Business News

In this week’s Business News: the central bank says the worst is over; commercial banks drag their feet on rate cuts; a Prague court throws out an insider dealing charge; Czech performance on internet economy assessed; and a Papal blessing for a monopoly producer.

Central bank says recession probably bottomed out in second quarter

Czech National Bank, photo: Štěpánka Budková

The worst is probably over. That was the message that came out from the Czech National Bank bank’s board meeting on Thursday. The bank said that the economy probably hit the bottom in the second quarter of the year and monthly figures on the economy could start showing an improvement. Even so, the bank was cautious in its optimism. It also came out with a more gloomy prediction that the economy will shrink by 3.8 percent this year. This forecast was delivered at the same time along with the bank’s historic decision to cut its main interest by a quarter of a percentage point to 1.25 percent, the lowest level ever.

Commercial banks fight shy of interest rate cuts

When the Czech National Bank leads the others follow. That at least is the theory — but Czech commercial banks are not showing much enthusiasm to follow the tune of the central bank Pied Piper. The head of Česká Spořitelna — the biggest Czech lender according to client numbers — said after the central bank interest rate cut that his bank saw no need to cut its rates further. Commercial banks’ interest rates have decoupled from the central bank rate over recent months with mortgage or home loan rates, for example, staying above 5.0 percent. They fear the recession still has to fully hit them in the form of more unpaid loans.

Court throws out insider dealing charge

The Czech Republic’s first ever insider dealing trial has concluded with the accused being cleared. The head of trading of power giant ČEZ was accused of buying shares in the company shortly before results were revealed. He later sold them for a 1.6 million crown profit. Prague’s High Court has ruled that the information would not have influenced the share price and that Alan Svoboda had not committed a crime, confirming an earlier ruling. Market watchdog, the Czech National Bank, still has to give its opinion on the case. Its predecessor slapped a 4.0 million crown fine on Svoboda for abuse of inside information which he appealed.

Pass marks for internet economy progress

The Czech Republic has been given moderate marks for its success in steering itself into the internet economy. A report by the European Commission showed that 51 percent of the population are regular internet users, putting it 17th out of the EU’s 27. Just under half of firms use internet applications for internal business — nine out of 27. And the Czech Republic grabbed third place for the proportion of employees with specialised information and computing skills with a total of 4.8 percent.

Pope boosts orders for special bakery

The Pope will in his small way be boosting production for a Czech company during his September visit. The Unitas bakery has landed the order to supply around 200,000 communion hosts or holy breads for the open air mass which Pope Benedict XVI will conduct during his visit. That adds up to two day’s of normal production. The bakery has a monopoly on making hosts in the Czech Republic, a position helped by the Communist regime’s repression of local parish priests who used to do the job. Unitas branched out into producing spa wafers in 2004, a few years after civilian workers replaced nuns as the workforce.