Eastern European Banking Model

A traditional banking model in a CEEC (Central and Eastern European Country) consisted of a central bank and several purpose banks, one dealing with individuals’ savings and other banking needs, and another focusing on foreign financial activities, etc. The central bank provided most of the commercial banking needs of enterprises in addition to other functions. During the late 1980s, the CEECs modified this earlier structure by taking all the commercial banking activities of the central bank and transferring them to new commercial banks. In most countries the new banks were set up along industry lines, although in Poland a regional approach has been adopted.

On the whole, these new stale-owned commercial banks controlled the bulk of financial transactions, although a few ‘de novo banks’ were allowed in Hungary and Poland. Simply transferring existing loans from the central bank to the new state-owned commercial banks had its problems, since it involved transferring both ‘good’ and ‘bad’ assets. Moreover, each bank’s portfolio was restricted to the enterprise and industry assigned to them and they were not allowed to deal with other enterprises outside their remit.

As the central banks would always ‘bale out’ troubled state enterprises, these commercial banks cannot play the same role as commercial banks in the West. CEEC commercial banks cannot foreclose on a debt. If a firm did not wish to pay, the state-owned enterprise would, historically, receive further finance to cover its difficulties, it was a very rare occurrence for a bank to bring about the bankruptcy of a firm. In other words, state-owned enterprises were not allowed to go bankrupt, primarily because it would have affected the commercial banks, balance sheets, but more importantly, the rise in unemployment that would follow might have had high political costs.

What was needed was for commercial banks to have their balance sheets ‘cleaned up’, perhaps by the government purchasing their bad loans with long-term bonds. Adopting Western accounting procedures might also benefit the new commercial banks.

This picture of state-controlled commercial banks has begun to change during the mid to late 1990s as the CEECs began to appreciate that the move towards market-based economies required a vibrant commercial banking sector. There are still a number of issues lo be addressed in this sector, however. For example, in the Czech Republic the government has promised to privatize the banking sector beginning in 1998. Currently the banking sector suffers from a number of weaknesses. A number of the smaller hanks appear to be facing difficulties as money market competition picks up, highlighting their tinder-capitalization and the greater amount of higher-risk business in which they are involved. There have also been issues concerning banking sector regulation and the control mechanisms that are available. This has resulted in the government’s proposal for an independent securities commission to regulate capital markets.

The privatization package for the Czech Republic’s four largest banks, which currently control about 60 percent of the sector’s assets, will also allow foreign banks into a highly developed market where their influence has been marginal until now. It is anticipated that each of the four banks will be sold to a single bidder in an attempt to create a regional hub of a foreign bank’s network. One problem with all four banks is that inspection of their balance sheets may throw up problems which could reduce the size of any bid. All four banks have at least 20 percent of their loans as classified, where no interest has been paid for 30 days or more. Banks could make provisions to reduce these loans by collateral held against them, but in some cases the loans exceed the collateral. Moreover, getting an accurate picture of the value of the collateral is difficult since bankruptcy legislation is ineffective. The ability to write off these bad debts was not permitted until 1996, but even if this route is taken then this will eat into the banks’ assets, leaving them very close to the lower limit of 8 percent capital adequacy ratio. In addition, the ‘commercial’ banks have been influenced by the action of the national bank, which in early 1997 caused bond prices to fall, leading to a fall in the commercial banks’ bond portfolios. Thus the banking sector in the Czech Republic still has a long way to go.

In Hungary the privatization of the banking sector is almost complete. However, a state rescue package had to be agreed at the beginning of 1997 for the second-largest state bank, Postabank, owned indirectly by the main social security bodies and the post office, and this indicates the fragility of this sector. Outside of the difficulties experienced with Postabank, the Hungarian banking system has been transformed. The rapid move towards privatization resulted from the problems experienced by the state-owned banks, which the government bad to bail out, costing it around 7 percent of GDP. At that stage it was possible that the banking system could collapse and government funding, although saving the banks, did not solve the problems of corporate governance or moral hazard. Thus the privatization process was started in earnest. Magyar Kulkereskedelmi Bank (MKB) was sold to Bayerische Landesbank and the EBDR in 1994, Budapest Bank was bought by GE Capital and Magyar Hitel Bank was bought by ABN-AMRO. In November 1997 the state completed the last stage of the sale of the state savings bank (OTP), Hungary’s largest bank. The state, which dominated the banking system three years ago, now only retains a majority stake in two specialist banks, the Hungarian Development Bank and Eximbank.

