Business News
Crown gets stronger
The Czech crown has strengthened in the past days to record high levels. On Wednesday, the exchange rate fluctuated between 36.28 and 36.66 per US dollar, and the crown was the strongest since January. At the same time it traded at around 33.50 per euro. An expected strong inflow of foreign investments into the Czech Republic will push the Crown-euro exchange rate even lower.
Energy sector privatisation to finish soon, lay-offs expected
The Czech government is to finish the privatisation of the Czech energy production and distribution companies by December 14. The winners of the public tender will be selected and proposed to the cabinet by Deloitte & Touche. All state-owned companies in the sector will be sold in one complete package, however, two regional distributors will be excluded. Massive lay-offs are expected to follow privatisation with up to 66 percent of the current employees likely to be made redundant. Newly laid off workers will be compensated for up to 13 months of wages in accordance with previously arranged collective agreements which strategic investors will have to observe.
Another case of "tunnelling" resolved
Two former top managers of the Vitkovicke stavby construction company have been sentenced to 8 1/2 and 7 years in prison respectively for asset stripping. A district court in Ostrava convicted the two men on grounds that they had signed contracts unfavourable to the once major construction company, causing financial losses of more than 22 million CZK or around 600,000 USD. The money was filtered off to companies where the two had had private interests. However, both the former chairman of the supervisory board Zbynek Prikryl and the chairman of the board of directors Ladislav Vizda pleaded not guilty. They claimed that the trial had been politically motivated and that the verdict had served the interests of the Trade Unions as the company management had planned to lay off 1000 employees as part of a restructuring programme.
Czechs bargain for supersonic fighters
Czech foreign minister Jan Kavan made it clear to his US counterparts on Monday that the Czech government considered the planned purchase of new supersonic fighter jets for the Czech army and exports of Czech-made subsonic combat aircraft L-159 as directly linked. The L-159 aircraft is produced by Aero Vodochody which was partly acquired by Boeing several years ago following a promise made by the American company to support exports of trainer and light combat aircraft. However, since the takeover not a single aircraft has been exported and the Czech company is now beginning to feel a financial squeeze.
The Czech government is still considering purchasing between 24 and 36 modern supersonic fighters. Following a public tender held earlier this year, the only remaining contender is the British-Swedish consortium of Saab and BAE Systems. Two American, a French and a German company withdrew their bids during the contest. Saab and BAE Systems have offered to bring to the country offset programmes of 150 percent of the value of the potential contract.
Mr. Kavan said after talks with US Secretary of State Colin Powell and US presidential defence advisor Condoleezza Rice that if the Czech government could dispose of part of the immense financial burden of the L-159 project, it could think more seriously about acquiring new supersonic fighters. This latest comment by Mr Kavan, however, now leaves the question of what will become of the yet undecided public tender very open.
Sales in insurance sector grow
Insurance companies operating on the Czech market have reported a 22-percent increase in sales in the first half of the year. Insurance companies collected a total of 43.6 billion CZK in premiums while they paid out indemnities of 18.9 billion. Ceska Pojistovna insurance company remains the largest player on the market with a 42-percent market share.
CNB approves Societe General's acquisition of Komercni Banka
The French bank Societe General has acquired a 60 percent stake in the leading Czech bank, Komercni Banka, at the price of 40 billion Czech crowns. The Czech National Bank gave the transaction official approval on Tuesday. Societe General will assume managerial control of Komercni Banka on Monday, October 8th.
Czech victory in free movement of labour negotiations
The free movement of labour is one of the most controversial chapters in negotiations between the EU and the membership candidate countries. While some of the front-runners, such as Poland and Hungary have concluded the chapter, accepting temporary restrictions for their workers seeking jobs in the current member states, the Czech Republic has fought on and eventually managed to negotiate more favourable conditions for free movement of labour than the other candidate countries. Negotiations are still underway and the Czech Republic is continuing to push the E.U. for the best possible agreement - an agreement which could eventually benefit all the candidate countries. Petr Jezek is the head of the European Integration Department of the Czech Foreign Ministry:
