oekb annual report 2010
TRANSCRIPT
The complete perspective.
Annual Report
2010O e s t e r r e i c h i s c h e K o n t r o l l b a n k G r o u p
Average number of employees of OeKB Group
Consolidated balance sheet total at 31 December
Equity including minority interest
Operating profit
Profit before tax
Profit for the year attributable to shareholders of the parent
Return on equity in %
Cost/income ratio in %
New guarantee contracts issued
Guaranteed export sales (estimate)
Guaranteed exports in % of total Austrian exports
Total Austrian exports (excluding services)
Number of new guarantee contracts issued
Aggregate guarantee exposure limit, at 31 December
Aggregate guarantee exposure (i.e., limit utilisation), at 31 December
Number of guarantees in place
Premium and interest income
Gross claims paid by the Guarantor
Recoveries on claims paid
New commitments issued
Total lending commitments outstanding at 31 December
Of which disbursements outstanding
Loan funds disbursed
Repayments received
Increase/(decrease) in net loans outstanding
Total funds used under the Export Financing Scheme
Limit on aggregate guarantee exposure under 1981 Export Financing Guarantees Act
Utilisation of the guarantee exposure limit at 31 December
Total new guarantees issued
Bond market — Federal bonds administered by OeKB
CSD.Austria — EUR/ATS bonds
DS.A volume of transactions (nominal, internal, double counting)
Number of depositors/classes of securities
20092008
365 363
33,019
440
83
74
59
20.58
45.18
12,316
4,395
4
114,680
1,225
45,000
37,460
3,994
250
328
188
9,803
32,919
29,537
8,726
4,795
+3,931
38,395
40,000
32,573
14,416
9,230
215,962
627,960
141/20,631
41,546
456
91
28
22
7.71
44.14
12,063
3,914
4
117,525
1,032
50,000
44,446
3,995
242
380
262
12,225
39,143
36,803
12,054
4,788
+7,266
45,499
45,000
38,486
17,108
5,619
249,908
818,153
157/20,550
Consolidated financial statements
EUR million (except lines beginning with “Number of”)
OeKB Export Financing Scheme
Capital Market Services
Guarantees of the Republic of Austria under the Export Guarantees Act
OeKB – Highlights
1 1
2010
Sources: 1 Statistics Austria 2 December 2010 forecast by WIFO, the Austrian Institute of Economic Research
2007
385
34,252
527
85
119
91
28.85
47.45
5,160
3,644
4
93,739
858
50,000
40,650
3,833
89
333
353
4,971
34,075
31,401
4,441
9,843
(5,402)
41,965
45,000
33,745
8,230
18,210
273,420
813,240
156/20,217
1
396
35,802
569
79
93
72
21.02
50.24
3,869
3,666
3
108,740
948
50,000
38,508
3,859
190
116
36
4,413
33,246
29,429
2,924
4,896
(1,972)
26,787
45,000
31,658
6,294
17,007
288,347
852,502
167/22,398
2
Oesterreichische
Kontrollbank Aktiengesellschaft
Annual Report 2010
Annual Report 2010
Why does it say “The Complete Perspective” on these reports?
The reason is that our aim at OeKB and the
Group companies is always to balance meticulous
attention to detail with a firm grasp of the big
picture, in all its intricacy and interconnectedness:
The export markets and their risk situation, the
capital and energy markets, and the rapidly growing
wealth of news and data.
With this special combination of wide-angle vision
and close-up precision, we deliver services that
help our clients achieve success in a complex world,
serving everyone from public sector principals, to
exporters and outward foreign investors, to capital
market participants and energy suppliers.
3
Annual Report 2010
Letter from the Executive Board
Dear Reader
The world economy recovered somewhat in 2010 thanks to considerable growth in emerging markets. This was beneficial for the Austrian export industry as well: After sharply contracting in theprevious year, exports rose by about 16% in 2010. This upswing was vigorously and effectively supported by the export finance and insurance entities of the OeKB Group — Oesterreichische Kontrollbank AG, OeKB Versicherung, PRISMA Kreditversicherung, and Exportfonds — with a particularfocus on small and medium-sized companies. Likewise, our subsidiary Oesterreichische Entwicklungs-bank AG, the development bank, achieved a significant increase in its financing for private sector projects in developing and newly industrialised countries.
In view of Austrian companies’ still subdued foreign direct investment activity, the main use of theAustrian government guarantees under the Export Guarantees Act and of the Export FinancingScheme operated by OeKB was in supporting exports of goods and services. As in the years before,the guarantee system generated a substantial revenue surplus. In export finance, since autumn 2010,soft loans are available for an additional 18 countries and, in certain situations, soft loan financing is possible also for service exports.
We successfully completed OeKB’s delivery of the Austrian government’s temporary programme ofguarantees under the Corporate Liquidity Support Act, which helped large Austrian companies weather the financial and economic crisis and preserve jobs. The end of 2010 also saw the completionof the special function served by OeKB in conducting the business activities of Oesterreichische Clearingbank AG.
For the Austrian capital market, OeKB further expanded its central role as a financial market servicesand information hub and entrenched itself as a full-service provider for the organisation and executionof shareholder meetings.
The demand for the high-quality services delivered under the OeKB brand is made clear not only by the interest in our well-established CEE Business Climate Index, but also by the uptake of other services in information and knowledge management and of specialised services from OeKB BusinessServices GmbH.
This Annual Report is distributed together with the Export Services Annual Review and OeKB’s Sustainability Report. The publications review our services to the export industry and foreign direct investors, and document our consistent efforts to ensure corporate responsibility. That we are able to demonstrate our performance convincingly is shown by OeKB’s winning the Austrian Sustainability Reporting Award for the third time and being honoured with the EMAS Award from the Austrian environment ministry.
Johannes Attems Rudolf Scholten
4
5
Why does the OeKB Group offer so many different services?
“This rich blend makes sense because all our services have one thing
in common: They help businesses to compete successfully.
For example, through risk protection products, attractive financing,
proven clearing systems and relevant business news.”
Andrea SchnablManager for IT Controlling/Organisation and Risk,
IT Department
O e s t e r r e i c h i s c h e K o n t r o l l b a n k G r o u p
7
I. General information 8
II. Group management report for 2010
Annual Report 2010
– Amount is zero.0 Amount is smaller than half of the stated unit.Totals may not add due to rounding.
Legend for data presentedin this report
1 Business performance and financial and economic situation 21
2 Management of Austrian federal government guarantees by OeKB 23
3 OeKB Export Financing Scheme 29
4 „Österreichischer Exportfonds“ GmbH 35
5 Capital market 35
6 CentralSecuritiesDepository.Austria 41
7 CCP Austria Abwicklungsstelle für Börsengeschäfte GmbH 44
8 Energy Market Services 45
9 Information Services 46
10 OeKB Business Services GmbH 48
11 Oesterreichische Entwicklungsbank AG 49
12 OeKB EH Beteiligungs- und Management AG 49
13 System of internal control 53
14 Risk management 54
15 Human resources 55
16 Sustainability at OeKB 57
III. OeKB Group Consolidated Financial Statements for 2010 61
IV. Auditor’s Report 102
Page
Contents
8
Annual Report 2010
Share capital of EUR 130 million
Oesterreichische Kontrollbank Aktiengesellschaft(“OeKB” or “OeKB AG”), an Austrian public limitedcompany, has a share capital of EUR 130 million.
In view of the special functions performed by OeKB,its shares are registered ordinary shares that are not listed on the Vienna Stock Exchange. The sharesmay be transferred only with the consent of the Supervisory Board.
1 Shareholders and share capital
2 Strategic positioning of OeKB
I. General information
2.1 Specialised services benefiting the overall economy
OeKB AG is a financial services provider in the Austrian banking industry. OeKB was founded on 22 January 1946 to provide specialised banking
services. It has its registered office in Vienna (Company Register Number FN 85749 b, Vienna Commercial Court).
OeKB’s activities are targeted to the needs and interests of the economy as a whole. It provides itsservices across business sectors, in a centralisedmanner, impartially and in accord with its sustain-ability policy.
OeKB has a long tradition of fulfilling these specialfunctions in its major areas of activity — Export Services and Capital Market Services — as well as in its Information Services business.
Number of shares PercentageShareholders
CABET-Holding-Aktiengesellschaft, Vienna
(UniCredit Bank Austria Group)
UniCredit Bank Austria AG, Vienna
Erste Bank der oesterreichischen Sparkassen AG, Vienna
Schoellerbank Aktiengesellschaft, Vienna
AVZ Finanz-Holding GmbH, Vienna
Raiffeisen Zentralbank Österreich Aktiengesellschaft, Vienna
BAWAG P.S.K. Bank für Arbeit und Wirtschaft und
Österreichische Postsparkasse Aktiengesellschaft, Vienna
Raiffeisen OeKB Beteiligungsgesellschaft mbH, Vienna
Oberbank AG, Linz
Bank für Tirol und Vorarlberg Aktiengesellschaft, Innsbruck
BKS Bank AG, Klagenfurt
Österreichische Volksbanken-Aktiengesellschaft, Vienna
217,800
142,032
113,432
72,688
72,600
71,456
44,792
44,000
34,224
26,888
26,888
13,200
880,000
24.750
16.140
12.890
8.260
8.250
8.120
5.090
5.000
3.890
3.055
3.055
1.500
100.000
Distribution of the share capital (at 31 December 2010)
9
In step with demand, these three main business segments are expanded and developed by adding new services. In this process, OeKB strives to identifyand exploit synergies to enhance efficiency.
The financial industry, the economy at large and thepublic sector all benefit from OeKB’s wealth of expertise and experience. This strengthens stake-holders’ trust — a trust that consistently makes OeKBthe provider of choice for an ever-growing range of financial, processing and information services, deli-vered from its position at the centre of the financialmarket. In the international capital markets, OeKB iswell-regarded as a frequent and high-quality issuer of debt securities.
Specialisation and innovation are also the strategieswith which OeKB meets future challenges. As always,it does this in harmony with its shareholders and coordinates its activities with the entire bankingsector, the export industry, capital market participantsand the ministries and institutions involved. OeKB’sbusiness strategy and philosophy are marked by aclear focus on markets and customers, a commitmentto sustainability, and an emphasis on continual innovative development of its portfolio of productsand services. The Bank’s strong sense of social cor-porate responsibility makes itself felt in the efficientmanagement of costs, earnings and risks, as well as in a motivating and environment-friendly work atmosphere that fosters an achievement-oriented corporate culture.
Export Services
Valuable synergies for the export and banking indus-tries are harnessed thanks to the fact that OeKB isboth responsible for the delivery of export guaranteesfrom the Austrian government, and able to provide theassociated export financing. Working in the context ofcurrent Austrian export development policy, OeKB isquick to respond to changing conditions and requi-rements by adjusting its offering and developing newprocesses accordingly. This ensures that Austrian exporters and outbound foreign direct investors always have access to a competitive range of helpfulproducts and efficient services.
Capital Market Services
OeKB’s strategic thrust in Capital Market Services,building on its key role as a securities depository andmanager, is to expand its existing services to banks,securities exchanges and all capital market partici-pants. In addition to these functions, the Bank offersservices that leverage the power of the latest infor-mation technology. Especially in view of growing EUharmonisation in the securities business and the resulting increase in cross-border movement of non-physical securities, OeKB’s technical innovation, modern financial data services and constantly expanding international contacts are vital to a globallycompetitive Austrian securities market.
2.2 Range of services
OeKB performs the following special functions in theAustrian financial system:
■ Management of export guarantees of the Republic of Austria, as the government’s agent under the Export Guarantees Act
■ OeKB’s Export Financing Scheme
■ Organisation and administration of Austrian government bond issues
■ Issuer Services■ Notification office under the Capital Markets Act■ CentralSecuritiesDepository.Austria and
processing of off-exchange securities transactions
■ Energy Market Services■ Major broker of financial and
economic information
Annual Report 2010
General information
10
Annual Report 2010
General information
OeKB AG is not a listed company, but is neverthelessguided by the Austrian Code of Corporate Governanceto the extent that the Code’s principles are applicable.
The Austrian Code of Corporate Governance, first pre-sented to the public in 2002, is reviewed and revisedannually in the context of national and internationaldevelopments. The most recent amendments to theCode, which promote even greater transparency andreflect a change in the Stock Corporation Law Amend-ment Act, were made on 1 January 2010. The Code in its full wording is available at www.corporate-governance.at.
Cooperation between the Supervisory Board and Executive Board
The Executive Board provides the Supervisory Boardwith regular, prompt and comprehensive reports on allrelevant business developments, including the risk situation and risk management at OeKB and significantGroup companies. The aim of good corporate gover-nance in managing the Group’s business is pursuedthrough open discussion and communication betweenand within the Executive Board and SupervisoryBoard.
The Executive Board sets the Group’s strategic direction together with, and subject to the approval of,the Supervisory Board and regularly discusses the status of strategy implementation with the latterBoard. The Supervisory Board meets at least fourtimes per financial year.
Executive Board
The two-member Executive Board of OeKB AG is responsible for managing the Group. Its decisionscomply with all relevant laws, the Articles of Asso-ciation and the Executive Board’s internal rules of procedure. The division of responsibilities and the internal cooperation of the Executive Board are setout in its internal rules of procedure.
The Executive Board’s compensation includes bothfixed and performance-based variable components.The results-based portion is determined by long-termperformance measures. The disclosure under rule 31of the Austrian Code of Corporate Governance con-cerning executive compensation is omitted in relianceon section 266(7)b Austrian Commercial Code; item31 is a so-called “C-rule” or “comply-or-explain” rule.
Supervisory Board
The Supervisory Board is responsible for supervisingthe Executive Board and supporting it in managing the Group, particularly in making decisions of funda-mental importance. In the year under review, the Supervisory Board was composed of 14 shareholderrepresentatives and eight employee representatives.As a result of an agreement among shareholders, thenumber of board members deviates from C-rule 52,which stipulates that supervisory boards should have a maximum of ten members, excluding the employeerepresentatives. The membership of the SupervisoryBoard is presented from page 12 onward.
The Supervisory Board’s remuneration is determinedat the Annual General Meeting and is shown in note54 to the consolidated financial statements. The employee representatives perform their responsi-bilities on the Supervisory Board in the course of their ordinary employment.
3 Corporate governance
11
Annual Report 2010
General information
The Supervisory Board has formed an Audit Commit-tee and a Working Committee. The members of thesecommittees are Erich Hampel (Chairman and FinancialSpecialist), Walter Rothensteiner and Martin Krull. The Audit Committee met twice in 2010.
The Audit Committee is responsible primarily for theauditing, and preparation of the adoption, of the company financial statements, the proposal for theappropriation of profit and the company managementreport; for the auditing of the consolidated financialstatements and Group management report; and for recommending to the Supervisory Board the choice ofindependent auditors. The Audit Committee is also required to monitor the effectiveness of the enter-prise-wide internal audit system and the risk mana-gement system.
The Working Committee oversees borrowing opera-tions to fund the export financing scheme; lendingunder the export financing scheme; lending undersection 3 of the internal rules of procedure (relateddebt rescheduling facilities and purchase of accountsreceivable); and the use of the amounts in the intereststabilisation account.
No nomination committee or remuneration committeewas formed. The functions concerned are performedby the chair group (the Supervisory Board Chairmanand Deputy Chairman). The chair group met four timesin 2010.
Transparency and auditing
Openness and transparency in communications withits shareholders and other stakeholders is particularlyimportant to OeKB. This priority was upheld in 2010by the Executive Board and the Investor Relations andPublic Relations departments. In addition to othercommunication channels, up-to-date information onthe Group and its business segments is always available on the OeKB website at www.oekb.at.
According to the rules 4 and 5 of the Austrian Code of Corporate Governance, the motions submitted tothe Annual General Meeting and all documents including shareholder motions and countermotions, as well as the candidates nominated for election tothe Supervisory Board, should ordinarily be publishedon the website. However, OeKB considers such publi-cation to be inappropriate, as this information is reser-ved for shareholders. Therefore only shareholders mayview these documents and the right to confidentialityof shareholders that submit motions must be respected.
The company financial statements, company manage-ment report, consolidated financial statements andGroup management report were audited by KPMGAustria GmbH Wirtschaftsprüfungs- und Steuerbera-tungsgesellschaft, the auditor appointed by the AnnualGeneral Meeting. The independent auditor’s report isfound in section IV., Auditor’s Report.
12
Annual Report 2010
General information
4 Supervisory bodies
Supervisory Board
Erich Hampel (born 1951), ViennaTerm of office: 1 January 2010 to AGM 2011Chairman
Walter Rothensteiner (born 1953)Term of office: 2 August 1995 to AGM 2011First Vice-ChairmanChief Executive Officer,Raiffeisen Zentralbank Österreich Aktiengesellschaft, Vienna
Franz Hochstrasser (born 1963)Term of office: 19 May 2009 to AGM 2011Second Vice-ChairmanDeputy Chief Executive Officer,Erste Group Bank AG, Vienna
Helmut Bernkopf (born 1967)Term of office: 19 May 2009 to AGM 2014Member of the Executive Board, UniCredit Bank Austria AG, Vienna
Peter Hofbauer (born 1964)Term of office: 19 May 2009—18 May 2010UniCredit Bank Austria AG, Vienna
Friedrich Hondl (born 1960)Term of office: 15 December 2009 to AGM 2011UniCredit Bank Austria AG, Vienna
Stephan Koren (born 1957)Term of office: 20 May 2008 to AGM 2014 Deputy Chief Executive Officer,BAWAG P.S.K. Bank für Arbeit und Wirtschaft undÖsterreichische Postsparkasse Aktiengesellschaft, Vienna
Reinhard Ortner (born 1949), ViennaTerm of office: 12 May 1998—18 May 2010
Heimo Penker (born 1947)Term of office: 20 May 2005 to AGM 2011Chief Executive Officer,BKS Bank AG, Klagenfurt
Angelo Rizzuti (born 1961)Term of office: 21 May 2003 to AGM 2013UniCredit Bank Austria AG, Vienna
Ludwig Scharinger (born 1942)Term of office: 18 May 2010 to AGM 2011Chief Executive Officer,Raiffeisenlandesbank Oberösterreich Aktiengesellschaft, Linz
Herbert Stepic (born 1946)Term of office: 3 April 1992 to AGM 2015Chief Executive Officer,Raiffeisen Bank International AG, Vienna
Thomas Uher (born 1965)Term of office: 16 May 2007 to AGM 2011Member of the Executive Board,Erste Bank der oesterreichischen Sparkassen AG, Vienna
Gerald Wenzel (born 1950)Term of office: 18 May 2010 to AGM 2011Chief Executive Officer,Österreichische Volksbanken-Aktiengesellschaft, Vienna
Stephan Winkelmeier (born 1967)Term of office: 19 May 2009—7 June 2010UniCredit Bank Austria AG, Vienna (until 22 June 2010)
Robert Zadrazil (born 1970)Term of office: 19 May 2009 to AGM 2011Chief Executive Officer, Schoellerbank Aktiengesellschaft, Vienna
Franz Zwickl (born 1953), ViennaTerm of office: 20 May 1999 to AGM 2011
AGM = Annual General Meeting
13
Annual Report 2010
General information
Employee Representatives:
Martin Krull (born 1976)Since 14 March 2002Chairman of the Staff Council
Anish Gupta (born 1966)Since 14 March 2006 Vice-Chairman of the Staff Council
Alexandra Griebl (born 1977)Since 14 March 2010
Christian Leicher (born 1968)Since 7 July 2009
Claudia Richter (born 1964)Since 11 July 2002
Erna Scheriau (born 1959)Since 1 April 2001
Otto Schrodt (born 1949)Since 14 March 1998
Ulrike Zabini (born 1959)Since 14 March 1998
The term of office for employee representatives ends on 13 March 2014.
