1.4% more than in 2011).

The PM said budget savings would actually amount to HRK 4 billion, considering the fact that the Government was planning to withdraw HRK 600 million more from European Union funds this year, explaining that those were non-repay-able funds that would not affect the budget deficit.

The budget deficit is planned at HRK 9.9 billion, or 2.8% of GDP. With 0.2% deficits of extra-budgetary users and local government units added to the amount, the projected general government deficit is likely to account for 3.3% of GDP. The Government projected this year’s economic growth at 0.8% and inflation at 2.4%.

The Government plans to privatise the Croatia Osiguranje insurer and Hrvatska Postanska Banka.


Fitch Ratings on Croatia’s proposed budget, structural reforms The Fitch Ratings agency says that the Croatian Govern-ment’s proposed reduction of budget expenditure for this year is encouraging, but that the planned cuts are less than previously projected, adding that it will conclude its review of the Croatian rating by the end of the first quarter.

The agency said in a statement that the new Croatian Govern-ment’s proposed fiscal and structural reforms presented a mixed picture so far.

Fitch sees some signs of early progress on structural reform, for example in raising the VAT rate (to 25% from 23%) from March 1, 2012 and cutting social security contributions to ease the tax burden on businesses and foreign investors. This could encourage foreign direct investments and diversify Croatia’s export base.

The agency warns that the Croatian economy suffers from “significant supply-side bottlenecks,” adding that without addressing them “potential GDP growth will remain weak and this will pose a threat to the country’s fiscal adjustment and its debt dynamics.”

“The government needs to address significant structural issues, including its rigid labour market, where its plans remain unclear,” the statement said.

The current rating for Croatia is BBB- with a negative outlook.


Written and edited by: Snjez ana Brunc ic Relationship Manager Global Securities Services, CroatiaTel. +385 1 630 5400 · [email protected]


15

Market Capitalisation CZK 1.1trn


Number of SE Transactions p.m. n.a.

YTD Dev. of SE Transactions n.a.

SE Turnover (Prague SE) CZK 66.2bn

Monthly Index Performance (PX) 6.6%





EUR/CZK 24.99



CZECH REPUBLIC


Czech

Market Capitalisation HRK 397.2 bnYTD Dev. of Market Capitalisation 2.307Number of SE Transactions p.m. 96000YTD Dev. of SE Transactions 7.107SE Turnover (Zagreb SE) HRK 5977.5 mnMonthly Index Performance (Crobex/ZSE) 0.017GDP per Capita (2012e in EUR) 15,901GDP Real 2012e (Change against prev. year in %) 3.33-Month Money Market Rate (current in %) 1.10Inflation in 2012e (yearly average in %) 2.4EUR/CZK 24.99Upcoming Holidays none

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2/27/2012 5:16 PM

PX-50

New Management Board team for CEE Stock Exchange GroupThe exchange holding company, CEE Stock Exchange Group AG (CEESEG AG), which consists of the exchanges of Budapest, Ljubljana, Prague and Vienna, will be man-aged as of March 1, 2012 jointly by Michael Buhl and Petr Koblic. Petr Koblic, who is Chairman of the Board of the Prague Stock Exchange, is joining the Management Board of CEESEG AG as a new member and succeeds Heinrich Schaller, who is leaving the management boards of the Vienna Stock Exchange and of the CEE Stock Exchange Group. Michael Buhl, Member of the Management Board of Wiener Börse AG, has been on the Board of CEESEG AG since January 2010, when the holding company was founded.

Petr Koblic has been Chairman of the Board of the Prague Stock Exchange since 2004. Additionally, Petr Koblic has been serving on the Board of Directors of the Budapest Stock Exchange since 2011, as Chairman of the Central Securities Depository of the Czech Republic since it was established and as Chairman of the Management Board of the Power Exchange Central Europe since 2007. Before joining Prague Stock Exchange he worked in investment banking in vari-ous managerial positions in Patria Finance, CAIB Securities Prague and HVB Bank Czech Republic.

Source: Prague Stock Exchange

Impact on investors This personal change will increase the lobbying power of the Prague Stock Exchange and expresses the credibility of PSE.

Interest rates unchanged by CNBThe Board of the Czech National Bank (CNB) decided at its meeting in February to keep interest rates unchanged. The two-week repo rate was maintained at 0.75%, the discount rate at 0.25% and the Lombard rate at 1.75%.

A definition of the above indicators, their history, as well as the CNB Board minutes are available on the Bank’s website (Section Monetary Policy).

Source: CNB

Impact on investors CNB as the responsible authority for the country’s mon-etary policy kept the rates unchanged to maintain stability of the Czech economy.


16 CZECH REPUBLIC

CNB and Ministry of Finance revised GDP outlook for 2012The Czech National Bank (CNB) has revised its estimate of the economic development in the Czech Republic for this and the next year, expecting economic stagnation in 2012 and a 1.9 % GDP growth in 2013.

CNB’s revision follows the move of the Ministry of Finance, which also revised downward its estimate of economic devel-opment for this year. The ministry cut its economic growth outlook for 2012 to 0.2% from 1% expected in October. In 2013, the Czech economy should grow by 1.6%, according to the ministry’s forecast.

Source: CNB, Ministry of Finance


Written and edited by: Zbynek Oborny Relationship Manager Global Securities Services, Czech RepublicTel. +420 955 960 779 · [email protected]


17

Market Capitalisation HUF 15,964.9bn




SE Turnover (Budapest SE) HUF 581,157.0mn

Monthly Index Performance (BUX) 10.2%





EUR/HUF 291.41

Upcoming Holidays 15–16 March

Extra working day 24 March


HUNGARY


Hungary

Market Capitalisation HRK 397.2 bnYTD Dev. of Market Capitalisation 2.307Number of SE Transactions p.m. 96000YTD Dev. of SE Transactions 7.107SE Turnover (Zagreb SE) HRK 5977.5 mnMonthly Index Performance (Crobex/ZSE) 0.017GDP per Capita (2012e in EUR) 11,140GDP Real 2012e (Change against prev. year in %) 3.43-Month Money Market Rate (current in %) 6.00Inflation in 2012e (yearly average in %) 3.4EUR/HUF 291.41Upcoming Holidays none

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2/27/2012 5:16 PM

BUX

Changes in intra-day HUF clearingBack in October 2009 key market players in cash manage-ment services and the National Bank of Hungary (NBH) made a decision to implement intra-day clearing in the Interbank Clearing System, GIRO. In 2005 a working group started to survey intra-day clearing client requirements. Following posi-tive feedback from clients and banks several scenarios were studied to understand the impact of intra-day clearing on the liquidity management of banks. Simulations made it clear that for the vast majority of clearing members the introduction of intra-day clearing would not represent a difficulty.

