First of all your institution is the oldest and the most prestigeous bank institution in the Czech Republic, could you give us a brief historical background of your bank?
The bank is really the oldest Czech bank, established in 1868. It went through difficult times and also the times of glory. The most famous period was between the two World Wars when Zivnostenska banka was the most powerful in the region. The bank survived the World War II . In 1945 the whole bank was nationalized. In 1950 the bank stopped its activities and in 1956 there was only the branch in London but there was no head office in the Czech Republic. It was the Bank of England intervention which forced the communist authorities to allow certain limited activities of Zivnostenska banka
After the 'velvet revolution' of 1989 the bank started its restructuring and in 1992 re-privatized. It was the first bank in Central Europe to be privatized with the entry of foreign capital. The major shareholder was German BHF- BANK with 40% of shares and 12% was owned by the IFC (International Finance Corporation) from Washington. The rest was owned by private shareholders, either directly or through the investment funds. Today our major shareholder is Bankgesellschaft Berlin AG, (BGB) which bought its shareholding from BHF. Bankgesellschaft was created through the merge of three banks in Berlin. Today Zivnostenska banka is a universal bank with three major segments of activities: private and personal banking, corporate banking and investment banking.
Our readers are business people and they like figures. Could you give us a brief overview about the financial figures of your bank?
The balance sheet of Zivnostenska banka is USD1.2 billion. We have been quite successful since 1992. Each year we paied each year between 12 and 16 % in dividends per share. In 1996 we had to decide about the new strategy of the bank for next years. We wanted to enlarge activities of Zivnostenska to build on the name which was well known in the Czech Republic. It meant to invest in the new business, mainly in retail, without coming down to the real retail, because we want to be positioned as a private and personal bank. We had to invest in distribution, simultaneously this bank believes in future of electronic banking. We were first bank which introduced an electronic banking device, we were among the first in telephone banking and we were definitely the first who introduced the credit cards in this country.
We started to invest in two directions: in electronic and internet banking, on the other hand to distribution network. So we finalized our branch network, we have eight regional branches and we want to have roughly 30 small agencies which would include self service zones.
Why did you decide to close the London branch?
First reason was that business which we did in London was very much influenced by the crisis in 1998 in emerging markets, so our business suddenly dried up and we did not want to invest in new business because it did not make sense when our major shareholder has a strong presence in the City of London. So, we decided to close it and it will help us to save some costs.
As you told me, you have been rebuilding the bank, implementing a new strategy. Which have been the results after those investments, especially the results in private and personal banking?
Our major aim is to get 5% in the Czech market, we are speaking about 400-500 thousands customers, but once we want to be a leader in internet banking. We know that we can not be a leader in traditional retail banking because we cannot compete with such a big banks as Investicni a Postovni banka (IPB).
We have been quite successful despite the fact that the major positive impact should be this year. Last year we increased our deposites from our private customers on year end basis by 8% but on average basis 1998/99 by 22%. We introduced into the market developing products.
Our ZB - Trust investment company is the fourth biggest in this country. We were very unhappy for the losses the last year but we had to do some restructuring for the future and also we did it because of the recession in the Czech Republic which was very though so we decided to build some general reserves.
But the economic situation is getting better...
Yes, we must be better because obviously every economy can grow up only when money is flowing in. But the Czech companies are still not in a very good shape.
Concerning the internet banking, among the countries of Central and Eastern Europe the Czech Republic is the one with the highest internet penetration. What is your precise objective in this matter ?
Well, we are just opening our internet banking services . We start from the 1st April. At the moment we are testing the whole system, as we want to be absolutely sure about its security.
The Czech Republic is still very attractive place for foreign investments, a part of your activities is corporate banking and investment banking. Do you have a lot of relations with foreign investors?