Government Commissionersunder section 76 Austrian Banking Act
Thomas Wieser (born 1954)Commissioner [since 1 January 2011]Austrian Ministry of Finance
Alfred Lejsek (born 1959)Commissioner [1 September 2003 until 1 January 2011]Austrian Ministry of Finance
Johann Kinast (born 1963)Deputy Commissioner [since 1 March 2006]Austrian Ministry of Finance
The above government commissioners are also
representatives of the Austrian Minister of Finance under
section 6 1981 Export Financing Guarantees Act.
Government Commissionersunder section 27 of the Articles of Association (supervision of bond cover pool)
Johannes Ranftl (born 1948)Commissioner [since 1 December 1996]Ministerialrat, Austrian Ministry of Finance
Edith Wanger (born 1955)Deputy Commissioner [since 1 June 1997]Amtsdirektorin, Austrian Ministry of Finance
Independent auditor(for the 2010 financial year)
KPMG Austria GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft, Vienna
Certified Public Accountants
The auditor within the meaning of the Austrian Stock Corporation
Act (Aktiengesetz) also acts as the bank auditor for the purposes
of the Austrian Banking Act (Bankwesengesetz).
Legal Advisers
Pöch KrassniggRechtsanwälte GmbH, Vienna
Peter Pöch, Lawyer, Legal Adviser
(Information current as of 28 February 2011)
14
Annual Report 2010
General information
Executive Board
5 Organisational structure of OeKB
Johannes Attems (born 5 October 1947)
Member of the Executive Board [since 1 June 1988]
Bank and Business Information
EDP Systems and Organisation
International Finance
Capital Market Services
Personnel Department
Bond Market and Notification Office under the Capital Markets Act
Rudolf Scholten (born 3 November 1955)
Member of the Executive Board [since 1 May 1997]
Controlling, Reporting and Payments
Export Guarantees — Claims Management
Export Guarantees — International Relations and Services
Export Guarantees — Project Underwriting
Credit Department
Organisation, Construction, Environmental Issues and Security
Project and Environmental Analyses
Accounting
Guarantees for Export Acceptance Credits
The Executive Board is collectively responsible for
Internal Audit/Group Internal AuditRisk Controlling DepartmentSecretariat of the Executive Board/Public RelationsLegal Affairs
The employment contract of Johannes Attems runs until 31 December 2014; that of Rudolf Scholten runs until 30 April 2012.
15
Annual Report 2010
General information
Senior officers
Bank and Business Information
Angèle Eickhoff, Head of DepartmentJutta Leitner, Deputy Head of Department
Controlling, Reporting and Payments
Robert Anderl, Head of DepartmentMichael Meier, Deputy Head of Department
Export Guarantees — Claims Management
Christine Dangl, Head of DepartmentPeter Gaspari, Deputy Head of DepartmentNorbert Wokusch, Deputy Head of Department
Export Guarantees —International Relations and Services
Sylvia Doritsch-Isepp, Head of DepartmentGerhard Kinzelberger, Deputy Head of DepartmentHeidemarie Ptacnik
Export Guarantees — Project Underwriting
Ferdinand Schipfer, Head of DepartmentErwin Marchhart, Deputy Head of DepartmentKarin Roitner, Deputy Head of DepartmentJohannes Pflügl
EDP Systems and Organisation
Lech Ledóchowski, Head of DepartmentFranz Macsek, Deputy Head of DepartmentManfred HeppeMichael Nedved
International Finance
Waltraut Burghardt, Head of DepartmentAnton Ebner, Deputy Head of DepartmentAnish GuptaElisabeth SchneiderMonika SeitelbergerJohannes Skarohlid
Internal Audit/Group Internal Audit
Karl Sterrer, Head of DepartmentGottfried Stocker, Deputy Head of Department
E-mail: [email protected]: +43 1 531 27-0
Capital Market Services
Georg Zinner, Head of DepartmentChristian Körbler, Deputy Head of DepartmentWolfgang AubrunnerPeter FelsingerNorbert LeitgebGerhard Mayer
Credit Department
Dieter Nell, Head of DepartmentHarald Klee, Deputy Head of DepartmentIlse CzermakHans-Rainer Miehl
Public Relations
Peter Gumpinger
Organisation, Construction, Environmental Issues and Security
Eveline Balogh, Head of DepartmentThomas Bammer, Deputy Head of Department
Personnel Department
Josef Feldhofer, Head of DepartmentMartina Ganzera-Veraszto, Deputy Head of Department
Project and Environmental Analyses
Werner Schmied, Head of DepartmentKarl Lenauer, Deputy Head of Department
Accounting
Angelika Sommer-Hemetsberger, Head of DepartmentMarkus Schmidt, Deputy Head of DepartmentGerhard Polterauer
Bond Market and Notification Office under the Capital Markets Act
Erich Weiss, Head of DepartmentMaria Kucera, Deputy Head of Department
Risk Controlling
Karl Heinz Überlackner, Head of Department and CROChristoph Schwärzler, Deputy Head of Department
and Deputy CROGerda Klaus, Deputy Head of Department
Guarantees for Export Acceptance Credits
Wolfgang Pitsch, Head of DepartmentUlrike Zabini, Deputy Head of Department
OeKB BusinessServices GmbH
Robert Anderl
Thomas Spanel
16
Annual Report 2010
General information
The entities shown are those in which OeKB AG holdsa direct or indirect ownership interest of at least 50%or of a carrying value of more than EUR 500,000. Pure holding companies are omitted.
Information on investments in other companies andtheir representation in the accounts is provided innote 28 to the consolidated financial statements.
6 Business holdings
Oesterreichische Kontrollbank Aktiengesellschaft
Johannes Attems
Rudolf Scholten
„Österreichischer Exportfonds“ GmbH
Carl de Colle
Elisabeth Strassmair
OeKB VersicherungAktiengesellschaft
Helmut Altenburger
Karolina Offterdinger
Wiener Börse AGOesterreichischeEntwicklungsbank AG
PRISMAKreditversicherungs-Aktiengesellschaft
BudapestStock Exchange Ltd.
Andrea Hagmann
Michael Wancata
Ludwig Mertes
Bettina Selden
OeKB SüdosteuropaHolding Ges.m.b.H.
Helmut Altenburger
CCP Austria Abwicklungsstelle für Börsengeschäfte GmbH
Wolfgang Aubrunner
Ludwig Nießen
17
Annual Report 2010
Supervisory Board report
In 2010 the Supervisory Board, the Audit Committee and the Working Committee supervised themanagement and approved its actions, on the basis of the regular reports made by management inregular meetings as well as in writing, and through repeated personal contact.
The consolidated financial statements for 2010 and the Group management report presented herein, as well as the 2010 company financial statements and management report, of Oesterrei-chische Kontrollbank AG were audited by KPMG Austria GmbH Wirtschaftsprüfungs- und Steuer-beratungsgesellschaft, Vienna. The financial statements received an audit opinion as being in accordance with the legal requirements.
The Supervisory Board and its Audit Committee have reviewed the reports presented by the Executive Board on the result of the audit for the 2010 financial year, and the proposal for the appropriation of profit. The final result of this review did not give rise to objections.
The Supervisory Board in its meeting on 22 March 2011 approved the company financial statements for 2010, which were thereby adopted, and declared its agreement with the ExecutiveBoard’s proposal for the appropriation of profit. The Supervisory Board has approved the consolida-ted financial statements and Group management report.
For the excellent work done during the year, the Supervisory Board would like to express its gratitude and appreciation to the Executive Board and every employee of the OeKB Group.
Vienna, March 2011
For the Supervisory BoardErich HampelChairman
18
With “Kontroll” in its name, what does Oesterreichische Kontrollbank actually control or supervise?
“Despite what our name seems to imply, we do not have a supervisory
or monitoring role. But we fulfil many functions for the Republic of Austria
and the general market that demand special expertise in the export
and securities markets. With this in mind, part of our job at OeKB is to ensure
day-by-day that we stay on top of our very diverse portfolio of businesses.”
Erik SchoinzFinancial Risk Analyst,
Risk Controlling
19
O e s t e r r e i c h i s c h e K o n t r o l l b a n k G r o u p
20
21
Annual Report 2010
Consolidated financial statements
This annual report includes the consolidated financialstatements of Oesterreichische Kontrollbank AG(“OeKB AG”) and its subsidiaries, prepared in accor-dance with International Financial Reporting Stan-dards (IFRS). The companies of the OeKB Group andtheir activities are profiled in this management report.
The OeKB Group’s operations in 2010 continued tofocus on the business segments of Export Services,Capital Market Services and Information Services, as well as the private credit insurance business.
The developments and performance in these specificbusiness segments are presented beginning in section 2 of this report.
2009 financial statements
The 2009 financial statements were taken up at the64th Annual General Meeting of the shareholders ofOesterreichische Kontrollbank AG on 18 May 2010;the resulting publications appeared on 21 May 2010in the Official Gazette of “Wiener Zeitung” (number97). The company and consolidated financial statements for 2009 and the associated documentswere filed by the Executive Board on 14 June 2010with the Vienna Commercial Court under CompanyRegister Number FN 85749 b, in accordance withsections 277 and 280 of the Austrian CommercialCode. Under section 221(3) of this legislation, OeKBis classified as a large corporation.
Macro trends in 2010
All in all, financial markets recovered in 2010. Thiswas despite interim concerns over the Eurosystem’sability to hold together that were brought on by thegovernment debt crisis in some euro countries, whichrepeatedly led to nervousness in markets and thus tofalling security prices.
The European Central Bank mostly maintained its low-interest policy and the support measures for access tofinancing, thus contributing to the markets’ furtherstabilisation.
Operating profit 2010
Austrian companies’ exports rose by 16% comparedwith 2009. However, the amount of funding providedunder OeKB’s Export Financing Scheme did not keeppace with this growth. With loans of EUR 2.9 billiondisbursed and repayments of EUR 4.9 billion received,net export loans outstanding decreased by EUR 2 billion. Similarly, the total outstanding balance ofloans by OeKB subsidiary Exportfonds to small andmedium-sized businesses declined slightly from EUR 804 million in 2009 to EUR 793 million. Only theamount of business done by OeEB, the developmentbank, grew in 2010.
The reduced lending and continuing low interest rateswere reflected in the net interest income, which atEUR 101.0 million in 2010 was significantly less thanthe year-earlier level of EUR 107.3 million.
A positive effect came from the equity-accounted credit insurance group, which, after a business-cycle-induced loss in the prior year, saw its earnings improve significantly in 2010.
Net fee and commission income rose substantially, reflecting higher fee and commission income (EUR 57.9 million, versus EUR 56.5 million in 2009) –particularly from the processing of export guaranteesand from capital market services — combined withlower fee and commission expense (EUR 6.7 million,versus EUR 10.5 million in the prior year).
Administrative expenses, at EUR 80.1 million, were upby EUR 3.2 million from one year earlier. The increasewas caused mainly by higher staff costs. Thus, in2010 the Group had an average of 396 employees interms of full-time equivalents (2009: 385).
Group operating profit in 2010 was EUR 79.3 million,a reduction of EUR 5.9 million from 2009 (EUR 85.2million) driven by the effects cited above.
1 Business performance and financial and economic situation
II. Group management report for 2010
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The net gain on financial instruments, at EUR 13.6 million, was well below the prior year’s figure of EUR 33.8 million, but shows that the markets hadquieted down somewhat after the crisis year 2008 and countermovement in 2009. All securities in theGroup are measured at fair value through profit orloss.
Profit for the year
Profit before tax in 2010 was EUR 92.9 million (2009: EUR 118.9 million).
After tax, the consolidated profit for the year attribut-able to shareholders of the Group’s parent company,OeKB AG, was EUR 72.0 million (2009: EUR 91.5 million). After the compensation of the SupervisoryBoard and the dividend distribution of EUR 30.0 million to shareholders, consolidated equity calculatedin accordance with IFRS grew by EUR 41.8 million toEUR 569.2 million.
Consolidated regulatory capital resources of the banking group under section 24 Austrian Banking Actrose from EUR 422.5 million at the end of the prioryear to EUR 459.2 million in 2010.
On balance, the Group’s profitability in 2010 surpas-sed expectations, thanks in part to the good insuranceearnings and the net gain on financial instruments.
Law Suits for Damages 2009/2010
OeKB was sued by two investors (service of claims on26 February 2009, for approx. EUR 29,000 and on 30 July 2010, for approx. EUR 2,790,000) for dama-ges in connection with issuing MEL-certificates and infringement of trustee duties.
Both law suits can be qualified as test cases. The firstlaw suit was dismissed at the beginning of April 2010in first and at the end of January 2011 in second instance. It seems unclear whether the plaintiff willlodge appeal at the Supreme Court. The chances ofsuccess of the second law suit are seen to be equalwith the chances of the first law suit, in particular inview of its evaluation also by external legal advisers.
Outlook for 2011
In the years ahead, OeKB expects operating earningsto stabilise at about the level of 2010. This is consis-tent with the return to normal already predicted here a year ago, following the excellent operating profits of2008 and 2009.
As the financial markets grow progressively less volatile, so too should the net gain or loss on financialinstruments.
OeKB believes that its lending under the Export Financing Scheme will continue to decrease slightly,but that the associated reduction in income will beoffset by rising service revenue (especially in CapitalMarket Services and Export Services).
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2.2 Developments and outlook
2 Management of Austrian federal government guarantees by OeKB1
1 Detailed statistics and the legal requirements concerning the types of guarantees under the Export Guarantees Act and regarding OeKB’s Export Financing Scheme are provided in the OeKB Export Services Annual Review.More information on OeKB’s Export Services is available at www.oekb.at.
2.1 Key programme features and background
Export guarantees and Austrian foreign investment guarantees
Since 1950, acting as the agent of the Republic ofAustria (the Austrian government as represented bythe Federal Ministry of Finance), OeKB has been performing the following functions:
■ Underwriting-related evaluation (including credit assessment) of applications for guarantees under the Export Guarantees Act
■ Issuing and administrative processing of the guarantees on behalf of the Republic of Austria
■ Exercising the rights of the Republic of Austria under the guarantee contracts.
In this business segment, OeKB acts on behalf and for the account of the Republic of Austria.
The liabilities under the Export Guarantees Act are assumed in the form of guarantees for the due per-formance of contracts by foreign contracting parties,or through endorsements (guarantees by aval) of billsof exchange used to finance export transactions oroutbound foreign direct investment.
The guarantee system in place is based on the provi-sions of the Export Guarantees Act and the respectiveregulation issued by the Federal Minister of Finance.The contractual relations between the Republic ofAustria and the guarantee holders are set out in thegeneral terms and conditions (“General Business Conditions”) for guarantees of the Republic of Austriaunder the Export Guarantees Act, and in the respectiveguarantees themselves.
Guarantees are issued in compliance with the guide-lines, directives and regulations of international agreements of the OECD, the EU and the Berne Union.
Cover for non-marketable risks
OeKB as the agent of the Republic of Austria offerscover for non-marketable risks, focusing on exports ofcapital goods and Austrian direct investment abroad.
In contrast, short-term revolving cover is provided bythe private market. In this market segment, two Groupsubsidiaries, OeKB Versicherung AG and PRISMA Kreditversicherungs-AG, offer export credit insurance.
Product and service developments in 2010
2010 was defined by a slow recovery in global economic activity, with most of the growth comingfrom emerging markets, particularly in Asia. The situation in Europe was marked by uncertainties oversome countries’ high levels of indebtedness.
In this environment, OeKB provided time-tested support to exporters through its services and flexiblecover facilities, with the latter expanded for a numberof countries, such as in the South Caucasus and Sub-Saharan Africa.
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Group management report
As conditions in the private credit insurance markethave largely normalised again, the availability of coverfor marketable risks from the Austrian government expired at the end of 2010, as did the reinsuranceprovided for private credit insurers since 2009 fornon-marketable risks in difficult markets.
As in the previous years, OeKB in 2010 made numerous visits to customers and intensified its communication and presentation activity to furtherraise companies’ awareness of the benefits of Austria’s export promotion facilities and to help newcustomers initiate cross-border trade transactions.
Outlook for 2011
In 2011 the economic upturn will continue, althoughregional uncertainties — such as in the euro area — willalso persist and the recently especially strong growthin Asia will shift into a lower gear. This confronts theAustrian export industry with a serious challenge. In these demanding times, OeKB will remain a sourceof steadfast support to exporters both through exportcredits and with guarantees for the financing of business acquisitions and company start-ups.
As in 2010, new business will consist primarily of guarantees for export credits and less of support forforeign direct investment by Austrian companies.
2.3 International involvement
International cooperation and the Berne Union
In today’s globalised economy, many projects aremade possible only by the collaboration of partnersfrom several countries. The dense network of cooperation agreements woven by OeKB with otherexport credit insurers and financial institutions in recent years facilitates the provision of one-stop insu-rance and financing for such complex multisourcingprojects.
Since 1954, OeKB is a member of the London-basedBerne Union (the International Union of Credit and Investment Insurers). This global organisation currently comprises 49 export guarantee and investment guarantee institutions from 39 countries,including the Multilateral Investment GuaranteeAgency (MIGA). The aims of the Berne Union are thecoordination of international trade terms and the extensive sharing of information between members.
Environmental responsibility
Based on the resolutions of the OECD, environmentalimpacts have since the middle of 2000 been given increased consideration in the evaluation of projectapplications and supported projects. A revision of therelevant OECD Recommendation from June 2007 is currently under negotiation and is intended to helpfurther improve this set of environmental standardsand enhance its compatibility with other aspects of development. In the environmental impact assess-ment procedure used by OeKB, the environmentalsoundness of projects is analysed with the goal ofidentifying weaknesses in terms of impacts on the environment and on people as early as possible, actively exerting influence towards their alleviationand thereby helping to promote environmental awareness in the target countries. The assessmentprocedure itself and large export projects are published on the OeKB website. They are subject to a peer review within the OECD and are thus open to public scrutiny.
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OECD Guidelines for Multinational Enterprises
OeKB promotes the awareness and application of theOECD Guidelines for Multinational Enterprises. Since2008, all guarantee holders and beneficiaries of avalendorsements in respect of foreign investment projects are therefore encouraged to become familiarwith these guidelines and to observe them to thegreatest possible extent in their international activities.
Economic situation
The demand decline in most buyer countries, whichhad taken a heavy toll on the Austrian export industryin 2009, was partly reversed in 2010: In total lastyear, Austrian exports rose by about 16% from 2009.At the same time, active foreign direct investment by Austrian entities still remained relatively subdued,but overall, it has probably passed the trough witnes-sed in 2009. There are signs of a continuing positivetrend for 2011, although less pronounced than in the year under review.
With this backdrop, the number of guarantee and avalholders serviced in the export guarantees scheme atthe end of the year under review was about 1,300.OeKB is also in ongoing contact with prospective exporters and has a continually growing number of direct contacts with potential outbound foreign directinvestors: Increasingly, end-buyers do not decide ontheir suppliers until after they have found attractive financing options for their projects.
The advisory activity of the customer service representatives is supplemented by a wide range ofbrochures and other written information about theexisting export promotion facilities and improvementsor additions to these products.
Aggregate exposure limit of EUR 50 billion,with utilisation of EUR 38.5 billion
With an exposure limit of EUR 50.0 billion (the limit onthe aggregate liability) under the Export GuaranteesAct, actual exposure at 31 December 2010 from outstanding guarantees amounted to EUR 38.5 billion,representing 77.0% utilisation. This compared withactual exposure of EUR 40.7 billion or 81.3% one yearearlier. Utilisation thus eased by EUR 2.2 billion or5.3%. The outstanding guarantee with the longest termcovers a credit period ending in the year 2043.
EUR 3.9 billion of new guarantees issued
In the year under review, 948 new guarantees (guarantees, aval endorsements, and guarantees ofOeEB) with a total value of EUR 3.9 billion were issuedby the Republic of Austria under the Export Guaran-tees Act, with the credit management aspects and administrative processing provided by OeKB as itsagent (2009: 858 new guarantees with a total value of EUR 5.2 billion).
The amounts at 31 December 2010 stated above in-cluded debt rescheduling guarantees for 16 countriesin a total amount of EUR 673 million (2009: debt rescheduling guarantees totalled EUR 816 million, andnew guarantee contracts issued included EUR 8 million of rescheduling guarantees).
2.4 Business in 2010
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2008 2009 2010EUR million (except lines beginning with “Number of”)
Aggregate guarantee exposure limit, at 31 December
Aggregate guarantee exposure (i.e., limit utilisation), at 31 December
Number of holders of outstanding guarantees (rounded)
Number of guarantees in place
Number of new guarantee contracts issued
New guarantee contracts issued
New conditional commitments
(i.e., new guarantee offers for prospective underlying transactions)
Guaranteed export sales (estimate)
Guaranteed exports in % of total Austrian exports
Total Austrian exports (excluding services)
Premium and interest income
Gross claims paid by the Guarantor
Recoveries on claims paid
Amounts written off as unrecoverable
Of which write-offs with Maastricht relevance
Guarantor’s recoverable claims, at 31 December
Net interest rate relief granted
50,000
44,446
1,400
3,995
1,032
12,063
868
3,914
4
117,525 1
242
380
262
48
48
916
23
50,000
40,650
1,400
3,833
858
5,160
1,618
3,644
4
93,739 1
89
333
353
32
32
864
—
50,000
38,508
1,300
3,859
948
3,869
1,593
3,666
3
108,7402
190
116
36
92
92
852
—
Sources: 1 Statistics Austria 2 December 2010 forecast by WIFO, the Austrian Institute of Economic Research
Guarantees under the Export Guarantees Act
Guarantees covered 3% of Austria’s total exports
Total Austrian exports in 2010 reached approximatelyEUR 108.7 billion (2009: EUR 93.7 billion). Includingthe new guarantees issued in 2010 (and excludingavals and rescheduling guarantees), the guaranteesystem under the Export Guarantees Act coveredabout EUR 3.7 billion, or 3%, of Austrian exports(2009: EUR 3.6 billion or 4%).
Claim payments and premium income
Premium and interest income in 2010 totalled EUR 190 million. Gross claims paid (including claimpayments under guarantees for debt reschedulingagreements) by the guarantor, the Republic of Austria,amounted to EUR 116 million, while recoveries wereEUR 36 million. EUR 92 million was charged off by theRepublic of Austria in 2010 as unrecoverable or underdebt foregiveness. The cumulative totals since the establishment of the export guarantee system in 1950
reached the following levels at the end of 2010: premium and interest income of EUR 5.7 billion, claimpayments of EUR 7.6 billion, recoveries of EUR 3.3 billion and charge-offs of EUR 3.4 billion. At 31 De-cember 2010, receivables from claims paid by the Republic of Austria under guarantees managed byOeKB were EUR 0.9 billion; collection activities are expected to lead to further recoveries on these outstandings. At the same date, claims authorised butnot yet paid amounted to EUR 4 million.
The amount of claims paid by the Republic of Austriaunder guarantees pursuant to the Export GuaranteesAct must be viewed in the context of the total cumula-tive volume of guarantee contracts issued. From the inception of the guarantee programme in 1950 to theend of 2010, the value of guarantees issued was EUR 186.3 billion. In this cumulative total, revolvingguarantees are only included at their nominalamounts. During these 61 years, cumulative charge-
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Annual Report 2010
Group management report
offs by the Guarantor and (since 1989) debt reliefthrough interest reductions that had to be grantedunder international agreements totalled a combinedEUR 4.6 billion, or 2.5% of the cumulative amount of guarantee contracts issued.
In setting the premium levels charged to customersfor the guarantees, the Guarantor does not seek torealise a profit but to cover the cost of the guarantee
system in the long term. Expenses for interest reductionin connection with the concessional rescheduling ofdebts under international agreements have a sus-tained effect on the guarantee programme’s net surplus.
In 2010 the positive trend of the past several yearscontinued and guarantee programme income exceeded net costs by EUR 115 million.
The strain in financial markets and the economic situation 2009 had caused even healthy, large Austrian companies to experience unexpected shortages of liquidity. To help boost the Austrian economy, the Corporate Liquidity Support Act waspassed.
The Austrian government has given OeKB the mandate to administer the guarantees under this Acton the basis of Austrian Federal Law Gazette I no.78/2009, to provide the credit-related processing,issue the guarantee contracts and protect the asso-ciated rights of the Republic of Austria.
The contractual relations between the Republic ofAustria and the guarantee holders are governed bythe Federal Ministry of Finance’s Detailed Provisionson Guarantees under section 4(8) Corporate LiquiditySupport Act and by the guarantee contracts involved.
When issuing guarantees, due regard was given to therespective basis in Community law, especially thecommunication from the Commission titled “Tempo-rary Community Framework for State Aid Measures toSupport Access to Finance in the Current Financialand Economic Crisis”.
The Austrian enabling legislation expired on 31 December 2010 and thus applications for suchguarantees could no longer be accepted after thatdate. The existing guarantees will expire by the end of 2015 and will be supported with administrative services until then.
The object of the guarantees are banks’ loan receivables from credit agreements with companies. Borrowers eligible for such guaranteed loans were any companies domiciled or having a business location in Austria that did not meet the criteria of a small or medium-sized enterprise (SME) as defined by the European Commission.
Credit facilities eligible for the guarantees were:
■ Investment loans for capital investment in Austrian locations
■ Loans obtained to service bonds or to meet contractual repayment obligations on existing loans (follow-up financing)
■ Operating loans.
The guarantees covered from 30% to 70% of the loanamount outstanding.
The maximum guaranteed amount per company orgroup of related companies was limited to EUR 300 million; the maximum term is five years.
In 2010, the Austrian Minister of Finance approvedguarantees totalling EUR 847 million on credit facilities representing total lending commitments of EUR 1,509 million. In total since the inception ofthe programme, the guarantees issued under the Corporate Liquidity Support Act reached EUR 1,310million by the end of 2010, covering credit facilities of EUR 2,248 million.
2.5 Guarantees under the Corporate Liquidity Support Act (ULSG)
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Exports in 2010
EUR million %
108,7402 100.0
Region or country group
Guarantee contractsissued in 2010
EUR million %
732 18.9
200 5.210 0.3
48 1.2
945 24.4
2 0.1
130 3.4
— —
1,867 48.3
1,870 48.3
132 3.4
3,869 100.0
169 4.4
1,123 29.0
139 3.6
Guar. outstanding at 31 Dec. 2010
EUR million %
9,785 25.4
1,167 3.013 0.0
367 1.0
4,841 12.6
9 0.0
726 1.9
2,487 6.5
18,228 47.4
20,039 52.0
241 0.6
38,508 100.0
1,353 3.5
5,932 15.4
1,822 4.7
Commitments
EUR million %
6,872 20.9
815 2.5— —
212 0.6
2,805 8.5
1 0.0
535 1.6
689 2.1
11,114 33.7
21,829 66.3
— —
32,943 100.0
1,213 3.7
3,537 10.7
1,133 3.4
1 The amounts shown for guarantees and financing include only contracts issued, not conditional commitments.Sources: 2 December 2010 forecast by WIFO, the Austrian Institute of Economic Research 3 Statistics Austria
Disbursements
EUR million %
6,655 22.6
734 2.5— —
112 0.4
2,641 9.0
1 0.0
484 1.6
365 1.3
10,258 34.9
19,171 65.1
— —
29,429 100.0
1,089 3.7
3,238 11.0
1,133 3.8
Exports
Europe (incl. Turkey, CIS)
EUNorth America
Latin America
Asia
Australia and Oceania
Africa
Comprehensive policies (CP)
Subtotal
Aval endorsements (AE)
Guarantees issued for OeEB
Total
Of which (excl. CP, AE, OeEB):
OECD
Non-European
developing countries
OPEC
At 31 December 2010
Export guarantees Export Financing Scheme
Exports, export guarantees and export financing scheme of OeKB, by region1
Exports in 20093
EUR million %
77,434 82.6
66,527 71.0
6,109 6.5
8,099 8.6
672 0.7
1,374 1.5
93,739 100.0
74,484 79.5
5,856 6.2
2,018 2.2
Europe (incl. Turkey, CIS)
EUNorth America
Latin America
Asia
Australia and Oceania
Africa
Comprehensive policies (CP)
Subtotal
Aval endorsements (AE)
Guarantees issued for OeEB
Total
Of which (excl. CP, AE, OeEB):
OECD
Non-European
developing countries
OPEC
Guarantee contracts
issued in 2009
EUR million %
923 17.9
110 2.14 0.1
120 2.3
967 18.7
— —
128 2.5
1,200 23.3
3,342 64.8
1,766 34.2
52 1.0
5,160 100.0
254 4.9
1,215 23.5
217 4.2
Guar. outstanding
at 31 Dec. 2009
EUR million %
10,540 25.9
1,171 2.96 0.0
392 1.0
4,996 12.3
9 0.0
780 1.9
2,487 6.1
19,210 47.2
21,331 52.5
109 0.3
40,650 100.0
1,680 4.1
6,167 15.2
2,033 5.0
Commitments
EUR million %
7,366 21.8
832 2.50 0.0
205 0.6
2,886 8.6
— —
641 1.9
750 2.2
11,848 35.1
21,955 64.9
— —
33,803 100.0
1,171 3.5
3,732 11.1
1,279 3.8
Disbursements
EUR million %
7,097 22.6
768 2.40 0.0
128 0.4
2,683 8.5
— —
624 2.0
410 1.3
10,942 34.8
20,459 65.2
— —
31,401 100.0
1,008 3.2
3,435 10.9
1,278 4.1
At 31 December 2009
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Export Financing Scheme in place since 1960
Since 1960 OeKB has operated a programme to finance exports of goods and services, largely on amedium- and long-term basis, with special emphasison exports of Austrian capital goods. Known as the Export Financing Scheme, this programme serves toprovide funding facilities to banks which in turn extendcredit to Austrian exporters or investors and foreignimporters (supplier and buyer credits for exports, financing for Austrian companies’ investments in foreign countries, and export acceptance credits). The export financing scheme is also used for fundingthe direct lending by OeKB for the same purposes.The 1995 Amendment to the Export Guarantees Actallows guarantees to be issued for untied credits.
Requirements
The credits to banks require a guarantee for the trans-action or right underlying the financing. The guaranteemust conform to the provisions of the 1981 Export Financing Guarantees Act and be of one of the following types:
■ A guarantee by the Republic of Austria under the Export Guarantees Act
■ A guarantee by a credit insurer complying with the same Act
■ A guarantee by Austria Wirtschaftsservice Gesellschaft mit beschränkter Haftung
■ A guarantee by an international organisation.
In addition, both the rights arising from the guaranteesand the underlying receivables (export or other receivables) typically must be assigned as security.
The extension of funding to banks through OeKB’s Export Financing Scheme represents an open systemavailable to domestic and foreign credit institutions.
They must, however, meet the creditworthiness criteria of OeKB, fulfil the legal requirements regardingthe transactions to be financed and satisfy OeKB’sstandard conditions for uniform financing procedures.The latter applies particularly to collateral manage-ment.
International environment
Lending under the export financing scheme is conducted in adherence to the applicable rules andguidelines established by international agreements ofthe OECD, the EU and the Berne Union.
The maximum repayment term of commercial exportcredits that fall within the scope of the OECD Arrangement on Officially Supported Export Credits is generally 10 years. Longer maximum terms are possible for conventional power plants (maximum of 12 years), project finance (maximum of 14 years) and renewable energy and water projects (maximumof 18 years).
Financing on commercial terms
The financing for banks’ supplier and buyer creditsand investment loans is extended at variable and fixed interest rates. The floating rate is determined byOeKB for periods of three months at a time and isbased on OeKB’s own average cost of funding itself in the market. In the case of non-revolving loans, the floating-rate portion of the credit is repaid first; the fixed interest rate is applied to the longer-term portion of the facility (base financing).
3.1 Key programme features and background
3 OeKB Export Financing Scheme1
1 Detailed statistics and the legal requirements concerning the types of guarantees under the Export Guarantees Act and regarding OeKB’s Export Financing Scheme are provided in the OeKB Export Services Annual Review.More information on OeKB’s Export Services is available at www.oekb.at.
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Since the middle of 2009, OeKB also offers pure floating-rate financing of supplier and buyer creditsand investments, based on 3-month EURIBOR. Creditto banks for the funding of revolving credit facilities,and of export acceptance credits under the Kontroll-bank Credit Line, or KCL (in German: Kontrollbank-Refinanzierungsrahmen or KRR), is extended at special floating interest rates.
Interest rates for commercial lending to banks
The current interest rates of the Export FinancingScheme are published via Reuters and can also be viewed on the Internet at www.oekb.at.
Concessional financing for certain projects
Subject to the relevant provisions of the OECD Arrangement, specific projects may be financed on concessional terms upon approval by the export financing committee. The eligibility criteria for softloans and the financing terms can be found online atwww.oekb.at.
Foreign currency financing
As an additional way to promote a strong exportsector, foreign currency financing is in some casesavailable: Export financing with credit periods of morethan two years can, subject to certain conditions, alsobe provided in foreign currency at variable or fixedrates.
Supplementing this, fixed-interest foreign currency financing for supplier credits is offered on a CIRRbasis.
Developments in products and services in 2010/2011
As mentioned above, since December 2009, the existing foreign currency funding options for bankslending to suppliers are rounded out by the availabilityof fixed-rate foreign currency funding facilities on aCIRR basis. In a pilot phase running to the end of2011, foreign currency loans can under certain condi-tions be made available to banks for the financing ofsupplier and buyer credits that are covered by creditinsurance in the matching currency.
In October 2010 the list of countries eligible to receive soft loans was expanded. Based on the set ofcountries authorised under the OECD Arrangementsand the soft-loan policy of the Federal Ministry of Finance, an additional 18 recipient countries for Austrian soft-loan financing are thus available to theAustrian export industry.
Also since the fourth quarter of 2010, contracts involving purely or largely services can under certainconditions be financed using soft loans.
In the soft loan project preparatory programme, sevennew applications were received in 2010. Four appli-cations were presented to the Federal Ministry of Finance for approval. Currently, five project prepara-tion studies are in progress and four other studieshave been completed.
In 2010, to promote and expand financial coopera-tion, master agreements were concluded with CapeVerde, Vietnam and Syria and extended with Tunisia.Negotiations to reach such agreements were openedwith Jordan and Mongolia.
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Since the OeKB-operated export financing schemecame into existence 51 years ago, a total of EUR 125.6 billion of credit has been disbursed to theAustrian export industry and banking sector, and credit repayments of EUR 96.2 billion have been received.
The total of all funds used under the export financingscheme in 2010 was EUR 26.8 billion. OeKB as an export credit agency is thus a major issuer of debt ininternational financial markets. Its bonds are ratedAAA by Standard & Poor’s and Aaa by Moody’s.
The respective ratings for short-term debt are A-1+and P-1.
OeKB raises funding for the export financing pro-gramme through borrowing operations in domesticand international financial markets.
The borrowing policy is discussed and agreed on anongoing basis with the Guarantor under the 1981 Export Financing Guarantees Act; the Guarantor is theRepublic of Austria as represented by the Federal Ministry of Finance.
2008 2009 2010EUR million (except lines beginning with “Number of”)
Number of banks/exporters involved (rounded)
Number of export financing contracts outstanding (rounded)
Total lending commitments (i.e., financing contracts and
conditional commitments) outstanding at 31 December
Financing contracts outstanding at 31 December
Of which disbursements outstanding
New commitments issued
New conditional lending commitments issued
Loan funds disbursed
Repayments received
Increase/(decrease) in net loans outstanding
Total funds used under the Export Financing Scheme
Limit on aggregate guarantee exposure
under 1981 Export Financing Guarantees Act
Utilisation of the guarantee exposure limit at 31 December
Total new guarantees issued
71/1,500
4,000
39,143
38,952
36,803
12,225
143
12,054
4,788
+7,266
45,499
45,000
38,486
17,108
70/1,400
3,700
34,075
33,803
31,401
4,971
178
4,441
9,843
(5,402)
41,965
45,000
33,745
8,230
68/1,300
3,600
33,246
32,943
29,429
4,413
257
2,924
4,896
(1,972)
26,787
45,000
31,658
6,294
OeKB Export Financing Scheme
The figures in the next table show the utilisation ofOeKB’s Export Financing Scheme by the export sectorvia banks. At the end of 2010, the programme was inuse by 68 banks and served approximately 1,300 exporters through about 3,600 export credits.
In the export financing scheme at the end of the year,there were outstanding total lending commitments (including conditional commitments) of EUR 33,246million (2009: EUR 34,075 million). Of this total, EUR 29,429 million or 88.5% was drawn (2009: EUR 31,401 million or 92.2%).
The net change from one year earlier was thus a reduction of EUR 829 million or 2.4% in total commit-ments (including conditional commitments) and a reduction of EUR 1,972 million or 6.3% in disburse-ments. The outstanding loan agreement with the longest term expires in the year 2043.
For 2011, depending on the business trend, credit disbursements in the Export Financing Scheme can be expected to decrease by approximately between EUR 1.5 billion and EUR 3 billion.
3.2 Business in 2010
32
How does OeKB fund itself?
“To finance cross-border project business and direct investment,
we raise funding in national and international money and bond markets.
Our reputation as a top-quality borrower with excellent market access
goes back decades. Helping make this easy access possible are our
thorough knowledge of the market, close communication with investors,
and transactions that are executed smoothly from the collection of
the proceeds to redemption.”
Bettina HankeManager, International Finance
33
O e s t e r r e i c h i s c h e K o n t r o l l b a n k G r o u p
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Annual Report 2010
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The 1981 Export Financing Guarantees Act authorisesthe Federal Minister of Finance to issue guarantees to creditors in borrowing transactions of OeKB underthe Export Financing Scheme. The Federal Minister of Finance is also authorised to guarantee repayment to OeKB of possible foreign exchange losses resultingfrom borrowing transactions in foreign currencies. The aggregate exposure limit under these guarantees(i.e., the limit on the total combined liability at anygiven time) is EUR 45 billion. For this coverage, OeKBpays a guarantee premium to the Ministry of Finance.
Aggregate exposure limit of EUR 45 billion and utilisation of EUR 31.7 billion
In 2010 the Republic of Austria gave guarantees under the Export Financing Guarantees Act for a totalprincipal amount of EUR 6.3 billion of funds borrowedby OeKB. At the reporting date of 31 December 2010,EUR 31.7 billion of the EUR 45.0 billion aggregate exposure limit was utilised by guarantees covering principal amounts and exchange rate risks, comparedwith utilisation of EUR 33.7 billion at the end of theprevious year.
3.3 Guarantees of the Republic of Austria under the 1981 Export Financing Guarantees Act
Oesterreichische KontrollbankAktiengesellschaft
USD 1,250,000,0001.750% Guaranteed Global Notes
due 2013
unconditionally and irrevocably guaranteed by theRepublic of Austria
Goldman Sachs InternationalJ.P. Morgan Securities Ltd.
UBS Limited
Oesterreichische KontrollbankAktiengesellschaft
USD 1,000,000,0001.750% Guaranteed Global Notes
due 2015
unconditionally and irrevocably guaranteed by theRepublic of Austria
Deutsche Bank AG, London BranchGoldman Sachs International
HSBC Bank plc
Transactions of Oesterreichische Kontrollbank AG in 2010
OeKB applies modern portfolio management tech-niques as decision support to help guide its fundingpolicy. Derivative financial instruments are used to
manage costs and risks. The risk management and valuation systems employed by OeKB satisfy inter-national standards.
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„Österreichischer Exportfonds” (“Exportfonds”) provides export financing for small- and medium-sizedcompanies via their own bank.
Disbursed loans outstanding at 31 December 2010amounted to EUR 793 million, or about 1.4% less thanone year earlier. Currently it serves approximately1,600 exporters, with an average outstanding loan balance of EUR 505,000. In 2010, Exportfonds approved loans to 87 new customers.
Since the beginning of 2005, WirtschaftskammerÖsterreich (the Austrian chamber of commerce) holds30% of the share capital of Exportfonds; the other 70%has been held by OeKB AG since 1998.
The company is managed by Carl de Colle and (since1 January 2011) Elisabeth Strassmair. Excluding themanagement, Exportfonds had 13 employees as of 31 December 2010.
4 „Österreichischer Exportfonds“ GmbH
From its very beginnings, OeKB has contributed inmany ways to the growth and increasing sophisti-cation of the Austrian securities marketplace, playinga crucial role in the establishment and progressive development of the domestic capital market, especially for bonds.
This has always been done in the service of the capitalmarket participants, while acting in agreement withthe Vienna Stock Exchange and in coordination withthe Federal Ministry of Finance and OesterreichischeNationalbank, the Austrian central bank.
5 Capital market
5.1 Business in 2010
Added to the continual growth in domestic settlementvolume was an upward jump in cross-border settlement transactions in the fourth quarter, which,however, stemmed from temporary causes.
In equities, the domestic settlement turnover declinedin 2010 for the second year in succession, whereasequity assets under custody remained steady. On thefixed income side, both settlement volume and assetsunder custody increased.
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5.2 Issuer Services
Issuer Portal and IssuerInformationCenter.Austria
As part of the transposition of the EU TransparencyDirective 2004/109/EC into national law (Stock Exchange Act Amendment of 2007), OeKB was askedto set up a system for the central storage of regulatedissuer information in Austria.
To do so, OeKB developed the Issuer Portal for issuerswhose securities are listed on a regulated market. The core functions of the Issuer Portal include theelectronic receipt, storage, and provision of access to regulatory information through IssuerInformation-Center.Austria. As well, at the issuer’s request, thePortal passes regulated and voluntary information on to specified recipients on an automated basis (forinstance, the Vienna Stock Exchange and the AustrianFinancial Market Authority). In 2010, a total of 152 issuers used the Portal and sent about 3,300 notifications.
IssuerInformationCenter.Austria (http://issuer-info.oekb.at) is a centralised Internet platform for required and voluntary disclosures by issuers to investors in Austria and other countries. It is acces-sible free of charge to the public and to market participants.
AGM Services
In the year under review, OeKB firmly established itselfas a full-service provider for the processes involved inthe preparation and execution of annual general meetings. Large, intermediate and small AGMs ofcompanies in various industries were conducted successfully and smoothly.
OeKB offers a breadth of AGM outsourcing servicesthat is unprecedented in the Austrian market. It provides key services beginning well before the physical meeting, such as participant registration and the collection of custody receipts, proxies and instructions, including their entry in the system and production of the participant registry.
On the day of the general meeting itself, OeKB (working in partnership with the worldwide leader inAGM services) offers straight through processing ofthe data from the registration process, advanced votecounting technology, and a backoffice online chat facility with database management. All features andcomponents of the service are scaleable and modular,and are tailored to the size and requirements of theparticular AGM.
With the creation of its AGM services business in2009, OeKB seeks to provide issuers, banks, proxiesand other capital market participants involved in AGMprocesses with infrastructure solutions that are efficient, customised and future proof.
Principal paying agent
As a principal paying agent, OeKB was responsible for419 classes of securities of Austrian issuers in 2010.OeKB acts in this capacity for the payment of principaland interest on domestic bond issues of the Republicof Austria. It also handled the redemptions of 51 otherbond issues that had already matured.
Additionally, since 1986 OeKB also sets the couponfor floating-rate Austrian Treasury Bills (ATB). Since1995 it also determines their issue price. For thesesecurities, OeKB is a fiduciary and the principal payingagent. Since as long ago as 1988, it acts as the custodian for the money market treasury bills andhandles the interest and principal payments. Marketparticipants made increasing use of the ancillary securities support services in the year under review.
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OeKB is the agent for the issuance of bonds of the Republic of Austria at auction. The bond auctions areconducted through ADAS (Austrian Direct AuctionSystem), the automated electronic auction system developed by OeKB.
At the beginning of 2010, the Austrian Federal Financing Agency indicated that its planned issuanceof euro-denominated government bonds for the yearwas EUR 21 billion to EUR 25 billion. In fact, as a result of the lower financing requirement, federal government bonds of EUR 21.3 billion were actuallyissued. Of this total, EUR 17 billion was issued in ten auctions and EUR 4.3 billion was placed through syndicates from January to March.
For 2011 the Federal Financing Agency estimates theissuance of euro government bonds at EUR 16 billionto EUR 19 billion. As in 2010, monthly auctions arescheduled for 2011.
5.3 Organisation and administration of domestic bond issues
3.200% Bundesanleihe 2010-2017/1/144A 4,000,000First reopening 1,366,665
3.400% Bundesanleihe 2009-2014/1/144ASeventh reopening 1,320,000
4.850% Bundesanleihe 2009–2026/2/144A Third reopening 825,000Fourth reopening 1,118,672Fifth reopening 789,142
4.350% Bundesanleihe 2008-2019/1/144AEighth reopening 1,335,473
4.150% Bundesanleihe 2007–2037/1/144ASixth reopening 983,198Seventh reopening 660,000
3.500% Bundesanleihe 2006–2021/1/144ASixth reopening 880,000Seventh reopening 935,179Eighth reopening 880,000
3.900% Bundesanleihe 2005-2020/1/144ASixth reopening 833,325Seventh reopening 785,725Eighth reopening 824,610Ninth reopening 550,000
3.500% Bundesanleihe 2005-2015/2/144ASeventh reopening 884,600Eighth reopening 550,000Ninth reopening 550,000
4.650% Bundesanleihe 2003-2018/1/144ASeventh reopening 935,227
6.250% Bundesanleihe 1997-2027/6Eighth reopening 300,000
Nominal value in EUR thousand
Austrian federal government bonds
issued in 2010
MERCUR
OeKB has the mandate from the Federal Ministry of Justice for managing and publishing MERCUR, a gazette for information under the Act on the
Cancellation of Lost or Stolen Securities (“Kraft -los erklärungsgesetz”). In 2010 this involved the management of 298 securities classes.
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In 1992, under the Capital Markets Act, OeKB became Austria’s official notification office.
Prospectus repository
The notification office acts as the filing destinationand database for prospectuses prepared in compli-ance with the Capital Markets Act, the InvestmentFund Act and Real Estate Investment Fund Act; it alsomaintains a calendar (required by the Capital MarketsAct) of planned new issues of securities and invest-ments. The related reports received are publisheddaily on the Internet and weekly in “Kapitalmarkt-service”, an OeKB bulletin, without stating the namesof prospective issuers. In 2010 the notification officeprocessed about 330,000 reports for the new-issuecalendar. The repository database currently containsapproximately 30,000 prospectuses (including prospectus supplements/amendments) filed underthe Capital Markets Act, Investment Fund Act andReal Estate Investment Fund Act.
Legal information system
When the Capital Markets Act entered into force, theFederal Ministry of Finance and OeKB (in its role asthe notification office) set up a legal information system to facilitate the application of the Act. Legalopinions on stock exchange and capital markets lawobtained from the legal information system continueto be forwarded by the notification office to interestedparties, provided that the Ministry of Finance pub-lished them in abstract form. The notification officealso answers inquiries regarding compliance with theformal disclosure requirements under the Capital Markets Act, Investment Funds Act and Real Estate Investment Funds Act. It supplies copies of the pro-spectuses filed and informs the Federal Ministry of Finance, the Financial Market Authority and the Austrian central bank of trends observed in the capitalmarket.
With the coming into effect of the Amendment to theStock Exchange Act and Capital Markets Act (AustrianFederal Law Gazette I No. 78/2005), the functions ofthe notification office were adjusted in line with therequirements of the new legislation on prospectuses(Directive 2003/71/EC) with effect from 10 August2005.
5.4 Notification office under the Capital Markets Act
5.5 Oesterreichische Clearingbank AG
In autumn 2008, OeKB was given responsibility forconducting the business activities of OesterreichischeClearingbank AG, a newly established institution. Inthe course of these activities in 2010, auctions wereheld on 145 days over the platform developed for thispurpose.
Overall, loans totalling about EUR 2.4 billion were issued in 2010, for terms ranging from 1 to 9 months.
Over the period from November 2008 to December2010, loans totalling EUR 11.2 billion were issued viathe auction platform.
Based on the underlying legislation and the currentguarantee agreement with the federal government,these liquidity auctions were discontinued from 31 December 2010.
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As part of its key functions in the Austrian capital market, OeKB offers comprehensive financial data ser-vices. In addition to master and transaction data ondomestic and foreign securities, OeKB calculates andpublishes data for domestic and foreign funds, fixedincome securities and investment performance resultsof pension funds.
ISIN Services
As the National Numbering Agency (NNA), OeKB onrequest assigns an International Securities Identifi-cation Number (ISIN) to a financial instrument. TheISIN allows each financial instrument to be uniquelyidentified worldwide, something that is of fundamentalimportance to all capital market participants. The ISINconsists of the country prefix “AT”, a nine-charactercore of digits and letters that can be chosen by the issuer, and a check digit. The ISINs are distributed byOeKB in accordance with ISO standard 6166 and areavailable at www.profitweb.at in the ISIN directory. Atyear-end the ISIN services were being used by 1,776issuers. In 2010 OeKB issued 15,026 ISINs, of which8,078 were for derivatives traded on the Vienna ex-change of the CEE Stock Exchange Group (CEESEG).A total of 25,671 active ISINs were searchable in theISIN directory at the end of 2010. In 2011, an Internetapplication for electronic ISIN requests is planned to go live that is to include an XML interface for automated requests.
Securities master data and transaction data
OeKB maintains databases for Austrian and inter-national securities and other investment vehicles. The data is entered by OeKB after careful research,and its up-to-dateness and accuracy are verified by astandardised quality assurance process. Four hundredand fifty data fields specify every Austrian security.Seven hundred fields are available for foreign issues.
To enable automated processing of the data on custo-mer systems, OeKB provides customised export files.The export files are made to specification based on a list of desired attributes relating either to individualISINs or to the customer’s total portfolio. The custo-mer ordering the data also chooses its format and thetransmission medium. Thus, for instance, registeredcustomers can also download master and transactiondata from the Internet (www.profitweb.at).
Price and rate data
For valuation purposes, OeKB provides the followingcontent through data feeds:
■ Prices of securities traded on the Vienna Stock Exchange (CEESEG)
■ Prices of unlisted Austrian securities■ Prices of international securities ■ Reference exchange rates of the ECB .
Profitweb
Profitweb is a long-established Internet platform forsecurities data, offering the following benefits:
■ Master and transaction data on 1,117,520 active domestic and foreign financial instruments
■ Price and transaction data, classification data, performance and risk indicators,volumes and portfolios of all Austrian funds and all foreign funds registered for sale in Austria
■ Convenient search functions■ Customisable analysis/reports, at data field level■ Charting tool■ Download options for all analyses and
historical data.
As an optional tool, DataQueryEngine enables clientsto download data in XML format for specific fields andsecurities according to their individual needs. Updatescan thus be performed several times daily if desired.
5.6 Financial Data Services
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Fund Data Portal
This central platform enables fund companies to exchange detailed fund data (particularly on full holdings) in the international, standard FundsXML format on an automated basis and to make the data available to business partners, data vendors, investors and regulators.
The main activities in 2010 were marketing efforts toacquire new customer segments, such as pensionfunds, insurance companies and data vendors.
Fund Processing Passport
Through the Fund Processing Standardisation Group,the European Fund and Asset Management Associa-tion (EFAMA) carefully analysed the efficiency of backoffice processes. Based on the insights gained, the“Fund Processing Passport” (FPP) was developed. Thisdocument is harmonised across Europe and containsall essential operational information about a givenfund.
Under contract to the Association of Austrian Investment Companies (VÖIG), OeKB collects and distributes the Fund Processing Passport data for theAustrian fund companies. This service for investmentcompanies is available via www.profitweb.at and isalso accessible through EFAMA’s central FPP Portal,in which OeKB acts as one of the five European Primary Providers.
At its website www.efama.org, EFAMA offers centra-lised access to all existing European FPPs. With thisFPP Portal, EFAMA intends to move a step closer toits goal of creating an efficient, single European market for investment funds.
Financial statement data transfer system
Bilanz Transfer, a system developed by OeKB, allowsaccounting firms, acting on behalf of their clients, totransfer the data from balance sheets, income statements, and income and expenditure accounts tobanks in standardised XML format. The banks in turnuse the system to provide analytical feedback to Austrian accounting firms (reports and ratios). Thestructure of the data transferred and the electronictransmission technology are based on the data transfer specifications of the Company Register.
When the Bilanz Transfer system went live, it was usedby Bank Austria and Erste Bank as well as the savingsbank sector. In 2010 the list of users grew to includeRaiffeisen banks in five Austrian provinces, and Austria Wirtschaftsservice. Further banks are preparing to join in 2011.
Tax data for foreign investment funds
In accordance with the Investment Fund Act, OeKB asthe notification office under the Capital Markets Acthas responsibility for the centralised collection andpublication of the data on capital yield tax amounts(the tax is known in Austria as “Kapitalertragsteuer”,or “KESt”) of all foreign investment funds wishing togive their investors the opportunity for single all-in taxation in Austria. To this end, OeKB provides an effi-cient infrastructure to the fund companies, includingthe necessary electronic interfaces for collecting thedata.
OeKB publishes these tax amounts on www.profit-web.at for what are by more than 17,200 ISINs. Theinformation is also available in electronic files.
In 2011 the reporting of capital yield tax amounts ischanging as a result of changes in legislation. Preparatory work for this was initiated by OeKB in late 2010.
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o Subject to approval by CSD.Austria, the following types of institutions may hold custody accounts: credit institutions, registered securities firms, members of a domestic securities exchange, official brokers of the Vienna Stock Exchange, foreign central securities depositories, and securities clearing houses. CSD.Austria may also admit other legal or natural persons and companies as depositors.
6 CentralSecuritiesDepository.Austria and processing of off-exchange securities transactions
CentralSecuritiesDepository.Austria since 1965
Ever since first receiving the mandate in 1965, OeKBhas acted as the Austrian central securities deposi-tory, known as CSD.Austria (or CentralSecurities-Depository.Austria). CSD.Austria provides collectivecustody of securities. A book entry transfer of securities at CSD.Austria eliminates the need to movephysical securities. Instructions for securities trans-fers are generally placed electronically throughOeKB’s DirectSettlement.Advanced (DS.A) system.
Through collective custody, banks that maintain accounts at CSD.Austria gain the benefits of heigh-tened efficiency and security in the safekeeping andadministration of securities. What is more, they savetime and costs in their own in-house custody activities.
At 31 December 2010, CSD.Austria held 22,398 classes of securities for 167 depositorso (prior year:20,217 and 156, respectively).
OeKB Sustainability Fund Index (OeSFX)
A growing number of investors are putting their moneyinto companies whose conduct is particularly ethicalin terms of environmental and social responsibility. To achieve the greatest possible diversification of risk,a promising strategy for these investors is to buy environmentally or socially responsible funds. This isoften referred to collectively as socially responsible investing (SRI), ethical investing or sustainable investing. With the OeKB Sustainability Fund Index
developed by OeKB, investors can compare the performance of such funds to that of the entire universe of sustainable equity funds registered for salein Austria.
The index is another way in which OeKB practices itslasting commitment to sustainable business. Detailson the OeSFX and current prices are available atwww.oesfx.at.
31 December 2009 31 December 2010
Assets under custody by CSD.Austria
1 Represents securities quoted in per cent of nominal value; foreign currencies are translated into EUR.2 Represents securities quoted per unit.
Nominal value in EUR thousand1 274,768,924 289,721,825
Number of units in 1,0002 9,741,632 9,801,676
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The transactions settled within the DS.A system are classified into three types as follows:
■ Transactions between two CSD.Austria account holders (“Internal” transactions)
■ Transactions between a CSD.Austria account holder and a counterparty having an account at
another custodian of CSD.Austria, in a security held at that custodian (“External” transactions)
■ Transactions from the Custody Clearing Link (“CCL” transactions).
Free of payment
Versus payment
Total in 2010
Total in 2009
Free of payment
Versus payment
Total in 2010
Total in 2009
Total in 2010
Total in 2009
Free of payment
Versus payment
Total in 2010
Total in 2009
5,177,829 354,476,554
5,814,048 72,735,458
10,991,877 427,212,012
14,790,006 399,872,697
290,854 5,897,094
202,896 162,346
493,750 6,059,440
293,075 11,646,902
637,028 84,610
697,210 89,151
5,468,683 360,373,648
6,653,972 72,982,414
12,122,655 433,356,062
15,780,291 411,608,750
Number of units in 1,0002 Nominal value in EUR thousand3
154,457
670,079
824,536
715,559
23,408
39,400
62,808
31,389
292,119
292,420
177,865
1,001,598
1,179,463
1,039,368
Volume of transactions1 Number of transactions1
1 Based on single counting. 2 Represents securities quoted per unit.3 Represents securities quoted in per cent of nominal value; foreign currencies are translated into EUR.4 All are versus payment.
Transactions settled by CSD.Austria
Internal
External
CCL4
Total
The account balances and transaction volumes shown in these tables underline the important rolewhich CSD.Austria, and hence the non-physical transfer of securities, have come to play in Austria.Approximately 90% of the nominal value of Austrian
debt securities, more than 90% of the nominal amount of all listed Austrian equity securities and over 70% of Austrian “certificates” (the popular structured products known as “Zertifikate”) are under custodywith and serviced by CSD.Austria.
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Settlement finality act
A decision of Oesterreichische Nationalbank on 9 December 2003 recognised CentralSecurities-Depository.Austria — the CSD established and opera-ted by OeKB — as a system for the purposes of theSettlement Finality Act. Through the Settlement Finality Act, Directive 98/26/EC of the European Parliament and Council of 19 May 1998 (the Settle-ment Finality Directive) was transposed into nationallaw in Austria. The purpose of the Settlement FinalityAct is to improve the protection of participants in systems defined under the Act in the event of insol-vency of another participant. When this occurs, thestatus of CSD.Austria as a system under the Settlement Finality Act places the customers ofCSD.Austria in the best possible legal position.
Code of Conduct
All members of the Federation of European SecuritiesExchanges (FESE), the European Association of Central Counterparty Clearing Houses (EACH) and theEuropean Central Securities Depositories Association(ECSDA) agreed on a Code of Conduct for Clearingand Settlement on 31 October 2006. With this voluntary Code of Conduct the stock exchanges, clearing institutions and central depositories activelycontribute to the increased efficiency and further harmonisation of the European capital market.
The aim of the Code of Conduct is not only to ensuregreater transparency of prices and services in cross-border securities business but also to invigoratecross-border securities trading. Thanks to technical interfaces that achieve interoperability between thedifferent platforms, and through separate accountsand redesigned services, market participants can nowsource their clearing, settlement and custody servicesfrom separate providers.
In its capacity as CSD.Austria, OeKB too is a signatoryto the Code of Conduct.
CCL
CCL (Custody with Clearing Link), a product designedto complement CSD.Austria, allows the AustrianCSD’s customers to reap the benefits of direct membership in the Frankfurt Stock Exchange withouthaving to establish their own clearing and settlementinfrastructure. The securities bought in Frankfurt arecredited to the accounts within CSD.Austria (providinga single point of entry), where they are administered.OeKB is the first central securities depository inEurope to offer such a service. As of the end of 2010,five Austrian members of the Frankfurt Stock Exchange settled their securities trades via OeKB’sCCL product.
The CCL settlement service is available not only forXetra Frankfurt transactions but also for trades on allseven German regional exchanges. On these other exchanges, OeKB complements its settlement serviceby also acting as an execution broker with electronicorder routing. To do so, OeKB became a member of all seven trading floor exchanges in Germany. It hasthus created the necessary infrastructure for efficientrisk management and for meeting its disclosure requirements with the Financial Market Authority. The orders are sent electronically to OeKB and auto-matically routed to the appropriate stock exchange for execution.
European developments
In 2010 the European Commission began prepara-tions for two directives relevant to CSD.Austria: theSecurities Law Directive (SLD) and the Regulation forCSDs. Their further development and implementationwill continue to be monitored closely in 2011. Effortsregarding the “Target2 Securities” (T2S) securitiessettlement platform were focused on drafting a written agreement between the Eurosystem and thecentral securities depositories. The final wording, andthus the basis for a decision on joining T2S, will become available in 2011.
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7 CCP Austria Abwicklungsstelle für Börsengeschäfte GmbH
The CCP Austria Abwicklungsstelle für Börsen-geschäfte GmbH (CCP.A) was jointly established byOeKB and the Vienna Stock Exchange in 2004. CCP.A acts as the clearing agent for the Vienna StockExchange (VSE) and as the central counterparty for all trades concluded on the exchange. In this key role,CCP.A makes a major contribution to the stability of the financial market.
For the clearing and settlement of stock exchangetransactions in the cash market, CCP.A uses the automated SICS system (Settlement Information andClearing System) developed and operated by OeKB. It uses the CSD.Austria accounts of the Vienna Stock Exchange members to enter the net securities balances. Exchange transactions in the derivatives market are cleared via the EUREX system operated by the Vienna Stock Exchange. More than 9,700 different products are currently processed throughthese systems.
The table below shows the transaction volume contracted and cleared in 2010 by CCP.A as the central counterparty.
20102009
Derivatives market
1 Netting factor: Number of trades divided by number of net positions.
Exchange turnover
As of the end of 2010, CCP.A served 68 Austrian and international members, most of which were also members of the Vienna Stock Exchange.
To ensure the fulfilment of transactions under con-stantly changing market conditions, CCP.A employs a multi-tiered collateral system. The risks are recalcu-lated several times per day and every clearing parti ci-pant deposits security according to its particular level of risk.
At the end of 2010 the CCP.A held collateral andother security totalling about EUR 21.5 million in theform of a common fund (the clearing fund) for the cash and derivatives market and in the form of individual security of clearing members.
CCP.A fully implemented the Code of Conduct in a timely manner. It conducted another self-assessmentin 2010. Implementation was confirmed in assurancereports by the auditor in connection with the financial statements for the years 2008 and 2009.
Number of orders executed 6,139,786 5,936,050
Turnover in EUR million (double counted) 75,241 76,556
Total number 302,167 305,343
Netting factor1 33.8 31.7
Number of contracts 766,628 838,911
Volume of contracts in EUR million 12,179.67 16,993.33
Volume of exchange-traded options in EUR million 136.10 131.31
Cleared net positions
Stock exchange turnover
Cash market
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What is balancing energy?
Based on experience, current weather, season andother factors, participants in energy markets (electricity and gas) forecast the amounts of energywhich their customers will consume or which their generating facilities will produce and make available.On the basis of these projections, they contract to buy or sell energy. The actual consumption and generation typically differ from the forecasts. The difference between the forecast-based contracts and actual consumption/generation is referred to as “balancing energy”, which is the energy shortfall or surplus that market participants buy or sell in the market.
APCS
APCS Power Clearing and Settlement AG was licencedin April 2001 by the Ministry of Economic Affairs asthe balancing energy clearing agent for electricity. Onbehalf of APCS, OeKB since October 2001 performsthe financial clearing and risk management for energymarket participants for all positions arising in connection with balancing energy.
AGCS
Analogous to its activities in the power market, since2002 OeKB has been responsible for the financialclearing and risk management in the gas market, undercontract to AGCS Gas Clearing and Settlement AG.
8.1 “Balancing energy”
OeKB has taken advantage of the liberalisation of theAustrian electricity and gas market to develop a newbusiness segment. In its functions of financial clearingand risk management, it has positioned itself as a cen-tre of excellence serving the energy sector as a whole.
In this context, unlike its role in the capital market,OeKB does not act as a clearing agent or centralcounterparty.
8 Energy Market Services
EXAA
With the opening of EXAA, the Austrian energy and environment exchange (EXAA Abwicklungsstelle für Energieprodukte AG) in 2002, OeKB also acquired the mandate for providing financial clearing and risk management for the market segment of exchange-traded electricity.
Trading of carbon emission allowances (also referredto in Austria as CO2 emission certificates) began inJune 2005. For banks and industrial companies, OeKB Business Services GmbH, as an EXAA member, provides a simple and low-cost means of buying andselling CO2 certificates on the exchange. This serviceis used especially by companies that are affected by the allocation plan, but for whom it would not be economical to become a member of the exchange.
8.2 Energy exchange
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ECRA
At the beginning of May 2004, in connection with the energy market services project, OeKB (together with the Austrian chamber of commerce, Investkredit Bank AG, Lenzing AG, Porr, smart technologies, APCS,members of the cement and concrete industry andseven energy firms) founded a new company, ECRAEmission Certificate Registry Austria GmbH. At pre-sent, OeKB holds a 12.5% ownership interest in ECRA.
ECRA was appointed by the Federal Ministry of Agriculture, Forestry, Environment and Water Manage-ment to operate the registry for CO2 emission allow-ances for all of Austria. The registry manages therequired accounts for the plant owners in which the is-suance of carbon allowances as well as all subsequenttransfers (purchases and sales) are recorded.
8.3 Registry service provider for CO2 emission certificates
8.4 Green electricity
OeMAG
In accordance with the 2006 amendment of the GreenElectricity Act, OeMAG Abwicklungsstelle für Öko-strom AG was set up in Austria as the organisation incharge of operating the market for environmentallyfriendly, green electricity, thus putting in practice thecorresponding EU legislation.
Licensed by the Federal Ministry of Economic Affairs,OeMAG is responsible for the purchase and sale ofgreen power. On behalf of OeMAG, OeKB performsthe necessary financial clearing and risk managementfor green electricity transactions.
9 Information Services
The global financial and economic crisis and its after-effects have confronted all market participants withunprecedented challenges. Against this backdrop,2010 even more than earlier years brought home thegreat importance of reliable high-quality data: Wisestrategic business decisions that can stand the test of time require dependable knowledge both of marketopportunities and of the associated risks. OeKB’s department in charge of making such knowledge available, through macro- and microeconomic analy-tical reports, is Bank and Business Information (BBI). It services companies in Austria and abroad, as wellas all businesses of the OeKB Group.
Thomson Reuters & OeKB CEE Business Climate Index for CEE
The Thomson Reuters & OeKB CEE Business ClimateIndex was developed by BBI to support companieswith international operations, as well as analysts andother market observers, in their Central and EasternEuropean activities. Leading indicators for a total of 19 countries in Central, Eastern and SoutheasternEurope give early signs of opportunities in the regionand enable users to keep risks firmly in sight. Amidthe global crisis, the index clearly proved its validity:At a very early stage, it already provided the first cluesto a spreading of the crisis to some countries in the
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region, and as early as the first half of 2009, it beganto signal a nascent new optimism in Central and Eastern Europe. In the course of 2010 the BusinessClimate Index readings substantiated the impressionthat the economic recovery in a number of countriesand industries should be regarded as a lasting one.The Business Climate Index for Central and EasternEurope is marketed worldwide through a successful,established partnership with Thomson Reuters. Additionally, in 2010 numerous companies made useof the leading indicators calculated quarterly by OeKBfor their strategic decisions in the region.
Information Broking
The Information Broking service, targeted mainly to business enterprises, financial services providers in Austria and other countries, and scientific and research institutions, continued to be expanded in2010, as demand for professional, made-to-measureresearch is progressively rising. Working to customers’exact wishes, the specialists at BBI prepare studies,analyses and concise reports on specific aspects of global financial and economic developments. Last year the customer requests focused particularly on analysis of market structure and potential, sector reports, comparative evaluations of business locations, peer group reviews and company profiles: In 2010, leading companies relied on analysis fromBBI especially in their globalisation strategies and thefurther growing of their operating business. Strategicalliances with international data vendors were furtherexpanded, developing joint projects through which BBI continues to add to its reputation as a provider of premium market information.
Online Press Review
In the form of the Online Press Review (which repre-sents a longstanding successful collaboration withAPA Austria Presse Agentur), BBI provides companiesin various industries with a daily, focused compilationof information on current affairs: BBI’s media analysisteam, using customer-specified profiles, searches the national and international press and selects all pertinent news about financial and business develop-
ments, relevant markets and companies. This customised news round-up is available to clients dailyfrom 9 am on the Internet, is stored in the company’sown media archive and can be retrieved at any time.At the reporting date, BBI’s Online Press Review had about 2,500 subscribers in Austria and abroad,for whom it was and is highly important in the global volatile environment to remain authoritatively in-formed on developments in the various national andinternational markets.
austrian business monitor
With its “austrian business monitor”, BBI providescomprehensive daily news on industries and industryplayers: Selected press reports from a wide range of media give a rapid overview of trends in all sectorsof the economy. The publication also focuses on reports about significant international and all Austrianfirms, from small family businesses all the way to multinational groups. Working together with APA,which contributes its technical expertise, the dailynews update is stored in a company and industrydatabase. This product too, which focuses primarily on business trends in Austria, was very well receivedin the year under review. It allows subscribers to follow not only broad trends, but also to stay consis-tently informed on company-specific developments at customers, suppliers and strategic allies.
Information & communication and knowledge management
In 2010, leading domestic and foreign business enter-prises made use of BBI’s information and knowledgemanagement expertise. The main focus of BBI’s in-house projects was to analyse OeKB’s internal communication processes in terms of efficiency andto further streamline them. The information servicesfor all business areas of the Bank have undergone extensive customisation. It continues to be BBI’s strategic goal to generate direct value-added forOeKB’s operations. Moreover, BBI seeks to promotethe sustained commercial success of OeKB by creating and expanding practice-oriented knowledgemanagement structures.
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10 OeKB Business Services GmbH
Safe business software
OeKB Business Services GmbH (OeKB-BS) is a specialist IT service provider owned by OeKB AG. Thecompany develops and operates business softwaresolutions of the highest quality, security and reliability:Marketed under the slogan of “safe business soft-ware”, its solutions are web-based, secure, profes-sional, up-to-date, and appropriate to user needs.
The solutions of OeKB Business Services address therequirements of customers in the most diversesectors, from finance to manufacturing and from go-vernment to private companies. The firm’s customersbenefit from its understanding of complex businessprocesses and from custom-tailored solutions thatprecisely meet their specifications. Confidentiality inhandling sensitive business data is assured.
Business in 2010
In 2010 OeKB Business Services placed particular emphasis on broadening its client base and expandingits portfolio of solutions. To its existing business seg-ments (open source software and Microsoft software),it added the new one of software sales under licence.The focus in this new business activity was on selectpartner solutions that optimally complement the solutions portfolio and reflect the company’s own corecompetencies.
The work done in the year centred on the continuedservicing of ongoing projects and the launch of several new ones. For example, the company deve-loped a proprietary standard software solution for themanagement of visitors and visitor cards for the Microsoft SharePoint platform, and implemented thesolution for the first time.
At year-end, OeKB Business Services GmbH employed a staff of nine. The company’s equity wasEUR 2,120,554.49. Its financial year closed with a net profit of EUR 72,922.99.
Outlook for 2011
From today’s perspective, a slow upturn can be expected in 2011 for the economy as a whole, thoughwith pronounced sectoral differences in the pace ofrecovery. With better growth prospects, companieswill be more willing again to invest in information technology. This outlook is also supported by the risein new orders during the second half of 2010.
The risks for 2011 are seen as residing mainly in theas yet unconfirmed durability and actual strength of the macroeconomic upswing and — directly relatedto this — the true readiness of the business sector to invest in new IT solutions.
The opportunities for OeKB Business Services GmbHlie in the ever-growing demand for solutions that improve and automate business-critical processes.The company meets this need with its proven technological and business process excellence and its extensive portfolio of solutions that gives clients a wide range of software resources from a singlehighly capable supplier.
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11 Oesterreichische Entwicklungsbank AG - Funding tomorrow’s prosperity
Oesterreichische Entwicklungsbank AG (OeEB) is a development bank. Having a public mandate, OeEBfocuses on long-term investment financing of largelyprivate sector projects in developing countries. In evaluating the commercial viability of projects, the development aspects of each individual transactionare accorded special importance. Support is not explicitly tied to Austrian investors or suppliers, although the potential of Austrian companies is to be utilised on a project-centred basis.
In addition to the income that it generates itself, OeEBalso annually receives about EUR 20 million from the Austrian federal government budget for project identification, preparation, monitoring and for non-financial project support provided by OeEB that is togenerate development benefits.
OeEB’s second full financial year was a successfulone. As a result both of the financial and economiccrisis and intensified project acquisition activities,2010 brought a large number of requests for finan-cing, with a number of deals being signed by OeEB. To cope with the expansion of activity, OeEB hiredmore staff and adjusted its internal structures.
At the end of December 2010, OeEB had 18 employees. The total transaction volume (based on contracts signed) was approximately EUR 132.0 million. Profit for the year was EUR 781,648.40. After transfers to reserves, unallocated profit for theyear amounted to EUR 280,483.95.
OeEB has share capital of EUR 5 million, which is entirely held by OeKB. The work of the developmentbank’s staff focuses on the immediate core activities:the identification, structuring, implementation and management of eligible projects. All support functions, such as accounting, IT, human resourcesadministration, internal audit and asset managementhave (with the approval of the Financial Market Authority) been outsourced to OeKB on a paid basis.The resulting lean organisation is expected to allowOeEB to operate very cost-effectively.
Information about OeEB and its business activities is available at www.oe-eb.at.
OeKB AG holds a 51% ownership interest in OeKB EHBeteiligungs- und Management AG, a company founded in 2008. The other 49% is owned by Hamburg-based Euler Hermes Kreditversicherungs-AG, the world’s largest credit insurer.