The batch-based intra-day clearing (InetGiro2, IG2) would operate in parallel to the Real Time Gross Settlement system (VIBER) operated by the National Bank of Hungary. GIRO Zrt. (the operator of the GIRO system), the Government Debt Management Agency, the Hungarian SEPA Association, the NBH and 52 direct members of the Interbank Clearing System take part in the creation of intraday clearing in Hun-gary. Widespread cooperation is necessary as no payment service can be completed without the joint effort of all pay-ment service providers in the market.

The decree of the NBH on cash management taking effect on July 1, 2012 requires cash management service provid-ers to actively use intra-day clearing services ensuring that transfer orders are effected and funds are made available for the beneficiary within 4 hours of receiving the order by the remitting bank. In the interest of compliance with the requirements of the decree the Payment System Council established a nationwide project in July 2010 in order to monitor developments and the preparation at a national level.

The “4-hour execution rule” set by the order of the NBH requires financial service providers (banks, saving cooper-atives, credit cooperatives) to make sure that from 1 July 2012 all electronically initiated domestic HUF transfers of their clients which are submitted for same-day clearing and within the applicable cut-off times are received by the finan-cial service provider of the beneficiary within 4 hours of the initiation of the payment order. Another provision of the order guarantees that the amount thus transferred is available to the beneficiary without delay. The maximum 4-hour execution deadline is extended by 2 more hours for payment service providers with indirect link to the domestic payment system. These are typically some savings cooperatives and special credit institutions.


18 HUNGARY

Electronic order means all payment instructions that are submitted by the ordering party electronically to its bank, including the use of electronic banking systems, swift and phone; instructions sent by fax are not considered electronic orders. The “4-hour rule” does not apply to transfers submit-ted on paper.

Domestic HUF transfers not requiring foreign exchange con-version are subject to the “4-hour execution rule” where the financial service providers of both the ordering party and the beneficiary operate in Hungary. Order types to be manda-torily covered are single transfer, multiple transfer and elec-tronically submitted regular transfer / standing order. On the other hand, collections (multiple direct debit, collection based authorization letter, collection of bill of exchange, collection of check, deferred payment collection, documentary collection), transfer orders by authorities and any type of paper based instructions will be excluded. Financial service providers may, however, decide at their discretion if they extend the possibil-ity of intra-day clearing to other payment orders or even to ones that are submitted in a paper based format. In a later phase decision will be made as to when intra-day clearing can be introduced for collections and payments that are not in the scope of the current project. The Central Bank expects this will most probably happen until 2015.

All transactions that are not subject to the “4-hour execution rule” will continue to be cleared in the prevailing night-time processing. For instructions covered by the “4-hour rule” several clearing phases shall be completed each day. Incom-ing items in the first batch are expected to be credited to the beneficiary at around 10:00 a.m. CET, items received in the last batch shall arrive around 6:00 p.m. CET. Should the deadline for the last batch be missed by the remitter, the payment order will be completed in the first batch the next working day, so the account of the beneficiary will be credited at around 10:00 a.m. CET in the first cycle.

The IG2 system will provide for 5 clearing cycles a day, start-ing from 8:30 a.m. CET until 4:30 p.m. CET. The Central Bank expects, however, that in the long run the number of clearing cycles will be increased and the system will get closer to a real time settlement.

Payment service providers may define their cut-off times applicable to IG2 transactions in their own discretion taking into account GIRO’s deadlines as well as the processing time necessary for them to complete the payment orders.

Depending on the agreement with the account holder the payment service provider will queue items with insufficient cover or, if not queued, will reject it on the next business day the latest. If the queuing period of maximum 35 calendar days is over without result, the payment service provider will reject the payment order with insufficient cover.

Similar to current practice, clients can continue to submit payment instructions in IG2 by stating a future debit date. The 4-hour execution time starts from the time when the amount required to make the payment is debited to the account of the remitter or at least the cover is blocked. This point in time may vary by payment service provider. If the debit value date defined by the payer is not a business day, the next business day is to be considered as the debit day.

The processing method of payments with intra-day clear-ing will be FIFO, i.e. the payment that is initiated earliest will be executed first, however, the payment service provider of the remitter can deviate from this rules based on a bilateral agreement with its client. At GIRO Zrt., i.e. at the operating level of the clearing system, there is no exception to this rule.

The payment service provider community came to the mutual agreement that bank-to-bank payments initiated by clients via MT202 swift messages will not be channelled to the IG2 system. IG2 will be a system mainly for small value commer-cial payments, however, banks may still decide to channel certain payments of this type to the real time VIBER system. The ground for this decision may be that the client requires all instructions to be processed on a real time basis even though at a higher cost, or the bank sets a limit above which all high value payments are automatically routed to VIBER.

Currently the systems of payment service providers, includ-ing UniCredit Bank Hungary and the system of GIRO Zrt. are being developed and tested. UniCredit Bank Hungary will keep its clients informed about the status of the development as well as about all major milestones of the project.

At present, there are 22 member states of the European Union that have small value intra-day clearing systems and the Pan-European bulk clearing system (EBA STEP2) also offers such service. Hungary will join this group of countries in July this year by switching from next-day processing to the more favourable intra-day system.

Impact on investors By introducing IG2 Hungarian banks will be able to offer intra-day, batch-based HUF clearing for small value commercial payments. This will require payment service providers to align liquidity management procedures and at the same time may result in system development needs, change in invoicing and accounting processes or trans-actional behaviour of clients.

Written and edited by: Lívia Mészáros Senior Relationship Manager Global Securities Services, HungaryTel. +36 1 301 1921 · [email protected]


19

Market Capitalisation KZT 12,837.3bn




SE Turnover (KASE) KZT 15.1bn

Monthly Index Performance (KASE) 1,228.7





EUR/KZT 197.94

Upcoming Holidays 8, 21–23 March

Source: Bloomberg

KAZAKHSTAN


Kazakhstan

Market Capitalisation HRK 397.2 bnYTD Dev. of Market Capitalisation 2.307Number of SE Transactions p.m. 96000YTD Dev. of SE Transactions 7.107SE Turnover (Zagreb SE) HRK 5977.5 mnMonthly Index Performance (Crobex/ZSE) 0.017GDP per Capita (2012e in EUR) 7,608GDP Real 2012e (Change against prev. year in %) 5.53-Month Money Market Rate (current in %) 2.05Inflation in 2012e (yearly average in %) 7.1EUR/KZT 197.94Upcoming Holidays none

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2/27/2012 5:16 PM

KASE

Bank risks minimization law introduced in January 2012In December, the Government passed the law “On introduc-ing amendments and addenda to some legislative acts of the Republic of Kazakhstan on the regulation of banking activities and financial institutions in terms of risk minimization”.

The alterations and additions were made to enhance Kazakh-stan’s legal framework for banks and financial institutions and the financial market to minimize risks and increase transpar-ency of banks and banking conglomerates in their opera-tions and investments. It furthermore aims at the creation of effective and efficient systems to protect investors’ rights and interests in the securities market, as it foresees to improve the disclosure of information to investors on securities issuers and financial market licensees. It finally improve corporate gov-ernance in financial institutions and joint-stock companies.

Impact on investors The changes to the legislative framework aim at decreas-ing investment risks and provide stability of financial institu-tions and the financial system in Kazakhstan.

Written and edited by: Saida Abdraimova Relationship Manager Global Securities Services, KazakhstanTel. +7 727 258 30 15 · [email protected]


20

KYRGYZSTAN

Market Capitalisation 8,767.8mn

YTD Dev. of Market Capitalisation n.a.



SE Turnover (KSE) KGS 15.2mln

Monthly Index Performance (KSE) 251.6

GDP per Capita (2012 in EUR) 744.28

GDP Real 2012 (Change against prev. year in %) n.a.



EUR/KGS 61.43



State Development Bank to be established in KyrgyzstanThe Kyrgyz government is planning to establish a State Devel-opment Bank, which will fund major national projects in the priority sectors of the country’s economy. The Bank will be established as a joint stock company, where the state will own 100% of its shares. In March 2012 the draft law on the State Development Bank’s establishment will be presented for consideration to the Parliament.

Impact on investors The establishment of the State Development Bank will contribute to the economic development in Kyrgyzstan.



21

Market Capitalisation PLN 482.5bn


Number of SE Transactions p.m. 1,094,136

YTD Dev. of SE Transactions 0%

SE Turnover (WSE) PLN 18.3bn

Monthly Index Performance (WIG20) 8.7%

Monthly Index Performance (WIG) 8.9%





EUR/PLN 4.17



POLAND


Poland

Market Capitalisation HRK 397.2 bnYTD Dev. of Market Capitalisation 2.307Number of SE Transactions p.m. 96000YTD Dev. of SE Transactions 7.107SE Turnover (Zagreb SE) HRK 5977.5 mnMonthly Index Performance (Crobex/ZSE) 0.017GDP per Capita (2012e in EUR) 11,027GDP Real 2012e (Change against prev. year in %) 3.93-Month Money Market Rate (current in %) 4.85Inflation in 2012e (yearly average in %) 3.7EUR/PLN 4.17Upcoming Holidays none

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2/27/2012 5:16 PM

WIG-20

KDPW_CCP – Novation principle to be implemented in PolandFollowing worldwide trends, in July 2011 KDPW – the Polish central depository – transferred all clearing functions to a separate entity established to act as a central counterparty. That was, however, not the end of implementing a true CCP in Poland. It was agreed that the transfer of clearing functions from KDPW to KDPW_CCP was done within the existing legal framework by implementing the principle of open offer and novation. From the final clients’ (and their agents’) perspec-tive, the settlement system in Poland became much more safe, as the central depository no longer bore central counter-party guarantee responsibility for on-exchange transactions.

On the other hand, the undefined “technical” counter-party mechanism remained unmodified, which caused some concerns over the legal status of the counterparty for on-exchange trades. In the existing legal environment KDPW_CCP does not act as “true” central counterparty as they do not become a party to a transaction. Instead of being a central counterparty, they apply CCP guarantee liability, meaning that an on-exchange transaction is done with an “anonymous” counterparty with CCP liability in case of a counterparty’s default. KDPW perceived this mechanism as inadequate for the future development of the market tending to replace it by open offer and novation mechanisms.

At the beginning of 2012 KDPW_CCP prepared draft amend-ments to the Law on Trading in Financial Instruments imple-menting a novation mechanism into the Polish legal system, upon which the original agreement concluded by two parties would automatically convert into two agreements with CCP. Due to some legal issues plans to implement an open offer mechanism (two separate agreements are executed once trade details are matched on the trading platform) have been abandoned. The implementation of the novation mechanism and rejection of the open-offer principle modifies KDPW’s initial concept of participation statuses in the CCP system.

Originally KDPW_CCP had foreseen that all brokers execut-ing trades that were cleared via KDPW_CCP would have to become members of KDPW_CCP, acting either as clearing or non-clearing ones (please refer also to our May 2011 GSS Newsletter). Today it is expected and unofficially confirmed by KDPW_CCP that under the novation rule brokers having clearing agents will not be forced to enter into a participa-tion agreement with KDPW_CCP. This changed concept means that the implementation will not have an impact on the brokers. In other words, brokers will not be required to take any action once the novation is approved and will still be allowed to operate on the Polish market using the existing infrastructure and legal relations.


22 POLAND

Today, and also in the future, brokers, including remote ones, can either clear their trades in KDPW_CCP as clearing mem-bers or can do it via its clearing agents. Contrary to the previ-ous announcement on this project, brokers who do not want to enter into legal relations with KDPW_CCP will not be forced to do so. Non-clearing membership will not be recognized in KDPW_CCP. From that perspective implementation of the novation mechanism in Poland can be perceived as a “techni-cal” operation not requiring any action by market participants.

Impact on investors Implementation of the novation mechanism will not have an operational impact on investors and brokers operat-ing in Poland, but will bring more safety and clarity for the market as far as legal aspects of on-exchange trades are concerned.