In 1992 when we had to stipulate the strategy of the bank, we were very much relying on privatizations and investments in the Czech Republic. We wanted to help the companies with bringing in the foreign investors, providing the bridge financing, trade financing and doing some investment banking like IPO's, bond issues. Unfortunately the voucher privatization changed our plans, because suddenly the privatized companies were not so much in need of such services because they were backed by credits. So we as a bank, were slipping more and more into the universal banking. That was the reason why in 1996 we were deciding what to do because we were just on the crossroad, we were not big enough but also not small enough. So we could be either an investment boutique or to grow and be a universal bank. We decided to grow to use properly the name of Zivnostenska and that brought the decision to set a new strategy. Originally we wanted to be a wholesale bank, we did not want to be an universal bank. But these services are not so much in need. If you look at what does the investment banking means in the Czech Republic, IPO's do not exist, stock market is not working very properly. We have been involved in mergers and acquisitions business, but we did this business only on behalf of foreign companies coming to the Czech Republic acquiring the Czech companies. That is what we still do but we run it under the umbrella of our division called structured finance. We take our investment banking as a service to our corporate customers, we do not run it any more as a separate business.
| You also operate a successful pension fund in corporation with Allianz, could you tell us more about that?
We have three companies. ZB-Trust is a company which is managing funds. These funds are open funds. We are running the fund which is investing in foreign shares, we are running funds which are investing in money markets and bonds and so on. These funds are very successful and they are growing. We are also very proud of the fact, that we are considered as one of the most honest fund managers and that we have never accepted certain activities which were perhaps accepted by some other fund managers. We have always in mind that we are building the future so we want to run those businesses in a proper way. Obviously now we have to come into the term wih our personal banking business. Because it is about the deposit taking and about the fund management so it is always certain conflict but we try to segment it for different people, investors, customers of the bank, services. We try to sell it through our distribution. We shall sell it through our NetBankwhich is the name for our internet banking. Then we have a pension fund which we have established together with Allianz and the third company is the assets management company and it is for our customers in portfolio management, investing in shares, funds.
What makes the Zivnostenska banka so different when you compare it to the other banks in the Czech Republic. Your history, your traditions, your transparency, your honesty?
I would not say that we are different, but definitely we have a tradition, transparency and more ethical approach to the business and we try to be innovative. The darker side of the innovations is that we are not able to sell it.
Your bank have always been recognized as a bank for the 'top class' people in the Czech Republic. Is it still the case? Do you want to change that aspect?
We are changing. We have been promoting that change. We changed logo, our corporate colours are more aggressive, more seen in the market, to come closer to the customers. We are still not in the retail banking which means to take every customer from the street, for that we do not have the capacity and system.
Our readers are always interested in new business opportunities. In which areas of your activities are you interested to make some partnerships, investments?
I will not speak about the personal banking, because it is not so interesting for the foreign businessmen, despite the fact that we have a lot of foreign customers in private banking, for instance, for different reasons. We are very much involved in project financing, so we are helping to the companies to start up the businesses, support the foreign investors to develop the business here, it is cash flow and investment financing. We are innovative in trade finance and we are very much involved in project finance through real estate finance. We cooperate with lot of people who are coming to the Czech Republic, we provide some bridge financing, investment loans, working capital loans. We try to help the customers in acquisitions of the Czech companies.
As a more personal issue, could you give us a brief historical background about your own professional experience?
I studied economics in the Czech Republic. My first job was in a trade bank Ceskoslovenska obchodni banka (CSOB), so I spent five years in trading, currency trading, money markets. Then I was transfered into syndications and bonds, negotiating on behalf of (CSOB) Then I spent four years in London working in Zivnostenska banka's branch, with responsibility given for trading and trade financing. When I came back I joined the Ministry of Finance as an advisor for banking and international banking affairs but I wanted to go back into banking, so started to work for Zivnostenska banka. In 1992 I was elected as a Chairman of the Board of Directors of Zivnostenska banka.
Which has been your most satisfying personal achievement since you are the Chairman?
The privatization of the bank and building the business in the bank, because in 1990 this bank had no single one corporate customer, for instance. So I am quite proud of having built the business and been trough the privatization.
As the final issue Mr. Kunert, what would be your final message to our readers?
I would like to invite people to the Czech Republic to have a look and decide if they want to do the business here. With the perspective of joining the European Union you will find the country just in the middle, still you can do business even in some Eastern countries. We have a good infrastructure, we have one of the highest penetration of mobile phones in Europe. You can find here very well educated and highly motivated people, so I think the opportunity is here.
I do not want to be hypocritical and say that everything is fine here. We have to do lots of changes and improvements but we are on the right track. |