OeKB EH Beteiligungs- und Management AG is thesole owner of PRISMA Kreditversicherungs-Aktien-gesellschaft, OeKB Versicherung Aktiengesellschaftand OeKB Südosteuropa Holding Ges.m.b.H.
This structure of the insurance holdings serves twomain objectives:
A very comprehensive range of credit insurance products can continue to be offered to the Austrianbusiness sector through a coordinated two-brand,two-company strategy. The development of local credit insurance opportunities in Southeastern Europeis being vigorously pursued.
12 OeKB EH Beteiligungs- und Management AG
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PRISMA primarily insures short-term trade receivablesin OECD countries against the risk of customer insolvency.
In addition to its headquarters in Vienna, the companyhas offices in Linz, Graz and Innsbruck. As of 31 De-cember 2010, a staff of 121 people was employed.PRISMA commands a market share of about 37%,making it the largest provider in the Austrian credit insurance market.
PRISMA Kreditversicherungs-AG holds the majority ofthe shares of PRISMA Risikoservice GmbH & Co KG.This subsidiary provides most of the insurance company’s credit analysis, for which it draws on theinformation resources of the globe-spanning EulerHermes network. This network gives Austrian clientsaccess to information on 40 million companies inmore than 50 countries.
PRISMA had an eventful year in 2010: At the start ofthe year, the company began to work with the newlyestablished Austrian branch of Euler Hermes Collection GmbH and thus gradually wound down itsown collections business. PRISMA cooperates closelywith this Group company and is thus able to provideboth credit insurance and collections services from a single greater source.
Corporate culture and values have long been a centraltheme at PRISMA. In the spring, a staff survey wasconducted on this subject. New activities wereplanned on the basis of the findings. As well, in thesummer a comprehensive customer satisfaction survey was carried out that encountered positive reviews while also revealing scope for optimisation.
The newly created Risk Management and Controllingdepartment focuses its attention especially on Solvency II and process management.
The project known as “One Euler Hermes” continuesto progress in the Group. Among other changes, it will group the more than 50 national Euler Hermescompanies into six, redrawn regions. Euler HermesHungary will be part of a different region than before.PRISMA therefore transferred its ownership interest in this company, which it had held on a fiduciary basis, to Euler Hermes.
Thanks to the improvement in economic conditions,the revenue performance was above target. Revenuefor 2010 was approximately EUR 63 million. New business, on the other hand, did not reach the targeted level. PRISMA nonetheless further expandedits lead as the largest player in the market.
Insolvencies eased slightly over the course of theyear. Despite the major insolvency of the A-Tec Group,the claims ratio fell from the prior year, to about 28%.However, reinsurance costs increased markedly as a result of the high level of insolvencies over the pastyears. After deducting expenses, the technical result(i.e., underwriting profit) amounted to EUR 4.4 million.Including the effect of net financial items, the company’s profit before tax was EUR 7.0 million.
PRISMA’s reinsurance provider is the Euler HermesGroup. The retention is capped by an excess-of-losscontract. At 31 December 2010 PRISMA had equity of EUR 27.1 million.
Outlook for 2011
In 2011, PRISMA aims for continuing profitable andsteady growth. It will focus on further increasing itsmarket share as the market leader. As the topprovider in the market, a key task for PRISMA will alsobe to further develop the credit insurance market inAustria.
12.1 PRISMA Kreditversicherungs-Aktiengesellschaft
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OeKB Versicherung AG is a credit insurer focused primarily on insuring short-term receivables from salesnot only into western industrialised countries or withinAustria itself, but also and especially into emergingeconomies. The company’s defining core competencyis its expertise in difficult markets.
A total of 41 people work at the headquarters inVienna and the office in Linz. Of these, 20 are employed directly by the company and the other staffmembers are on secondment from OeKB.
The company has a market share of almost 15% andranks third in the Austrian credit insurance market.
In its activities, OeKB Versicherung itself concentrateson the immediate insurance core business, that is,sales, underwriting, credit analysis and claims handling. All support functions, such as accounting, IT,human resources administration, internal audit and asset management, are outsourced to OeKB on a paid basis with the approval of the Financial MarketAuthority.
Product portfolio
Based on each customer’s individual requirements,OeKB Versicherung provides the right type of receivables insurance.
The most convenient product is the Global Policyknown as P6, covering all transactions of the clientwith all customers worldwide through one and thesame policy. Alternatively, Single-Buyer cover (P5) insures all sales to a single customer. For one-timetransactions, Single-Transaction policies (P1) are a natural choice. Standard cover is available both forcommercial risks (payment default and insolvency)and political risk (for instance, receivables with publicsector institutions, and transfer risk).
OeKB Versicherung offers a comprehensive customercare concept: From the start, every client has the advantage of a single personal point of contact atOeKB Versicherung. The relationship manager is responsible for everything from drafting the insurancecontract, to limit monitoring, to handling the client’sclaims. In this way, clients are guaranteed easy,straightforward access to custom-tailored and secureservice.
Business performance
In 2010 — the company’s sixth year in business — asignificant expansion in Austrian exports and generallyhigher premiums in the market led to revenue growthfor OeKB Versicherung. The premium income of EUR 23.7 million was up 15.6% year-on-year; the claims ratio was 36.2%. Taking into account an addition to the claims equalisation provision, the company’s technical result amounted to approximatelyEUR 1.4 million. After net financial result, profit before tax was EUR 2.2 million.
As the Austrian government underwrote reinsurancefor so-called “non-marketable” risks during the economic crisis, OeKB Versicherung was able to continue to provide the accustomed support to itsclients selling into difficult markets. As agreed, this supplementary reinsurance cover expired at 31 December 2010. The reinsurance contract with Luxembourg-based Euler Hermes Réassurance SA remains in effect. From the beginning of 2011, therisks that were until then covered by the governmentreinsurance are once again reinsured with Euler Hermes Rèassurance SA.
12.2 OeKB Versicherung Aktiengesellschaft
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Outlook for 2011
The economic trend in the traditional markets of Austrian exporters is showing a pattern of volatility.Export firms are therefore increasingly targeting emerging markets, where economies are growingmore consistently. However, these markets too are associated with considerable risks, which must beanalysed, monitored and insured.
With its special expertise in “difficult“ countries, OeKBVersicherung will continue to back its clients’ salesinto new export markets in 2011.
The object of OeKB Südosteuropa Holding is to establish and develop local service companies andcredit insurance facilities in Southeastern Europe formarketable export and domestic risks based on theunderwriting standards of a private credit insurer, andto manage the resulting companies.
The company has share capital of EUR 2 million andtotal equity of approximately EUR 8.2 million.
The equity interest in Euler Hermes Servicii FinanciareS.R.L. (EHSF), a service provider for the Euler Hermesbranch in Romania, was administered by OeKB Südosteuropa Holding Ges.m.b.H. on a fiduciary basisfor OeKB Zentraleuropa Holding GmbH until it wassold in the year to the Euler Hermes Group.
The subsidiary OeKB Financial Services d.o.o. (OFSS)— OeKB d.o.o. za finansijske usluge — based in Belgrade, closed the 2010 financial year with a profit.It is 51% owned by OeKB Südosteuropa Holding and49% owned by Agencija za osiguranje i finansiranje izvoza Republike Srbije AD (AOFI), an export creditagency in Serbia. OFSS provides credit decisions forcredit insurers, credit information on Serbian companies and, very successfully, out-of-court debtcollection services in Serbia.
In January 2010, the Zagreb-based Hrvatsko KreditnoOsiguranje d.d. (HKO) became the first private Croatian credit insurance company registered in thecountry. The company is owned by OeKB Südost-europa Holding with a shareholding of 49% and byHBOR (Hrvatska banka za obnovu i razvitak) with aninterest of 51%. HKO insures companies domiciled inCroatia against default risks that are marketable. In October 2010, in accordance with Croatian legal requirements, a service company was founded as asubsidiary of HKO to provide information and risk assessment. The new company, named Poslovni infoservis d.o.o., was furnished with equity in the amountof HRK 2 million.
In the course of 2010 the cooperation with the Bosnian-Herzegovinian export credit agency, IGA, inthe area of credit information was further expanded.
In 2011, OeKB Südosteuropa Holding will continue towork on the execution of new projects to set up localcredit insurance facilities in Southeastern Europe.
12.3 OeKB Südosteuropa Holding Ges.m.b.H.
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13 System of internal control
The Executive Board has responsibility for the estab-lishment and design of a system of internal controland of risk management that meets the company’sneeds, particularly in relation to the accounting andreporting process.
The key features of the internal control system atOeKB can be described in terms of the definition usedby the Committee of Sponsoring Organizations of theTreadway Commission (COSO). The COSO frameworkconsists of five interrelated components: control environment, risk assessment, control activities, information and communication, and monitoring.
The purpose of the internal control system at OeKB isto support management such that it is able to ensureeffective and continually improving internal controlsregarding accounting. It is intended to ensure compliance with policies and rules and to create conditions conducive to the effectiveness of specificcontrol activities in the key accounting processes.
Internal Audit independently and regularly verifies theadherence to internal rules, including in the area ofaccounting. The head of Internal Audit reports directlyto the Executive Board.
Control environment
The most fundamental aspect of the control environ-ment is the corporate culture in which managementand employees operate. OeKB actively works to improve communication and the transmission of thebasic corporate values, with the aim of ensuring highmoral and ethical standards and integrity within the company and in its external relations.
The implementation of the internal control system inrespect of the accounting process is set out in thecompany’s internal policies and rules. The responsi-bilities in relation to the internal control system wereadjusted to fit the company’s organisational structure,in order to safeguard a satisfactory control environ-ment that meets the requirements.
Risk assessment
Risks relating to the accounting process are identifiedand monitored by management, with the focus placedon material risks.
The preparation of the financial statements regularlyrequires estimates to be made which involve the inherent risk that future developments will differ fromthese estimates. This is particularly true of, but not limited to, the following conditions or items relating to the financial statements: financial instruments, employee benefit costs and provisions, the outcomeof legal disputes, collectability of receivables, andtrends in the value of interests in subsidiaries andother companies. In some cases, external experts areconsulted and/or reliance is placed on publicly accessible sources in order to minimise the risk of errors of judgement.
Control activities
In addition to the Supervisory Board and ExecutiveBoard, the general control environment also encompasses middle management, such as the department heads.
All control activities are applied “in-process” duringthe regular ongoing operation of the business processes in order to ensure that potential errors in financial reporting are detected and corrected.
The Executive Board is responsible for ensuring thatthe levels of the reporting hierarchy are structuredsuch that an activity and the controls on the activityare not performed by the same person (following theprinciple of strict separation of responsibilities).
Control activities regarding information technology security represent a cornerstone of the internal control system. Thus, the separation of sensitive responsibilities is supported by restrictiveness in the assignment of IT privileges. For accounting and financial reporting, the software SAP ERP CentralComponent 6.0 is used. The functioning and effectiveness of this accounting system is assured,among other ways, by automated IT controls installed in the system.
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14 Risk management
Risk management forms an integral tool of overallbank management in the OeKB Group and is the jointresponsibility of the whole Executive Board. The riskpolicy and strategy, set by the Executive Board, aimsto assure a sustained return on equity combined withorganic growth.
The bank’s special position by virtue of its public mandate from the Austrian government and of its roleas a central provider of essential services to the capital market, along with the associated responsibi-lity for the Austrian economy, dictate a very high standard of soundness in OeKB’s risk management.
An important feature of the bank’s corporate policy istherefore the conservative management of all risks, in-cluding financial risks and risks arising from businessoperations in general — irrespective of whether the
risks are OeKB’s own or are those managed on behalfof the Republic of Austria — yet without neglecting theneed for profitability. This approach is also traditio-nally reflected in a sustainable compensation policy(see section 15, Human resources).
A key variable in the measurement and managementof risk is economic capital; it is calculated using theconcept of Value at Risk (VaR) over a one-year timehorizon. In the ICAAP, credit risk, market risk, opera-tional risk and business risk are taken into accountquantitatively, through the calculation of economic capital (business risk is considered to be the risk that earnings will suffer as a result of changes in the business environment — such as markets, customerbehaviour or technology or of inappropriate or inadequately implemented business strategy).
In subsidiaries, the respective management has ultimate responsibility for the establishment and design of a system of internal control and of risk management appropriate to the respective company’srequirements, particularly in relation to the accountingprocess, and for compliance with the associatedGroup-wide policies and rules.
Information and communication
Policies and rules on financial reporting are regularlyupdated by management and communicated to thestaff concerned.
As well, the accounting staff members receive frequent training regarding changes in internationalaccounting practices in order to be able to detectrisks of inadvertent reporting deficiencies at an early stage.
Monitoring
The responsibility for the enterprise-wide ongoing monitoring of business processes rests with mana-gement and the Supervisory Board as well as the Controlling department. Further, the respective department heads are responsible for the monitoringof the relevant areas of activity; for example, checksand validations are conducted at regular intervals. Internal Audit is also involved in the monitoring process. The system of internal control likewise performs a monitoring and oversight function.
The findings of the monitoring activities are reportedto management and the Supervisory Board. The Executive Board regularly receives summarised finan-cial reports such as, for example, monthly financialstatements and quarterly segment and risk reports. Financial statements for publication undergo a final review by accounting management staff and the Executive Board before being forwarded to the AuditCommittee of the Supervisory Board.
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In the calculation of risk coverage, the economic capital required is compared with the economic capital available. This is done in a multi-tier system addressing various risk coverage objectives.
A risk type not included in the calculation of risk coverage is liquidity risk. It is measured and controlledusing liquidity gap analysis in accordance with the regulatory requirements and recommendations (such as the recommendations of the Committee ofEuropean Banking Supervisors).
As planned, in 2010 the implementation of a comp-rehensive software solution for risk evaluation andasset/liability management was completed. This is animportant enhancement in the integrated manage-ment of the bank, as it allows both single-period anddiscounted multi-period parameters (returns and risks)to be calculated in a single system.
In operational risk management, one of the main projects in 2010 was the further improvement of thedocumentation of the internal control system. As well,the internal control system policy was put into effectby the Executive Board.
Details on the risk management of the OeKB Groupare provided in notes 48-52 to the consolidated financial statements.
15 Human resources
Given the Group’s central significance for Austria’s capital market and export industry, OeKB and its subsidiaries are very aware of the importance of highlyqualified and motivated staff. Service quality and professionalism, combined with sustained earnings-,cost- and risk-consciousness, are the critical successfactors.
OeKB’s long-term success depends on the commit-ment of its staff. As a responsible employer, OeKBknows its employees’ interests and needs. Carefullytailored staff development tools help to create the best possible work environment. In the reporting period, a revised performance appraisal interview process was put into place and, for interested staff, a job rotation system was implemented. The trainee-programme pilot project underway since the previousyear was successfully adopted into regular operations,and two new trainees were accepted for the CapitalMarket Services and Export Services segments.
The programme’s first graduate now works as a country analyst in OeKB’s Export Services segment.
The Group’s compensation policy uses both performance criteria and market benchmarks. Care is taken to ensure an appropriate proportion of fixedto variable pay. In keeping with the risk-conscious corporate strategy, variable compensation representsabout 10% of total gross compensation. The variableportion is based partly on individual performance asdiscussed in the performance appraisal interview, andpartly to various Group-level performance indicators.These indicators provide a balanced reflection of theGroup’s profitability, sustained growth in enterprisevalue, and risk profile. Appropriate controls ensurethat variable compensation is paid only when both theGroup’s earnings and risk profile allow it. These rulesare applied at all levels of the organisation, includingsenior management and the units which generate orcontrol risk.
For the subsidiaries, corresponding compensation models are being adjusted in accordance with legalrequirements.
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In 2010 as well, the importance of employees’ expertise and work ethic both in the business and service departments was particularly evident. Furthersynergies were raised through improved servicing of subsidiaries by central corporate departments. Inthe year under review, important benefits continued to be generated for the Austrian economy at largethrough the management by OeKB of the programmeof Austrian federal guarantees under the Corporate Liquidity Support Act (ULSG) as one of the measuresto alleviate the liquidity crisis, along with the continuing operation of Oesterreichische Clearing -bank AG (established in late 2008).
The Group’s staff count at the end of 2010 was 401full-time equivalents (prior year: 402); the averagecount during the year was 396 FTE (prior year: 385).
The concerted efforts of the entire staff enabled theGroup, even in the difficult market situation, to attainan operating profit per full-time equivalent of EUR 200,286.88.
The Executive Board would like to express its gratitudeand appreciation to all employees for their commit-ment and contribution to the good business perfor-mance achieved. This sincere thank you also goes tothe Staff Council, whose members, true to tradition,represented the interests of both the employees andthe bank.
20102009
Total number of employees as of 31 Dec. 428 428
Of whom part-time employees 83 86
Total employees in
full-time equivalents 402 401
Average number
of employees 385 396
Up to 30 44 42
More than 30 and up to 40 117 114
More than 40 and up to 50 163 165
More than 50 and up to 60 89 96
More than 60 15 11
Up to 5 100 97
More than 5 and up to 10 69 70
More than 10 and up to 20 122 107
More than 20 and up to 30 95 107
More than 30 and up to 40 34 42
More than 40 8 5
OeKB Group’s staff
By age in years
By length of service in years
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Welcome recognition of the Group’s sustainable environmental management practices came whenOeKB was honoured with the 2010 EMAS Award andalso placed first in the Austrian Sustainability Reporting Awards — Large Companies category.
OeKB is involved in the Austrian network of the UNGlobal Compact, in working groups of the Austrian Society for Environment and Technology (OGUT) andof Transparency International, and seeks to persuadeits guarantee holders to commit to following the OECD Guidelines for Multinational Enterprises.
After an intensive focus in 2009 on the integrationand safeguarding of human rights principles in theGroup’s business operations, the fight against corrup-tion — as the chosen key theme of the Austrian UNGlobal Compact network in 2010 — was made thecentral focus of OeKB’s corporate responsibility activities in the year under review.
The dominant motivation for working against corrup-tion is to strengthen fair competition in business. Only when corruption is outlawed and all parties tobusiness transactions take a clear stance against it iscorruption no longer seen by some individuals as away to improve sales results, but is recognised as thecriminal act that it is.
This anti-corruption stance was discussed during numerous events that OeKB actively participated in or hosted. Thus, both OeKB and development bank Oesterreichische Entwicklungsbank AG (OeEB) aremembers of the banking sector working group createdby Transparency International in January 2010. Herethe various institutions present their different comp-liance policies. The purpose is to achieve a uniformstandard and discuss implementation problems in asolutions-centred way.
The credit insurance subsidiary OeKB Versicherung reviewed its processes in terms of the principles of the UN Global Compact, and the website of Export-fonds (the OeKB Group’s export financing provider for SMEs) offers comprehensive, clear information onanti-corruption practices and considerations. All these activities are interlinked and help to examinethe subject of anti-corruption from diverse angles.