Written and edited by: Kamil Polak Head of Relationship Management Global Securities Services, PolandTel. +48 225 245 863 · [email protected]


23

Market Capitalisation RON 83.0bn




SE Turnover (Bucharest SE) RON 692.0mn

Monthly Index Performance (BET/BSE) 12.7%





EUR/RON 4.35



ROMANIA


Romania

Market Capitalisation HRK 397.2 bnYTD Dev. of Market Capitalisation 2.307Number of SE Transactions p.m. 96000YTD Dev. of SE Transactions 7.107SE Turnover (Zagreb SE) HRK 5977.5 mnMonthly Index Performance (Crobex/ZSE) 0.017GDP per Capita (2012e in EUR) 6,624GDP Real 2012e (Change against prev. year in %) 3.43-Month Money Market Rate (current in %) 4.50Inflation in 2012e (yearly average in %) 3.7EUR/RON 4.35Upcoming Holidays none

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2/27/2012 5:16 PM

BET

Bucharest Stock Exchange reports RON 17 million net profitIn February the Bucharest Stock Exchange has announced preliminary financial figures, drawn up according to the Roma-nian Accounting Standards (RAS).

Bucharest Stock Exchange (BVB), identified in the market by ISIN ROBVBAACNOR0, ends 2011 with a turnover of RON 21.73 million, registering a growth of 66.4%. The net profit for 2011 increased to RON 16.96 million.


National Bank of Romania lowers monetary policy rate to 5.5%In its meeting of February 2, 2012, the Board of the National Bank of Romania decided to:

■■ lower the monetary policy rate to 5.50% per annum from 5.75% as from February 3, 2012

■■ ensure adequate management of liquidity in the banking system

■■ maintain the existing levels of minimum reserve require-ment ratios on both leu-denominated and foreign currency- denominated liabilities of credit institutions.

Impact on investors For information purpose only.


24 ROMANIA

Romania’s economy grew by 2.5% in the past 12 months The 2.5% economic growth yoy is in line with declarations of the Romanian President and IMF officials, though slightly below the 2.6% yoy growth forecast and above the market expectations of 2.4% yoy.

On a quarterly basis, in the fourth quarter of 2011 the econ-omy shrank by 0.2%, given the above-expectations perfor-mance (+1.9% qoq) in the previous quarter.

Agriculture and construction have, most probably, contrib-uted strongly to GDP in the fourth quarter 2011, the former owing to excellent crops (very much dependent on weather conditions) and the latter boosted by a positive base effect (the comparison with austerity-stricken 2H2010). The detailed data will be published on March 6.


New Romanian Prime Minister – Mihai Ra zvan Ungureanu All former ministers from the Democrat-Liberal Party, senior party of the ruling coalition, have been replaced. Under Mr. Mihai Ra zvan Ungureanu, the new Prime Minis-ter, Mr. Bogdan Dra goi, former head of Treasury and state secretary, has been appointed Finance Minister, while the new Minister of the Economy is Mr. Lucian Bode, a little known MP from Northern Romania. The Justice Minister Mr. Ca ta lin Predoiu and the one coordinating the absorption of EU funds (former European Commissioner Mr. Leonard Orban) kept their jobs.

The priorities of the new Government will be a better absorption of EU funds, reforms in education and the health system, Romania’s inclusion into the Schengen Area and, if possible, the reduction of social security contributions (the latter objective is difficult to achieve, given the huge deficit of the pension system).


International Monetary Fund and EC representatives meet new CabinetAt the request of the new Prime Minister of Romania, Mihai Ra zvan Ungureanu, the head of the International Monetary Fund mission in Romania, Mr. Jeffrey Franks, and the Country Director for Romania of the European Commission, Mr. Istvan Szekely met the new Cabinet in Bucharest on the 20th of February. This is a regular practice for a country that has an ongoing accord with the IMF when it appoints a new Execu-tive, the IMF announced in a press release.


Written and edited by: Iuliana Manastireanu Account Manager Global Securities Services, RomaniaTel. +40 21 200 1494 · [email protected]

and: Andreea Albu Relationship Manager Global Securities Services, RomaniaTel. +40 21 200 2678 · [email protected]


25

Market Capitalisation RUB 17.8trn


Number of SE Transactions p.m. (MICEX) 8,326,289


SE Turnover (MICEX) RUB 5.7trn

Monthly Index Performance (MICEX) 5.2%





EUR/RUB 38.90

Upcoming Holidays March 8


RUSSIA


Russia

Market Capitalisation HRK 397.2 bnYTD Dev. of Market Capitalisation 2.307Number of SE Transactions p.m. 96000YTD Dev. of SE Transactions 7.107SE Turnover (Zagreb SE) HRK 5977.5 mnMonthly Index Performance (Crobex/ZSE) 0.017GDP per Capita (2012e in EUR) 9,520GDP Real 2012e (Change against prev. year in %) 4.13-Month Money Market Rate (current in %) 6.69Inflation in 2012e (yearly average in %) 7.5EUR/RUB 38.90Upcoming Holidays none

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2/27/2012 5:16 PM

RTS

FFMS creates expert counsel to fight market manipulationThe Federal Financial Market Service (FFMS) of Russia cre-ated an expert counsel to counteract market manipulation. According to the FFMS draft document the commission will consist of representatives from financial communities, who will determine the significance of deviations of prices, supply, demand and volume of trades of publicly circulating financial instruments in case these deflections cannot be determined by objective criteria. The Counsel is to consider requests of stock exchanges and to issue a professional opinion within 30 days.

Impact on investors Additional control instrument against market manipulation using the expertise and experience of market professionals.

Government to exempt international financial institutions from approval requirements The Government of the Russian Federation has deter-mined the list of international financial institutions which will be exempt from the requirement of obligatory preliminary approval when investing into strategic sectors of the Russian economy. These are the following:

■■ International Bank for Reconstruction and Development (IBRD)

■■ International Development Association (IDA)

■■ Multilateral Investment Guarantee Agency (MIGA)

■■ International Finance Corporation (IFC)

■■ European Bank for Reconstruction and Development (EBRD)

■■ Black Sea Trade and Development Bank

■■ Eurasian Development Bank

Impact on investors Liberalisation of foreign investment in Russia.


