Business News
Standard & Poors: Czech banking sector vulnerable
The rating agency Standard & Poors has said the Czech Republic is one of fifteen vulnerable banking systems around the world. Others included the United States, China, Ireland and several countries in Central and Eastern Europe. Standard & Poors warned against a sharp increase in loans in some of the countries which might worsen the quality of the loan portfolio. Standard & Poors said the Czech Republic, Slovakia, Romania, and China were also vulnerable due to delayed restructuring of both industry and the banking sector.
Life to be harder for money launderers
New legislation came into effect in the Czech Republic this week which is designed to make money laundering more difficult and bring extra revenues to the state budget. The law, proposed by the government, delegates more power to some state institutions in order to limit tax evasion and prevent the legalisation of profits from criminal activities. The new law also requires financial institutions to report suspicious transactions to state authorities.
European Central Bank criticises new Czech law
The European Central Bank has described newly approved changes to the law on the Czech National Bank as a potential threat to the bank's independence. In an unofficial statement, quoted by the Czech News Agency, the European Bank says that some clauses are also inconsistent with European Union regulations. The statement echoes criticism voiced on Thursday by the head of the EU Commission delegation in Prague, Ramiro Cibrian. The main focus of criticism is a clause that divides the bank's budget into two parts, one of which has to be approved directly by Parliament.
Biggest steelworks cut production
The Czech Republic's biggest steelworks, Nova Hut, has begun working at only 85-percent capacity in the face of serious financial difficulties. The crisis has been caused by the accumulation of old debts, which the plant is having to pay at the expense of investment into production. The government last month decided to grant Nova Hut credits of 750 million Czech crowns, to guarantee the financial stability of the plant.
Russian mafia launders IMF money through Czech banks
The Czech leading daily newspaper, MLADA FRONTA DNES, has unveiled a case of international money laundering involving some of the Czech Republic's banks. The newspaper claims that the Russian mafia used Komercni Banka and the IPB bank to launder money from multi-billion loans provided to Russia by the International Monetary Fund. The transactions were part of the massive money laundering operation through the Bank of New York, one of the biggest cases of money laundering in the United States in recent years. The newspaper also quoted a policeman who wished to remain anonymous, who said that suspicious transactions between the Bank of New York and some Czech banks are still going on.
Six companies interested in Radiokom privatisation
Six companies have expressed interest in acquiring the state-owned 51-percent stake in the Czech national wireless communications operator, Ceske Radiokomunikace. The spokesman for the National Property Fund however declined to specify who the potential strategic partners for Radiokomunikce are. Investors still have time to hand in their bids to the government advisor for the privatisation, ABN Amro Rotschild.
Telecom increases profit
The Czech monopoly fixed-line telephone operator has announced financial results for 1999. The price hikes Telecom was able to introduce due to its monopoly position brought its revenues to nearly 28 billion CZK, or 750 million USD, which is an 11-percent year-on-year increase. Net income grew by 21 percent. In anticipation of the liberalisation of the telecommunications sector, the company speeded up the digitalisation of the network, which now exceeds three quarters of the total area covered.
Telecom's spokesman Vladan Crha said the growth in total revenues of Czech Telecom was driven by revenue increases in data transmission, including ISDN and Internet, and other value-added services. An additional contribution to the revenue growth came from the revenue consolidation of EuroTel, Telecom's cellular subsidiary.
Telecom has clearly demonstrated its commitment to explore opportunities offered by the so-called New Economy. It has been stepping up activities in the field of Internet business, for example it recently acquired a leading Czech Internet advertising agency, M.I.A.
The Czech telecommunications market will be liberalised as of January 1, 2001 when Czech Telecom will lose its monopoly in the fixed-line sector. However, Parliament postponed the introduction of certain features necessary for full competition on the market, namely call-by-call carrier selection and number portability by 6 and 12 months, respectively.
CSA to join SkyTeam
The Czech government has approved the entry of the Czech national airline, CSA, to the SkyTeam alliance, as well as a future sale of up to 15 percent in Czech Airlines to Air France and Delta Airlines. The sale is to take place in 2002 at the earliest, after an assessment of co-operation within SkyTeam. The cabinet is thinking of offering another 25-percent stake on capital markets. According to the law, the state must retain a 52-percent majority in the national carrier.
I asked the spokesman for Czech Airlines, Daniel Plovajko, about the benefits of CSA's membership in SkyTeam. Although the global skies have been integrating, airlines world-wide have to face serious problems caused by the fragmentation of the Air Traffic Control, causing mass delays at virtually all airports across Europe. Some carriers say the situation in Europe is becoming critical and therefore they are pushing for the EU to adopt appropriate measures to prevent further increase in delays and gradually remove them completely. I asked Mr. Plovajko whether Czech Airlines had joined such initiatives.