The standing dialogue with stakeholders continued in2010, serving especially to keep NGOs and customersabreast of international developments in the OECD —the Common Approaches on Environment and Officially Supported Export Credits and the Sector Understanding on renewable energy, water projectsand climate protection. These sets of policies forOECD members are currently under revision. Humanrights are to be more firmly incorporated into all mainOECD Recommendations and Guidelines, whichshould also lead to a stronger formal emphasis onhuman rights aspects in the evaluation of prospectiveand actual projects.
Vienna, 23 February 2011
Oesterreichische Kontrollbank Aktiengesellschaft
Signed by the Executive Board
Johannes Attems Rudolf Scholten
16 Sustainability at OeKB
58
59
Where does the future of the OeKB Group lie?
“In providing trusted services for businesses and the public sector,
and in continuing to improve and expand this offering.
Sometimes, new companies or institutions grow out of our core
activities – one recent example is Oesterreichische Entwicklungsbank AG,
the development bank. And to help business decision makers,
we create useful new services such as the CEE Business Climate Index
for Central and Eastern Europe developed by our department.”
Verena EbnerSenior Manager, Bank and Business Information
O e s t e r r e i c h i s c h e K o n t r o l l b a n k G r o u p
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Page
Consolidated Income Statement 62
Consolidated Balance Sheet 63
Consolidated Statement of Changes in Equity 64
Consolidated Cash Flow Statement 65
Notes to the Consolidated Financial Statements of the OeKB Group
Accounting policies 66
Segmental information 73
Notes to the Consolidated Income Statement 75
Notes to the Consolidated Balance Sheet 78
Other Information and Risk Report 87
IV. Auditor’s Report 102
III. OeKB Group Consolidated Financial Statements 2010
Contents Financial Statements
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At 31 December 2010, as one year earlier, there were no exercisable conversion or option rights. The statedearnings per share therefore represent basic earnings per share and are not subject to dilution.
Interest and similar income 790,492 1,119,615 — 29.4
Interest and similar expense (696,511) (1,011,914) — 31.2
Share of results of equity-accounted investees 7,051 (427)
Impairment losses on loans and advances and other credit risk provisions 15 (150) — + 100.0
Net fee and commission income 16 51,164 45,950 + 11.3
Fee and commission income 57,882 56,466 + 2.5
Fee and commission expense (6,718) (10,516) — 36.1
Administrative expenses 17 (80,082) (76,900) + 4.1
Net other operating income 18 7,349 8,837 — 16.8
Net gain or loss on financial instruments 19 13,584 33,750 — 59.8
Income tax and other taxes 20 (20,699) (27,219) — 24.0
Attributable to: minority interests (215) (226) — 4.9
EUR thousand Notes 2010 Change
in %
2009
Profit for the year attributable to OeKB shareholders, in EUR thousand 71,983 91,466
Average number of shares outstanding 880,000 880,000
Earnings per share in EUR 81.80 103.94
2010 2009
Earnings per share
III. OeKB Group Consolidated Financial Statements 2010
Consolidated Income Statement of the OeKB Group
Net interest income 14 101,032 107,274 — 5.8
Operating profit 79,313 85,161 — 6.9
Profit before tax 92,897 118,911 — 21.9
Profit for the year 72,198 91,692 — 21.3
Profit for the year attributable to shareholders of the parent 71,983 91,466 — 21.3
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IFRS Financial Statements
Change
in %
31 December
2009
EUR thousand Notes
Cash and balances at central banks 22 83,060 189,273 — 56.1
Loans and advances to banks 23 28,192,342 30,294,003 — 6.9
Loans and advances to customers 24 1,406,150 1,558,654 — 9.8
Allowance for impairment losses on loans and advances 7, 25 (224) (74) + 202.7
Other financial instruments 26 1,356,221 645,888 + 110.0
Interests in equity-accounted investees 28 52,914 48,972 + 8.0
Property and equipment and intangible assets 27 29,482 30,452 — 3.2
Current tax assets 34 469 1,100 — 57.4
Deferred tax assets 34 53,085 48,663 + 9.1
Other assets 29 4,628,787 1,434,805 + 222.6
Assets
Consolidated Balance Sheet of the OeKB Group
Total assets 35,802,286 34,251,736 + 4.5
Change
in %
31 December
2010
31 December
2009
EUR thousand Notes
Deposits from banks 30 1,411,173 980,594 + 43.9
Deposits from customers 31 608,053 516,750 + 17.7
Debt securities in issue 32 30,396,838 29,876,060 + 1.7
Provisions 33 645,757 507,387 + 27.3
Current tax liabilities 34 13,532 11,533 + 17.3
Deferred tax liabilities 34 16,106 11,280 + 42.8
Other liabilities 35 2,141,615 1,820,716 + 17.6
Equity 36 569,212 527,416 + 7.9
Attributable to minority interests 3,987 3,912 + 1.9
Liabilities and equity
Total liabilities and equity 35,802,286 34,251,736 + 4.5
31 December
2010
64
Annual Report 2010
IFRS Financial Statements
The amounts of called-up share capital and capital reserves shown above are the same as those reported in theseparate financial statements of Oesterreichische Kontrollbank AG.
More information on changes in equity is provided in note 36.
Consolidated Statement of Changes in Equity of the OeKB Group
Changes in retained earnings 61,204 (61,204) —
Profit for the year 71,983 215 72,198
Dividends paid and Supervisory Board emoluments (30,262) (140) (30,402)
EUR thousand Called-up
share capital
Capital
reserves
Retained
earnings
Profit for the year
attributable to
OeKB shareholders
Minority
interests
Total equity
At 31 December 2010 130,000 3,347 359,895 71,983 3,987 569,212
2010
At 1 January 2010 130,000 3,347 298,691 91,466 3,912 527,416
Changes in retained earnings 2,120 (2,120) —
Profit for the year 91,466 226 91,692
Dividends paid and Supervisory Board emoluments (20,264) (139) (20,403)
EUR thousand Called-up
share capital
Capital
reserves
Retained
earnings
Profit for the year
attributable to
OeKB shareholders
Minority
interests
Total equity
At 31 December 2009 130,000 3,347 298,691 91,466 3,912 527,416
2009
At 1 January 2009 130,000 3,347 296,571 22,384 3,825 456,127
65
Annual Report 2010
IFRS Financial Statements
Further detail on cash and cash equivalents is given in note 22. Additional information on the cash flow statement is provided in note 37.
Non-cash items included in profit before tax, and adjustments to
reconcile profit before tax to cash flows from operating activities:
Depreciation, amortisation and impairment of property and equipment and intangible assets 4,199 4,203
Changes in provisions 140 9,442
Gains/losses from disposal and/or valuation
of investments and property and equipment (56,366) (405,557)
Unrealised gains/losses from movements in exchange rates 46,373 374,357
Other non-cash items 10,665 2,341
Changes in operating assets and liabilities,
after adjustment for non-cash components:
Loans and advances to banks 2,040,394 5,286,527
Loans and advances to customers 142,625 487,074
Securities at fair value through profit or loss (717,618) 27,121
Other operating assets 11,480 127,147
Deposits from banks 430,299 (298,982)
Deposits from customers 91,302 95,601
Debt securities in issue (2,278,446) (6,574,963)
Other operating liabilities (8,761) 10,599
Interest and dividends received 843,634 1,049,605
Interest paid (708,216) (1,102,024)
Income tax paid (17,564) 16,234
Proceeds from disposal of:
Property and equipment and intangible assets 3 8
Purchase of:
Interests in unconsolidated companies — (5,842)
Property and equipment and intangible assets (3,245) (2,287)
Foreign exchange adjustments — —
Issue of shares — —
Dividends paid (30,008) (20,020)
Net cash from operating activities (72,963) (772,364)
Net cash used in investing activities (3,242) (8,121)
Net cash used in financing activities (30,008) (20,020)
EUR thousand 2010 2009
Net cash from operating activities (72,963) (772,364)
Profit before tax 92,897 118,911
Cash and cash equivalents at end of period 83,060 189,273
Net cash used in investing activities (3,242) (8,121)
Consolidated Cash Flow Statement of the OeKB Group
Net cash used in financing activities (30,008) (20,020)
Cash and cash equivalents at beginning of period 189,273 989,778
66
Annual Report 2010
Oesterreichische Kontrollbank Aktiengesellschaft (“OeKB AG” or “OeKB”) is a special-purpose bank with its registered office in Vienna, Austria. The activities of the OeKB Group consist largely of export services and capital market services.
OeKB AG prepared the consolidated financial statements for the year ended 31 December 2010 in accordanceexclusively with International Financial Reporting Standards (IFRS) as adopted by the European Union, thus alsosatisfying the requirements of section 59a Austrian Banking Act and section 245a Austrian Commercial Code.
In preparing these financial statements, the OeKB Group applied all IFRS (including IAS) and their interpretationsby the International Financial Reporting Interpretations Committee (IFRIC, formerly Standard InterpretationsCommittee or SIC) that were effective at the balance sheet date.
With the exception of the following items, the consolidated financial statements were prepared on a historicalcost basis:— Derivative financial instruments (measured at fair value)— Financial instruments at fair value through profit or loss.
The revised IAS 1 was adopted by the European Union on 18 December 2008. The revision is effective for financial years beginning on or after 1 January 2009.
The most important change introduced by IAS 1 relates to the presentation of income and expense recogniseddirectly in equity (now referred to as “other comprehensive income”). For the presentation of the income statement, the standard allows a choice between two formats: either two separate statements — the traditionalincome statement and a statement of comprehensive income — or a single statement that combines both thesestatements. Additionally, IAS 1 introduces new (non-binding) titles for some of the financial statements usedunder IFRS: In IAS 1 the balance sheet is now referred to as a “statement of financial position”, the incomestatement (in the case of the single-statement option) as a “statement of comprehensive income” and the cashflow statement as a “statement of cash flows”. However, as the new titles are not mandatory, they have notbeen adopted by the OeKB Group.
As the revision of IAS 1 relates solely to presentational matters, it has no substantive effects on the OeKBGroup’s reported financial position, results of operations and cash flows. Further, no statement of comprehen-sive income is required, as no income or expense was recognised directly in equity in the year under review orin the comparative prior periods.
Changes in accounting methods
The revisions to IFRS 2 have no retrospective effect on the OeKB Group’s financial statements for the prior reporting periods and the financial year 2010, as there were no circumstances to which the revisions apply.
The interpretations IFRIC 15, IFRIC 19 and IFRIC 14 have no effect on the financial statements of the OeKBGroup in prior years or the year under review, as there were no circumstances to which these IFRICs apply.
Accounting policies
Notes to the Consolidated Financial Statements of the OeKB Group
(1) General information
67
Annual Report 2010
IFRS Financial Statements – Notes
The amendment effective from 2011 to IAS 24 (Related Party Disclosures) for government-controlled entitieshas no effect on the financial reporting of the OeKB Group.
Uniform accounting policies are used throughout the Group. The accounting principles described below are consistently applied to all financial years represented in these consolidated financial statements.
Critical assumptions and judgements
The preparation of the consolidated financial statements in accordance with IFRS requires the Executive Boardto make judgements and to proceed on assumptions about future developments. These judgements and assumptions can have a material effect on the recognition and measurement of the assets and debt, the disclosure of other liabilities at the balance sheet date, and the amounts of income and expenses reported forthe financial year.
The following assumptions involve a not insignificant risk that they may lead to a material change in the carryingamounts of assets and liabilities in the subsequent financial year:
■ Financial instruments for which no active market exists are reviewed for impairment by using alternative discounting-based valuation methods. The inputs used for the determination of fair value are based in part on assumptions about future developments.
■ The measurement of existing retirement and termination benefit obligations involves assumptions regarding interest rate, age at retirement, life expectancy, employee turnover and future increases in pay and benefits.
■ The recognition of deferred tax assets is based on the assumption that sufficient tax income will be realised in the future to utilise them.
■ The off-balance sheet obligations from guarantees and from other contingent liabilities are regularly reviewedas to whether they require recognition in the balance sheet.
The estimates and underlying assumptions are reviewed on an ongoing basis. The actual values may deviatefrom the assumptions and estimates made if the general conditions do not follow the trends expected at the balance sheet date. Changes in estimates of assets, liabilities, income and expense are recognised in the balance sheet or in the income statement as they become known, and the assumptions adjusted accordingly.
A list of all entities that are represented in the consolidated financial statements of the OeKB Group is providedin note 28, Companies wholly or partly owned by OeKB AG. Three companies are fully consolidated: Oesterrei-chische Kontrollbank AG (“OeKB”, the Group parent) and the Vienna-based Oesterreichische EntwicklungsbankAG (“OeEB”) and “Österreichischer Exportfonds” GmbH (“Exportfonds”). There was no change during the financial year in the scope of consolidation, i.e., in the lists of entities that are fully consolidated, included by the equity method, or unconsolidated and held at cost.
(2) Scope of consolidation
68
Annual Report 2010
IFRS Financial Statements – Notes
(3) Methods of consolidation
31 December 2010 31 December 2009
Fully consolidated companies 2 2
Companies accounted for under the equity method 2 2
Unconsolidated subsidiaries held at cost 2 2
Other investments in companies held at cost 11 14
Number of companies incl. in the consolidated financial statements or held at cost, by accounting method
Total 17 20
The consolidation of the Group accounts involves purchase-method accounting; equity-method accounting; consolidation of intercompany balances, expenses and revenues; and the elimination of intercompany profits.The separate annual accounts of the fully consolidated entities and of the entities accounted for by the equitymethod are uniformly made up to 31 December.
The Group elected to make use of an option under IFRS 1 on 1 January 2004 (the date of transition to IFRS) byadopting the carrying amounts from the initial consolidation that was performed under the Austrian CommercialCode, or UGB. Acquisitions of subsidiaries are thus accounted for by the purchase method. Under this method,the cost of the acquired ownership interest is offset against the Group’s share of the subsidiary’s net assets at the time that control passes to the Group. As in the prior periods, the provisions of IFRS 3 on business com-binations were not yet applied in the year under review, as no relevant transactions occurred. Intercompany balances, expenses, revenues, profits and losses are eliminated when significant.
Companies classified as joint ventures are accounted for under the equity method and are reported as interestsin equity-accounted investees. Measurement by the equity method is based on local financial statements, adjusted to adhere to the Group’s uniform accounting methods. The annual results are obtained from the latestavailable annual separate financial statements and sub-groups’ consolidated financial statements, and thechanges in equity are thus recognised in the year in which they occur. Dividends paid by joint ventures to theGroup parent company are eliminated by reversing entries. Profits or losses for the year generated by joint ven-tures are shown in the consolidated income statement within share of results of equity-accounted investees.
Representing the unconsolidated entities held at cost, two subsidiaries were not consolidated (prior year: two);they are of minor overall significance to the Group’s financial position and results of operations. The combinedtotal assets of these two entities represent less than 0.01% of the Group’s consolidated total assets, and their combined profit for the year represents less than 3.5% of the Group’s consolidated profit for the year. In the OeKB Group’s consolidated financial statements, two companies (prior year: two), which are joint ventures, were accounted for by the equity method.
(4) Foreign currency translation
The consolidated financial statements are presented in thousands of euros, rounded by the standard round-half-up convention. The euro is also the OeKB Group’s functional currency.
69
Annual Report 2010
IFRS Financial Statements – Notes
Loans and advances to banks and customers
Loans and advances to banks and customers, to the extent that they are originated by the Group, are carried at their nominal amount or at amortised cost, before deduction of impairment losses and including accrued interest. Individual allowances for impairment losses are recognised for identifiable individual credit risks andfor country risks. Impairment losses are not deducted from the corresponding loans and advances but are reported as a separate line item on the face of the balance sheet. Most of the loans and advances to banksmade under OeKB’s Export Financing Scheme are guaranteed by the Republic of Austria. No collectively assessed provision for credit losses was required.
Other financial instruments
The item “other financial instruments“ consists of all fixed income and variable income securities (includingequities) and investments in unconsolidated subsidiaries and smaller shareholdings in other companies. In otherwords, investments consist of all securities and all unconsolidated investees. Effects on profit or loss are shownin the income statement within net gain or loss on financial instruments. The date of initial recognition or derecognition of other financial instruments is the settlement date.
Bonds and other fixed income securities as well as equity shares and other variable income securities are designated at fair value through profit or loss. As there is no trading portfolio in the OeKB Group, these securities form part of the investment portfolio, which is managed on the basis of market values. The securitiesare measured at fair value at the balance sheet date, with changes in value recognised in profit or loss.
The investments in unconsolidated subsidiaries and other companies are initially measured at amortised cost.
Financial liabilities
Financial liabilities are initially measured at their actual proceeds. Premiums, discounts or other differences between the proceeds and the repayment amount are realised over the term of the instrument by the effectiveinterest method and recognised in net interest income (amortised cost). Zero coupon bonds are recognised atpresent value. Where derivatives are used to hedge the interest rate risk or currency risk associated with liabili-ties, the hedged debt instruments are recorded at fair value in order to avoid accounting mismatches.
(5) Financial instruments
Currency Mid rate Currency Mid rateCurrency Mid rateCurrency Mid rate
AUD 1.3136
CAD 1.3322
CHF 1.2504
CZK 25.061
Foreign exchange reference rates at 31 December 2010
DKK 7.4535
GBP 0.86075
HRK 7.383
HUF 277.95
JPY 108.65
NOK 7.8000
PLN 3.975
RON 4.262
SEK 8.9655
USD 1.3362
Assets and liabilities denominated in foreign currencies are translated at the reference exchange rates of the European Central Bank at the balance sheet date of 31 December 2010.
70
Annual Report 2010
IFRS Financial Statements – Notes
Derivative financial instruments
The fair value of derivative contracts is calculated by generally accepted methods. Derivatives are recognised at the trade date.
Those derivative transactions which were entered into substantially to hedge the market values of banking bookitems in the balance sheet are recognised at their market value (their fair value, being the clean price) within otherassets or other liabilities. To avoid accounting mismatches, the change in market values of the hedged balancesheet items, like that of the derivatives, is recognised in profit or loss within net gain or loss on financial instruments.
The exchange rate guarantee of the Republic of Austria under the Export Financing Guarantees Act (in German:Ausfuhrfinanzierungsförderungsgesetz, published in Federal Law Gazette No. 216/1981, as amended), which isused to hedge exchange rate risks under the export financing scheme, is treated as a derivative contract andmeasured at fair value.