26 RUSSIA

MICEX-RTS to offer new features during post-trading auctionStarting from February 13, MICEX-RTS stock exchange has offered new features for submitting and executing trades during the post-trading auction in the Main Market sector. The post-trade auction is held between 6:45 pm and 6:50 pm and shall determine the “last deal price”.

The innovation implies that limit orders submitted into the trading system of MICEX-RTS during the main trade period but not filled or partially filled, including orders of market makers, will automatically be transferred to the post-trading auction. Orders with equal prices will be executed in accord-ance with the time when the order is submitted to the trad-ing system. At 6:50 pm Moscow time (GMT+4) orders not executed will be removed from the trading system.

During the order collections to the post-trading auction the indicative auction price shall be calculated on an assump-tion that at a given moment there are orders with matching prices in the trading system. The price will be recalculated each time the queue of orders changes. At the same time the indicative quantity of securities involved in trades with the indicative auction price will be published.

Impact on investors New opportunities for post-trade auction on the MICEX-RTS stock exchange.

MICEX-RTS stock exchange to launch pension savings indexMICEX-RTS stock exchange plans to launch a pension sav-ings index (benchmark) to more effectively assess the activi-ties of pension fund management companies. This will allow simplified and expanded access to the pension savings of the Pension Fund of Russia for private management companies.

On the basis of the sub-indexes three strategies of savings will be calculated: aggressive (bonds - 55%, shares – 45%), moderate (bonds - 80%, shares – 20%) and conservative (with bonds only).

A further intention behind the launch of the new index is the movement of pension savings liquidity from the primary government securities market to the secondary corporate securities market.

Additionally, MICEX-RTS stock exchange suggests expand-ing the limit for pension funds for investments in shares from 65% to 80%, for investment in bonds from 80% to 100% (applicable for A and B quotation lists), and also to remove restrictions of participation in IPOs if stocks are included in A or B quotation lists. Furthermore, MICEX-RTS stock exchange suggests eliminating the requirement of asset revaluation and introducing a five-year period for manage-ment companies’ efficiency valuation on the basis of the comparison with pension savings benchmark.

According to MICEX-RTS stock exchange the list of instru-ments for pension savings investments should be expanded to Russian depositary receipts which are listed on Russian stock exchange, foreign securities, derivatives and ETFs.

Impact on investors Potential development of the pension savings system including deeper incorporation of the pension system and securities markets.



27

Market Capitalisation RSD 815.3bn




SE Turnover (Belgrade SE) RSD 2.1bn

Monthly Index Performance (Belex 15) 0.2%





EUR/RSD 109.98


Source: Bloomberg

SERBIA


Serbia

Market Capitalisation HRK 397.2 bnYTD Dev. of Market Capitalisation 2.307Number of SE Transactions p.m. 96000YTD Dev. of SE Transactions 7.107SE Turnover (Zagreb SE) HRK 5977.5 mnMonthly Index Performance (Crobex/ZSE) 0.017GDP per Capita (2012e in EUR) 4,546GDP Real 2012e (Change against prev. year in %) 3.53-Month Money Market Rate (current in %) 10.63Inflation in 2012e (yearly average in %) 6.7EUR/RSD 109.98Upcoming Holidays none

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2/27/2012 5:16 PM

BELEX15

Telekom Srbija now 100% Serbian-owned Greek telecom operator OTE has signed a document trans-ferring its 20% stake in Telekom Srbija to the state-owned Serbian landline and mobile provider, which previously inked a deal to buy back the minority holding for EUR 380 million. Telekom Srbija, which is now 100% Serbian owned, paid EUR 320 million out of a syndicated loan and EUR 60 million from own sources.

The transaction enables Telekom Srbija to list on the stock exchange and the state to hand out a minority stake in the tel-ecom operator to some 4.8 million people in Serbia, accord-ing to the Serbian Prime Minister Mirko Cvetkovic.

Under the buy-back contract, signed on December 30, OTE will “additionally receive a minimum dividend of EUR 17 million for fiscal year 2011,” according to a statement from the Greek company at that time. OTE and Telecom Italia bought 49% of Telekom Srbija for some 1.56 billion then German marks from the state in 1997, and the Italian operator sold its stake back to Serbia for EUR 195 million in 2003.

In January Telekom Srbija signed a contract on a EUR 470 mil-lion syndicated loan, EUR 320 million of which for buying back OTE’s 20% holding and the remaining EUR 150 million for refinancing an existing loan that Telekom Srbija took out to acquire a majority stake in Bosnian Serb telecom operator Telekom Srpske in 2007.

Impact on investors Recent changes in Telekom Srbija’s ownership structure will enable the company to proceed with its previous plan to list the shares on Belgrade Stock Exchange.

Written and edited by: Aleksandra Ilijevski Senior Relationship Manager Global Securities Services, SerbiaTel. +381 11 3028 621 · [email protected]


28

Market Capitalisation EUR 32.3bn


Number of SE Transactions p.m. 1,367.0


SE Turnover (Bratislava SE) EUR 0.9bn

Monthly Index Performance (SAX/BSSE) -2.9%







SLOVAK REPUBLIC


Slovakia

Market Capitalisation HRK 397.2 bnYTD Dev. of Market Capitalisation 2.307Number of SE Transactions p.m. 96000YTD Dev. of SE Transactions 7.107SE Turnover (Zagreb SE) HRK 5977.5 mnMonthly Index Performance (Crobex/ZSE) 0.017GDP per Capita (2012e in EUR) 14,073GDP Real 2012e (Change against prev. year in %) 4.53-Month Money Market Rate (current in %) -Inflation in 2012e (yearly average in %) 3.7EUR/SKK -Upcoming Holidays none

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2/27/2012 5:16 PM

SAX

Bratislava Stock Exchange trading in January 2012In the first month of 2012, the members of the Bratislava Stock Exchange (BSSE) used the electronic trading system on 21 business days. A total of 1,367 transactions were concluded in this period, the financial volume amounted to EUR 893.39 million. The number of concluded transactions increased against the previous month by 21.3%. On the other hand, the achieved financial volume fell during the same period by 3.2%. Two indicators, however, increased on a year-on-year basis: the number of concluded transactions rose by 61% and the amount of traded securities went up by 76.58%. However, the achieved volume decreased by 28%. Not unlike previous periods, the month of January 2012 saw negotiated deals dominate over electronic order book (i.e. price-setting) transactions, with the former generating 99.11% of the total trading volume. A total of 271 negotiated deals (in a volume of EUR 885.41 million) were concluded, as opposed to 1,096 electronic order book transactions in a financial volume of EUR 7.97 million.