The move towards, and success of privatization can be seen in the balance sheets of the banks, which showed an increase in post-tax profits of 45 percent in 1996. These banks are also seeing higher savings and deposits and a strong rise in demand for corporate and retail lending. In addition, the growth in competition in the banking sector has led to a narrowing of the spreads between lending and deposit rates, and the further knock-on effect of mergers and small-hank closures. Over 50 percent of Hungarian bank assets are controlled by foreign-owned banks, and this has led to Hungarian banks offering services similar to those expected in many Western European countries. Most of the foreign-owned but mainly Hungarian-managed banks were recapitalized after their acquisition and they have spent heavily on staff training and new information technology systems. From 1998, foreign banks will be free to open branches in Hungary, thus opening up the domestic banking market to full competition.

As a whole, the CEECs have come a long way since the early 1990s in dealing with their banking problems. For some countries the process of privatization still has a long way to go but others such as Hungary have moved quickly along the process of transforming their banking systems in readiness for their entry into the EU.

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Learn about Custom Pilot Plants

Custom pilot plants are very indispensable in any of your projects. You can reap several benefits when you opt for a custom pilot plant. One of the main advantages of using a custom pilot plant is that it allows you to calculate your general costs. When you are handling any project, you would hate to deal with the uncertainty of the amount you are spending on the project. When you buy a custom pilot plant, you will have the privilege to know how your money is being spent, and you can likewise plan earlier. You will also have the opportunity to know the total amount you need on any project, and you will make money available for the project. When you do not have a custom pilot plant, you could end up spending a lot more or a lot less for your project, and as such, you could not achieve excellent work. In a bid to squeeze the plan to fit in your project, you could end up buying items in less quantity only to realize that there is some money left after the project, and this is very frustrating.

Another benefit associated with buying a custom pilot plant is that it allows you to make prior plans. There is no other fulfillment than the one that comes in knowing that you do not need to worry about the project. When you have a custom pilot plant, you rest assured that your project will run smoothly till the end. The fact that you know the total amount you need for the completion of the project is also another catch. You can also boost the level of confidence you have, and this will relieve you of stress.

Another advantage of buying a custom pilot plant is that it reduces the number of operations you need to carry out. When you have a custom pilot plant, you do not have to worry about anything. You will have an opportunity to increase the value of your systems and the rate at which you can utilize the methods. When you have custom plants, all this will be effortless, and you will appreciate you have the custom plant.

Another benefit associated with buying a custom pilot plant is that it allows you to cut on general costs. When you use a custom pilot plant, you will not need a lot of water or air, which can cost you a fortune. This is because custom pilot plants have low gas emissions, and therefore, your project will be in total compliance with the regulations. You will likewise have the opportunity to use available pollution control methods, which are less costly and convenient. You will likewise appreciate training the engineers for your project, and this allows you to increase their efficiency. You will also have clear expectations, and therefore, it will be easy to establish what you want to achieve at a specific time. In conclusion, using custom pilot plants is the surest way to achieve success in a project, and you will also appreciate all the above-listed benefits.

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Guidelines to Follow when Selecting Parking Access Control Systems

When you buy a car, you have to know that there will be parking fees required. Not all car parks are secure for your car. You need to be careful when selecting the place to park your car. Controlling the parking manually can be challenging. With the invention of technology, digital parking systems have been invented. The digital parking systems have made work easier. Most businesses that are using technology have seen positive results. Controlling parking with digital parking systems is better than controlling the parking manually. There are many digital parking systems. There are many parking systems that you can use. When selecting a parking access control system, you need to choose the one that will fully fit your needs and requirements. Therefore, before selecting a parking access control system, you need to research the different types of parking access control systems and their uses. When you research, you will find the right parking access control system.

Nowadays, if you want to buy something, you need to research to know which product is the best. There are positive results that car owners enjoy if they choose the correct car park management system. People have always had a hard time when it comes to parking. With the use of technology in digital parking systems, getting positive results is now easy. Knowing the type of parking access control system that your car needs, will lead to positive results. There will be ease of use when you choose the right parking access control system. There will also be improved security when you choose the right parking access control system for your car. Below are the guidelines to follow when selecting a parking access control system.

You need to know the amount that you will be charged for the parking access control systems. Due to the increase of these parking access control systems, price varies from one system to another. You need to choose a parking access control system that will fully suit your needs. Before you access the parking area, you need to pay a certain amount of money. This will help you in controlling the people that access your parking lot.

Choose a parking access control system that will be easy to use. With the increase of parking access control systems, the form operating them is different. Conduct the research on the type of parking system parking uses and from there you will know the best system to use. With the information above, it will be easy for you in making the right decision.
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