In January investors continued to focus on debt securi-ties, as bond transactions generated over 99.66% of the total trading volume. A total of 323 bond transactions were concluded in the period under review, in a financial volume of EUR 890.3 million. In comparison with December 2011, the number of concluded transactions rose by 44.2%. The achieved financial volume fell in the same comparison by 2.25%. On a year-on-year basis: the volume decreased by 27.91%, the number of transactions increased by 63.13%. Negotiated deals in bonds (EUR 885.41 million) once again significantly dominated over electronic order book transactions (EUR 4.9 million).

Equity securities of local companies were traded in 1,044 transactions, in a financial volume of EUR 3.07 million. Unlike in the previous month, electronic order book transac-tions (in a volume of EUR 3.1 million) prevailed over negotiated deals (in a volume of EUR 2 433.8). Share issues of Tatry Mountain Resorts and Best Hotel Properties together gen-erated more than 82% of the volume of share transactions.

Transactions concluded by non-residents in January 2012 accounted for 25.08% of the total trading volume. Out of that, the buy side represented 25.27% and the sell side 24.90%.

The SAX index ended the month of January 2012 at 209.29 points, representing a 2.86% decrease on a month-on-previous-month basis and a 9.36% decrease year on year.



29 SLOVAK REPUBLIC

Slovakia’s public finance deficit decreasedSlovakia’s public finance deficit fell from 8.1% of GDP in 2010 to 4.6% at the end of 2011, the Finance Ministry announced at a press conference at the end of January. The result was better than expected: the ministry had previously predicted that the deficit would fall to 4.9 % in 2011. The state deficit for 2011 was EUR 3.186 billion, EUR 262 million less than had been earlier projected, with the ministry stating that this was because of a reduction in state expenditures of EUR 1.2 bil-lion compared to last year, as well as a rise in state revenues.

The final numbers on Slovakia’s efforts to trim its deficit will be announced at the end of March, when all member countries must send their final data to Eurostat, the European Union’s statistics office.


Moody’s downgraded Slovakia’s government bond ratingMoody’s Investors Service downgraded Slovakia’s govern-ment bond ratings to A2 from A1. The outlook has been changed to negative. The agency reasoned its decision by the uncertainty over the prospects for institutional reform in the euro area and the weak macroeconomic outlook across the region. Another factor was Slovakia’s increased susceptibility to financial and political event risk, presenting considerable challenges to achieving the government’s fiscal consolidation targets and reversing the adverse trend in debt dynamics. Moody’s also pointed to the increased downside risks to economic growth due to weakening external demand.

The negative outlook reflects the agency’s view that the wors-ening debt crisis in the eurozone will have a negative impact on conditions in local economy and public finances. Accord-ing to analysts Moody’s thus followed the S&P rating agency that in January fulfilled its December threats and downgraded ratings of nine eurozone members including Slovakia. Ana-lysts agree that the current downgrading of Slovakia’s rating particularly mirrors the long-term situation in the eurozone.

The rating’s downgrading might worsen the conditions of Slo-vakia for financing its needs on the financial market, analysts admit. Finance Minister Ivan Miklos also ascribes the rating cut to the situation on the local political scene.


Written and edited by: Zuzana Milanová Head of Global Securities Services Global Securities Services, SlovakiaTel. +421 2 4950 3702 · [email protected]


30

Market Capitalisation EUR 18.2mn




SE Turnover (Ljubljana SE) EUR 26.3mn

Monthly Index Performance (SBI TOP) 1.3%







SLOVENIA


Slovenia

Market Capitalisation HRK 397.2 bnYTD Dev. of Market Capitalisation 2.307Number of SE Transactions p.m. 96000YTD Dev. of SE Transactions 7.107SE Turnover (Zagreb SE) HRK 5977.5 mnMonthly Index Performance (Crobex/ZSE) 0.017GDP per Capita (2012e in EUR) 19,532GDP Real 2012e (Change against prev. year in %) 2.83-Month Money Market Rate (current in %) 0.92Inflation in 2012e (yearly average in %) 2.9EUR/RSD -Upcoming Holidays none

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2/27/2012 5:16 PM

SBI TOP

Janez Janša elected new Prime Minister On Saturday, 28th January, the Slovenian Parliament approved the candidacy of the leader of the Slovenian Democratic Party Janez Janša to the post of prime minister with 51 members of the 90 member National Assembly voting for the appoint-ment. Mr. Janša led Slovenia’s cabinet from 2004 to 2008 and as new prime minister said the country needs to achieve three main objectives: stabilisation and reduction of govern-ment spending, economic growth and the creation of jobs.


CEE Stock Exchange Group increases stake in Ljubljana Stock ExchangeCEESEG (CEE Stock Exchange Group) increased its stake in the Ljubljana Stock Exchange to 99.85 % after the suc-cessful completion of the takeover procedure. In June 2008, the company running the Vienna Stock Exchange at the time, Wiener Börse, now CEESEG, acquired 81.01% in the Ljubljana Stock Exchange. This share remained within the holding company CEESEG AG when the stock exchange group, that comprises the exchanges of Vienna, Budapest, Ljubljana and Prague, was restructured.

Since February 8, 2010, CEESEG, which as a holding com-pany is the 100% owner of the current exchange operating company, Wiener Börse AG, holds – after completion of the takeover proceedings – a share of 99.85 % of the Ljubljana Stock Exchange, 50.45% of the Budapest Stock Exchange and 92.74% of the Prague Stock Exchange.

CEESEG will be working actively to support the progress of the Ljubljana Stock Exchange market; they are focused mainly on the areas of increasing trading and liquidity on Prime Market.



31 SLOVENIA

Debate on the future of the Slovenian capital marketConsidering Slovenia’s pressing challenge to stimulate the development of the capital market, which is a crucial source of capital for companies and provides domestic as well as foreign investors attractive investment opportunities with vari-ous potential return-risk ratios, the Ljubljana Stock Exchange has decided to open a public debate.

A series of round tables on the further development of the Slovene capital market has thus been initiated. The first two panel discussions were very well attended, with renowned speakers from the industry debating the “Challenges Facing the Slovene Capital Market” and the “Strategy and Impact of State Ownership in Companies”. The speakers agreed on a number of requirements for the Slovene capital market:

■■ corporate governance in state-owned companies and the role of the state in these companies

■■ development of investment banking and attracting foreign institutional investors

■■ restoring the confidence of Slovene retail investors and profitable companies

■■ need for responsible owners with a clear vision. A special group in this respect includes companies indirectly or di-rectly held by the state, where the government is expected to sell its stakes, at least partially, in the coming years. This means that Slovene companies should systematically, yet carefully, open up to foreign capital.

Impact on investors Given the above ideas will materialise, the development of the Slovene capital market will provide domestic as well as foreign investors attractive investment opportunities with various potential return-risk ratios.

Prepared by: Aljoša Benc ina Relationship Manager Global Securities Services, SloveniaTel. +386 1 5876 451 · [email protected]


32

Market Capitalisation (PFTS) UAH 195.9bn

YTD Dev. of Market Capitalisation (PFTS) -4.3%

Number of SE Transactions p.m. (PFTS) 56,680

YTD Dev. of SE Transactions (PFTS) -51.5%

SE Turnover (PFTS) UAH 1.3bn

Monthly Index Performance (PFTS) 3.8%





EUR/UAH 10.71



UKRAINE


Ukraine

Market Capitalisation HRK 397.2 bnYTD Dev. of Market Capitalisation 2.307Number of SE Transactions p.m. 96000YTD Dev. of SE Transactions 7.107SE Turnover (Zagreb SE) HRK 5977.5 mnMonthly Index Performance (Crobex/ZSE) 0.017GDP per Capita (2012e in EUR) 3,285GDP Real 2012e (Change against prev. year in %) 5.03-Month Money Market Rate (current in %) 14.50Inflation in 2012e (yearly average in %) 10.4EUR/UAH 10.71Upcoming Holidays none

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2/27/2012 5:16 PM

PFTS

President of Ukraine signed privatisation programme According to the State Property Fund’s official web site the President of Ukraine recently signed a Law on the State Privatisation Programme.

The Law approves the privatisation plan for 2012–2014. Two years after the decision on privatisation was taken, it stipu-lates admitting a wider range of state property to privatisa-tion and specifies its terms. Under the Programme the sale of state property is to be made easier, in particular of those objects which are little in demand.

This is to be achieved through a number of measures: sale with a price reduction to the level of actual demand, sale without reduction of the minimal price of the sale, split of the shares portfolio and sale by separate lots on the stock exchange and finally sale without announcement of the price.

The programme also provides limitations on access to priva-tisation of state property for certain buyers. These limitations refer to legal entities registered in off-shores and countries which are included to the FATF list. Legal entities with a stake of the state over 25% and their affiliated entities will not be admitted to privatisation.

Stages of the privatisation and their respective timeframes are:

■■ setting up of the legal and organisational basis – by mid 2012

■■ completion of small-scale and mass privatisation including for those objects where privatization started before the programme entered into force – by 2013

■■ accomplishment of all sales procedures – by 2014.

Impact on investors Opportunity for investors to participate in privatisation.


33 UKRAINE

Market regulator improves programme of stock market developmentThe Ukrainian stock market regulator National Securities and Stock Market Commission (NSSMC) endorsed an improved and extended Programme of Stock Market Development for 2012–2014 on the last NSSMC meeting on February 9, 2012.

Following comments received by the NSSMC’s, the Pro-gramme of Stock Market Development has been adapted to the current legislation and market situation. The Programme will serve as guideline for the market regulator’s activities on market development and defines strategic directions for the further reform and modernisation of the stock market at a legal, institutional and technological level. It also provides top priority mid-term objectives and lays out steps necessary towards their realisation.

The document names among the main objectives for the establishment of an efficient market with sufficient liquidity the following:

■■ increased capitalization and liquidity of the market

■■ enhanced market infrastructure and principles of self regu-lation

■■ support of its sustainable and efficient operation

■■ better protection of investors’ rights and

■■ improved state regulation of the market.

The draft Programme was developed as part of the Presi-dent’s economic reforms to improve the climate for invest-ments.

Source: http://news.ligazakon.ua/

Impact on investors The Programme will enhance further market development.

Written and edited by: Katherine Yevtushenko Relationship Manager Global Securities Services, UkraineTel. +38 044 590 1210 · [email protected]


34

GEoRGIa · MoNGoLIa · aZERBaIJaN

AZERBAIJAN

Institutional boost to trade in government securitiesOn January 24, representatives from the Baku Stock Exchange (BSE) and more than 20 representatives from banks and professional securities market participants dis-cussed issues of profitability, the volume of issue and appli-cation period, the time of auction with government securities on the primary market, OTC market liquidity and the market development trends in 2012.

The result of the meeting was the creation of a Coordination Council, which will encourage closer cooperation between professional market participants and state agencies: the Min-istry of Finance, the Central Bank and the State Committee on Securities.

The Coordination Council will be headed by the Chairman of BSE.

Impact on investors The creation of the Coordination Council should facilitate the further development of infrastructure of the securities market in Azerbaijan and a closer cooperation between participants and the regulators of the market.

GEORGIA

National Bank of Georgia decreased refinancing rateThe Monetary Policy Committee of the National Bank of Geor-gia decided to decrease the refinancing rate by 25 basis points, bringing it to 6.5%, on its meeting on January 18.

According to the National Bank of Georgia, at 1.9% annual inflation remained low in December. The current forecast indicates that inflation will remain on a low level in the first half of the year.

Impact on investors Medium-term inflation forecasts to remain at target level.

MONGOLIA

S&P revised Mongolia’s outlook from Stable to PositiveAccording to Standard & Poor’s Ratings Services Mongolia’s outlook was revised from Stable to Positive and affirmed the landlocked nation’s sovereign ratings. Mongolia’s long-term sovereign ratings remain at BB- and the short-term rating at B.

The outlook revision reflects expectations for a “significant increase in real per capita gross domestic product through at least 2014, with S&P estimating the figure may more than double to USD 6,560 by 2014 from USD 2,973 this year, according to the statement.

Economic growth in Mongolia may surge to 23% in 2013, more than twice the pace of expansion in China, as mining projects take up production in the sparsely populated nation, the International Monetary Fund said in April. Mongolia in June surpassed Australia to become the biggest supplier of coking coal to China, according to the Ulan Bator-based Trade and Development Bank.

Impact on investors Positive trends in Mongolia’s economy.



35

YoUR CoNTaCTS

Regional responsibilityTomasz Grajewski Tel. +48 22 524 5867 [email protected]

Pawel Muszalski Tel. +43 50505 57315 [email protected]

Markus Winkler Tel. +43 50505 58547 [email protected]

Sven Trahan Tel. +43 50505 57311 [email protected]

Beata Szönyi Tel. +36 1 301 1924 [email protected]

Philipp Aschl Tel. +43 50505 58508 [email protected]

AustriaUniCredit Bank Austria AG Julius Tandler-Platz 3 A-1090 Vienna Austria

Günter Schnaitt Tel. +43 50505 58501 [email protected]

Michael Slavov Tel: +43 50505 58511 [email protected]

Thomas Rosmanitz Tel. +43 50505 58515 [email protected]

Tina Fischer Tel. +43 50505 58512 [email protected]

Stephan Hans Tel. +43 50505 58513 [email protected]

Bosnia and HerzegovinaUniCredit Bank d.d. Global Securities Services Zelenih beretki 24 71 000 Sarajevo Bosnia and Herzegovina

Lejla Sabljica Tel. +387 33 491 777 [email protected]

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BulgariaUniCredit Bulbank AD 6 Vitosha Boulevard, 2nd floor BG-1000 Sofia Bulgaria

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CroatiaZagrebacka Banka d.d. Savska 60/IV HR-10000 Zagreb Croatia

Valerija Bezak Tel. +385 1 6305 430 [email protected]

Snjez ana Brunc ic Tel. +385 1 6305 400 [email protected]


36 YOUR CONTACTS

Czech RepublicUniCredit Bank Czech Republic a.s. Revolucni 7 CZ-110 05 Prague Czech Republic

Michal Stuchlík Tel. +420 955 690 780 [email protected]

Tomáš Vácha T. +420 955 960 777 [email protected]

Zbynek Oborny Tel. +420 955 960 779 [email protected]

Alena Kalasova Tel. +420 955 960 778 [email protected]

HungaryUniCredit Bank Hungary Zrt. Szabadsag ter 5 – 6, 6th floor H-1054 Budapest Hungary

Júlia Romhányi Tel. +36 1 301 1923 [email protected]

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KazakhstanJSC ATF Bank Furmanov Street 100 KZ-050000 Almaty Republic of Kazakhstan

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PolandBank Polska Kasa Opieki SA Ul. Grzybowska 53/57 PL-00-950 Warsaw Poland

Tomasz Grajewski Tel. +48 22 524 5867 [email protected]

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RomaniaUniCredit Tiriac Bank S.A. Ghetarilor Street 23 – 25 RO-014106, Bucharest 1 Romania

Irina Savastre Tel. +40 21 200 2670 [email protected]

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Andreea Albu Tel. +40 21 200 2678 [email protected]


37 YOUR CONTACTS

RussiaZAO UniCredit Bank 9, Prechistenskaya Emb. RU-119034 Moscow Russian Federation

Alexander Nazarov Tel. +7 495 258 73 49 [email protected]

Ksenia Liskina Tel. +7 495 258 7258 - 3455 [email protected]

Svetlana Vlasova Tel. +7 495 258 7258 - 3453 [email protected]

SerbiaUniCredit Bank Serbia JSC Omladinskih Brigada 88 RS-11070 Belgrade Serbia

Jasmina Radic evicś Tel. +381 11 3028 611 [email protected]

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Aleksandra Ilijevski Tel. +381 11 3028 612 [email protected]

SlovakiaUniCredit Bank Slovakia A.S. Sancova 1/A SK-811 04 Bratislava Slovak Republic

Zuzana Milanová Tel. +421 2 4950 3702 [email protected]

Rastislav Rajninec Tel. +421 2 4950 2424 [email protected]

SloveniaUniCredit Bank Slovenija d.d. Wolfova 1 SI-1000 Ljubljana Slovenia

Vanda Moc nik-Kohek Head of GSS Slovenia Tel. +386 1 5876 450 [email protected]

Elmedina Garibovic Tel. +386 1 5876 597 [email protected]

Aljoša Benc ina Tel. +386 1 5876 451 [email protected]

UkrainePJSC UniCredit Bank 14a, Yaroslaviv Val UA-01034 Kyiv Ukraine

Bohdana Yefremova Tel. +380 44 230 3341 [email protected]

Katherine Yevtushenko Tel. +380 44 590 1210 [email protected]

Websitesgss.unicreditgroup.eu www.gtb.unicredit.eu www.unicreditgroup.eu www.bankaustria.at

http://www.unicreditgroup.eu


38

dISCLaIMERThis publication is presented to you by:Corporate & Investment BankingUniCredit Bank Austria AGJulius Tandler-Platz 3A-1090 Wien

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as of 29 August 2011


39

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Statement pursuant to the Austrian Media Act Publisher and Media Owner

Corporate & Investment Banking Global Transaction Banking UniCredit Bank Austria AG Global Securities Services Julius Tandler-Platz 3 A-1090 Vienna Tel. +43 50505 0

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Registered office and postal address Schottengasse 6 – 8 A-1010 Vienna

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Registered under no. FN 150714p Companies Register at the Commercial Court Vienna

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Supervisory authority Austrian Financial Market Supervisory Authority (Finanzmarktaufsicht), departments banking supervision and securities supervision Praterstraße 23 A-1020 Vienna www.fma.gv.at

Membership Austrian Federal Economic Chamber, bank and insurance division Wiedner Hauptstraße 63 A-1040 Vienna www.wko.at Austrian Bankers’ Association A-1013 Vienna, p.o.box 132 www.voebb.at

Applicable legal regulations Applicable legal regulations are in particular the Austrian Banking Act (“Bankwesengesetz – BWG”, Federal Law Gazette/BGBl. No. 532/1993, with some amendments), the Austrian Securities Supervision Act (“Wertpapieraufsichtsgesetz – WAG”, Federal Law Gazette/BGBl. No. 753/1996, with some amendments) an the Austrian Savings Banks Act (“Sparkassengesetz”, Federal Law Gazette/BGBl. No. 64/1979, with some amendments).

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