The fair value of listed instruments is deemed to be the quoted market price at the balance sheet date (level 1).Unlisted instruments are measured using the present value method (present value of discounted future cashflows) or suitable option pricing models (Black-Scholes models, the multifactor HJM model or the Hull-Whitemodel approach). To the extent possible, the input parameters used for these models are the relevant marketprices and interest rates observed at the balance sheet date that are obtained from widely accepted externalsources (level 2). The net asset values of investment fund units are determined as set out in the InvestmentFund Act.
The allowance for impairment losses on loans and advances and other credit risk provisions relates to impair-ment of loans and advances, and any provision for credit guarantees. The allowance and provisions are raisedfor all identifiable credit risks and country risks. As part of its risk management system, the OeKB Group employs a credit analysis system and an internal rating procedure. Counterparties are classified into five internalcredit rating categories on the basis of external ratings from internationally recognised rating agencies (Standard & Poor’s, Moody’s and Fitch). Credit ratings are monitored on an ongoing basis for changes. Forclients without an external rating, internally developed criteria are applied. As a result, all banking book assetsand off-balance sheet business can be classified according to creditworthiness and collateralisation.
Property and equipment comprises land and buildings used by the Group, and fixtures, fittings and equipment.Land and buildings used by the Group are those which are used primarily for the Group’s own business operations.
1. Property and equipment and intangible assets are recorded at cost less accumulated depreciation and amortisation. The following useful lives are assumed:
(6) Determination of fair value
(8) Property and equipment and intangible assets
(7) Allowance for impairment losses on loans and advances and other credit risk provisions
71
Annual Report 2010
IFRS Financial Statements – Notes
2. Low-value assets with an individual purchase price of up to EUR 400 are depreciated completely in the year of acquisition. In note 27, Property and equipment and intangible assets, low-value assets are recorded asadditions and disposals in the year of acquisition.
Intangible assets comprise only purchased software. Their value is periodically reviewed.
Sundry liabilities are recorded at amortised cost.
The provisions for pensions, termination benefits and long-service awards are calculated annually by an inde-pendent actuary using the projected unit credit method, in accordance with IAS 19. The biometric basis for thecalculations consists of the version of the current computation tables by Pagler & Pagler specific to salaried employees. The key parameters are a discount rate of 4.0% (prior year: 5.0%), an overall rate of salary and pension increases up to 3.5% (prior year: 4.25%) — which represents the collective-agreement trend and regularmulti-employee increases and unscheduled individual-employee increases — and an assumed age at retirementof 58 years 3 months for women (prior year: 58 years) and 63 years 3 months for men (prior year: 63 years)based on the transitional provisions of the Austrian public pension scheme (ASVG) under the Budget Implemen-tation Act 2003. In previous years, the pension obligations for a portion of the staff were transferred to a pension fund under a defined contribution plan. The employee benefit provisions include entitlements of formeremployees who were already receiving a pension before the time of the transfer, and non-transferred entitle-ments of present employees. For all active employees, the provisions include a component for a disability pension. The provision for termination benefits is determined so as to cover the legal and contractual entitle-ments. Actuarial gains and losses are fully recognised in the income statement in every financial year.
Other provisions are recognised where all of the following conditions are met: the OeKB Group has a legal or constructive obligation to a third party as a result of a past event, the obligation is likely to lead to an outflow ofresources, and the amount of the obligation can be reliably estimated.
Years
Buildings 40
Fixtures, fittings and equipment, other than information technology 3 to 10
IT hardware 3 to 5
Software 3 to 5
Useful life
(9) Sundry liabilities
(10) Employee benefit provisions
(11) Other provisions
72
Annual Report 2010
IFRS Financial Statements – Notes
Provisions are assessed at the amount representing the best estimate of the expenditure required to settle theobligation. If the present value of the obligation determined on the basis of a market interest rate differs materially from its nominal amount, the present value of the obligation is used.
In support of the export financing scheme, an interest rate stabilisation provision is maintained to stabilise theinterest rates on export credits, based on the constructive obligation regarding the use of surpluses from the export financing scheme. This de facto obligation has a dual basis: it arises from the rules for the setting of interest rates in the export financing scheme, which specify fixed margins for OeKB; and from a directive fromthe Austrian Ministry of Finance on the use of surpluses from fixed interest facilities. The amount allocated tothe provision is the total of i) the amount by which the interest earned in the export financing scheme exceedsthe sum of the borrowing costs incurred and OeKB’s fixed margin, and ii) the net gain or loss from the measure-ment of the derivatives and financial liabilities in the export financing scheme. In accordance with these rules,the provision is used to stabilise the terms of export credits.
The recognition and calculation of income taxes is performed in accordance with IAS 12. Current income tax assets and liabilities are measured by reference to local tax rates. Deferred taxes are determined by the balancesheet/liability approach. Under this approach, the carrying amounts of the assets and liabilities in the balancesheet are compared with the respective tax base for the particular Group company. Any temporary differencesbetween the two sets of valuations lead to the recognition of deferred tax assets or liabilities.
Composition of net gains and losses on financial instruments
Net gains and losses on financial instruments are affected by fair value changes recognised through profit orloss, by impairment losses, reversal of impairment through profit or loss, exchange rate movements and derecognition. For financial assets designated on initial recognition as at fair value through profit or loss, andthus measured as such, interest and dividend income is recorded within net interest income.
Revenue recognition
Income and expenses are recognised as they accrue. Interest income is recognised on an accrual basis usingthe effective interest method. Dividend income is recognised at the time of the decision to pay the dividend.
(12) Current and deferred taxes
(13) Consolidated income statement
73
Annual Report 2010
IFRS Financial Statements – Notes
Segmental information
In the segmental analysis presented below, the activities of the OeKB Group are divided into business segments.The delineation of these three segments — Export Services, Capital Market Services and Other Services — isbased on the internal control structure and the internal financial reporting to the Executive Board as the chiefoperating decision-making body. The financial information for these segments is regularly reviewed to allocateresources to the segments and judge their performance.
The Export Services segment encompasses the management of guarantees provided by the Republic of Austriathrough OeKB as the government’s official agent under the Export Guarantees Act (in German: Ausfuhrförde-rungsgesetz); OeKB’s Export Financing Scheme; and the shareholding in “Österreichischer Exportfonds“ GmbH.
The Capital Market Services segment comprises all services provided by Oesterreichische Kontrollbank AG relating to the capital market, clearing and settlement of on-exchange and off-exchange securities transactions,the CentralSecuritiesDepository.Austria, and clearing services for the energy market.
The Other Services segment consists of OeKB’s information services, its own-account investment portfolio, the activities of the OeKB Group in private sector credit insurance, and Oesterreichische Entwicklungsbank AG.
Interest and similar income 773,443 — 17,049 790,492
Interest and similar expense (694,641) — (1,870) (696,511)
Share of results of equity-accounted investees — (52) 7,103 7,051
Impairment losses on loans and advances
and other credit risk provisions — — (150) (150)
Net fee and commission income 21,049 27,484 2,631 51,164
Fee and commission income 24,574 29,610 3,698 57,882
Fee and commission expense (3,525) (2,126) (1,067) (6,718)
Administrative expenses (38,644) (24,871) (16,567) (80,082)
Net other operating income 16 1,612 5,721 7,349
Net gain or loss on financial instruments (174) — 13,758 13,584
Income tax and other taxes (14,349) (975) (5,375) (20,699)
Attributable to minority interests (215) — — (215)
Segment assets 34,907,707 10,772 883,807 35,802,286
Segment liabilities 34,322,292 32,022 878,760 35,233,074
EUR thousand Export Services Capital Market
Services
Other
Services
Total
Profit before tax 61,049 4,173 27,675 92,897
Profit for the year 46,700 3,198 22,300 72,198
Net interest income 78,802 (52) 22,282 101,032
Results by business segment in 2010
Operating profit 61,223 4,173 13,917 79,313
Profit for the year attributable to shareholders of the parent 46,485 3,198 22,300 71,983
74
Annual Report 2010
IFRS Financial Statements – Notes
Transactions offset between segments represent services rendered. Services by Oesterreichische KontrollbankAG to subsidiaries are provided at cost. No reconciliation of the amounts for the reportable segments to theamounts recorded in the consolidated balance sheet and income statement is necessary, as the consolidationitems are assigned directly to the segments.
The segment information is, generally speaking, based on the same accounting methods as the consolidated financial statements.
As the regional focus of the OeKB Group’s activities lies in Austria, a geographic segmentation is not consideredmeaningful and is omitted.
Interest and similar income 1,097,231 — 22,384 1,119,615
Interest and similar expense (1,007,599) — (4,315) (1,011,914)
Share of results of equity-accounted investees — (49) (378) (427)
Impairment losses on loans and advances
and other credit risk provisions — — — —
Net fee and commission income 16,533 26,825 2,592 45,950
Fee and commission income 24,349 28,780 3,337 56,466
Fee and commission expense (7,816) (1,955) (745) (10,516)
Administrative expenses (36,638) (24,345) (15,917) (76,900)
Net other operating income 24 972 7,841 8,837
Net gain or loss on financial instruments (1,456) — 35,206 33,750
Income tax and other taxes (15,197) (741) (11,281) (27,219)
Attributable to minority interests (226) — — (226)
Segment assets 33,051,877 10,522 1,189,337 34,251,736
Segment liabilities 32,835,093 40,101 849,126 33,724,320
EUR thousand Export Services Capital Market
Services
Other
Services
Total
Profit before tax 68,095 3,403 47,413 118,911
Profit for the year 52,898 2,662 36,132 91,692
Net interest income 89,632 (49) 17,691 107,274
Results by business segment in 2009
Operating profit 69,551 3,403 12,207 85,161
Profit for the year attributable to shareholders of the parent 52,672 2,662 36,132 91,466
75
Annual Report 2010
IFRS Financial Statements – Notes
The export guarantee activities represent services provided by OeKB on behalf of the Austrian government; additional detail is provided in the Segmental information section of this report.
Credit operations 1,041 409
Securities services 25,416 24,756
Export guarantees 18,694 15,096
Energy clearing 2,126 2,090
Other services 3,887 3,599
EUR thousand 2010 2009
Total 51,164 45,950
(15) Impairment losses on loans and advances and other credit risk provisions
(16) Net fee and commission income
(14) Net interest income
In the 2010 financial year an impairment loss of EUR 149,545 was recognised in respect of microcredits extended by OeKB.
Notes to the Consolidated Income Statement of the OeKB Group
Total
2010
Amortised
cost
2009
Fair value
option 2009
Total
2009
EUR thousand Amortised
cost
2010
Fair value
option 2010
Loans and advances and money market instruments 773,336 — 773,336 1,101,821 — 1,101,821
Fixed income securities — 10,128 10,128 — 10,101 10,101
Equity shares and other variable income securities — 5,356 5,356 — 5,790 5,790
Investments in unconsolidated subsidiaries
and other companies 1,672 — 1,672 1,897 — 1,897
Money market instruments and current accounts (19,404) — (19,404) (32,446) — (32,446)
Debt securities in issue (365,882) (311,225) (677,107) (467,361) (512,107) (979,468)
Leasing income — — — 437 — 437
Depreciation of leased assets and other leasing expenses — — — (431) — (431)
Interest income 775,008 15,484 790,492 1,103,718 15,891 1,119,609
Share of results of equity-accounted investees 7,051 — 7,051 (427) — (427)
Interest expense (385,286) (311,225) (696,511) (499,807) (512,107) (1,011,914)
Net income from leasing activities — — — 6 — 6
Total 396,773 (295,741) 101,032 603,490 (496,216) 107,274
76
Annual Report 2010
IFRS Financial Statements – Notes
Staff costs 53,315 50,688
Salaries 35,953 33,905
Social security costs 7,620 7,268
Pension and other employee benefit costs 9,742 9,515
Other administrative expenses 22,568 22,009
Depreciation, amortisation and impairment of property and equipment and intangible assets 4,199 4,203
EUR thousand 2010 2009
Total 80,082 76,900
(17) Administrative expenses
Other operating income 8,668 9,536
Other operating expenses (1,319) (699)
EUR thousand 2010 2009
Total 7,349 8,837
(18) Net other operating income
The item “other operating income” relates largely to service fees received by OeKB from non-fully consolidatedsubsidiaries for providing outsourced services on their behalf. In addition, in November 2008, OeKB was giventhe mandate to conduct all operating activities of Oesterreichische Clearingbank AG.
The auditor’s remuneration is included in other administrative expenses and consisted of fees of EUR 333,000(2009: EUR 285,000) for the audit of the Group’s annual accounts for 2010.
Net gain or loss on financial instruments represents gains and losses from the disposal and valuation of securities, interests in investments and other companies.
The gains from securities of EUR 23.8 million (2009: EUR 39.4 million) included realised gains of EUR 3.6 millionon disposal of securities (2009: EUR 3.0 million). The losses from securities were EUR 8.0 million (2009: EUR 3.0 million).
Foreign exchange differences and the fair-valued debt securities in issue and derivatives relate primarily to the export financing scheme and are to be regarded as a single unit from an economic point of view. The strongfluctuations in both items were driven by exchange rate movements, particularly in the US dollar and Swissfranc, but largely offset each other as a result of the hedging function of the derivatives.
(19) Net gain or loss on financial instruments
77
Annual Report 2010
IFRS Financial Statements – Notes
The actual taxes are calculated on the tax base for the financial year, at the local tax rates applicable to the individual Group companies. The taxation at the standard Austrian income tax rate is reconciled to the reportedactual taxes as follows.
Net gain or loss from measurement at fair value through profit or loss
Securities 15,761 36,376
Foreign exchange differences (46,411) (374,801)
Debt securities in issue and derivatives 44,789 375,172
Net gain or loss on investments in unconsolidated companies (555) (2,997)
EUR thousand 2010 2009
Total 13,584 33,750
Net gain or loss on financial instruments
Subtotal 14,139 36,747
The change in fair values of financial liabilities resulted exclusively from changes in market interest rates. The net loss on investments in unconsolidated companies reflects write-downs of EUR 0.7 million and valuationgains of EUR 0.15 million.
(20) Income tax and other taxes
Current tax expense 20,299 16,493
Deferred tax expense/(benefit) 400 10,726
EUR thousand 2010 2009
Total 20,699 27,219
Income tax
EUR thousand 2010 2009
Tax expense at Austrian standard corporate income tax rate of 25% 23,224 29,728
Tax effect of tax-exempt results of investees (2,279) (1,720)
Tax effect of other tax-exempt income (185) (401)
Tax effect of non-deductible expenses 178 738
Adjustment for prior years (1,916) (3,390)
Other tax effects 1,677 2,264
Income tax reconciliation
Profit before tax 92,897 118,911
Total 20,699 27,219
78
Annual Report 2010
IFRS Financial Statements – Notes
The Executive Board will propose to the 65th annual general meeting on 25 May 2011 that the profit availablefor distribution recorded in the parent company financial statements for the year 2010 in the amount of EUR 20,297,328.91 be used to pay a dividend of EUR 22.75 per share. The amount of the resulting total proposed dividend is EUR 20,020,000.00. This represents approximately 15% of the participating ordinary sharecapital for 2010 of EUR 130,000,000.00. After payment of the Supervisory Board emoluments, the balance,amounting to EUR 10,177.91, is to be carried forward.
(21) Appropriation of profit
This item consists solely of cash and balances with central banks and corresponds to cash and cash equivalentsreported in the cash flow statement.
EUR thousand
31 Dec. 2010 31 Dec. 200931 Dec. 201031 Dec. 2009
Domestic banks 1,565 7,592 26,755,405 28,674,660
Foreign banks 4,814 2,731 1,430,558 1,609,020
Total 6,379 10,323 28,185,963 30,283,680
Notes to the Consolidated Balance Sheet of the OeKB Group
(22) Cash and balances at central banks
(23) Loans and advances to banks
(24) Loans and advances to customers
Repayable on demand
EUR thousand
31 Dec. 2010 31 Dec. 200931 Dec. 201031 Dec. 2009
Public sector 8,414 8,916 600,230 740,809
Other 796,387 807,783 1,119 1,146
Total 804,801 816,699 601,349 741,955
Domestic customers
Other maturities
Foreign customers
The analysis by rating category is presented in note 51.
79
Annual Report 2010
IFRS Financial Statements – Notes
(26) Other financial instruments
31 Dec. 2010 31 Dec. 2009EUR thousand
Treasury bills 543,583 7,203
Bonds 507,605 356,044
Of which listed bonds 1,049,497 357,767
Equity shares — 120
Investment fund units 280,114 257,046
Of which listed equity shares and other variable income securities 2,374 2,174
Investments in unconsolidated subsidiaries 1,536 1,536
Investments in other unconsolidated companies 23,383 23,939
Equity shares and other variable income securities 280,114 257,166
Bonds and other fixed income securities 1,051,188 363,247
Bonds and other fixed income securities as well as equity shares and other variable income securities in theamount of EUR 1,331 million (2009: EUR 620 million) are held at fair value through profit or loss. No reclassi-fications were made.
In 2010, as part of liquidity management for the Export Financing Scheme, a liquid assets portfolio was established that had a market value of EUR 709.5 million at 31 December 2010.
Unconsolidated companies 24,919 25,475
Total other financial instruments 1,356,221 645,888
The allowance for impairment losses on loans and advances relates only to loans and advances to customers,and concerns only credit risks. The item also includes any impairment of accrued interest at the balance sheetdate. No collective impairment loss has been provided. The amount of non-performing loans and advances before impairment allowances was EUR 0.22 million (2009: also EUR 0.07 million). The amount of “other creditrisk provisions” was nil.
(25) Allowance for impairment losses on loans and advances and other credit risk provisions
80
Annual Report 2010
IFRS Financial Statements – Notes
(27) Property and equipment and intangible assets
Within the carrying amount of land and buildings used by the Group, the value of the land itself was EUR 4.4 million (2009: also EUR 4.4 million).
EUR thousand Cost at
1 Jan. 2010
Disposals in
2010
Additions in
2010
Accumulated
depreciation
and
amortisation
Cost at
31 Dec.
2010
Net book
value
at 31 Dec.
2010
Net book
value
at 31 Dec.
2009
Current-year
depreciation
and
amortisation
2010
Property and equipment 93,954 2,717 (797) 95,874 (67,501) 28,373 29,386 (3,713)
Land and buildings 71,902 — — 71,902 (50,183) 21,719 23,814 (2,095)
Fixtures, fittings and equipment 22,052 972 (797) 22,227 (17,318) 4,909 5,572 (1,618)
Assets under construction — 1,745 — 1,745 — 1,745 — —
Software 2,893 408 (1) 3,300 (2,311) 989 1,066 (486)
Assets under construction — 120 — 120 — 120 — —
Total 96,847 3,245 (798) 99,294 (69,812) 29,482 30,452 (4,199)
EUR thousand Cost at
1 Jan. 2009
Disposals in
2009
Additions in
2009
Accumulated
depreciation
and
amortisation
Cost at
31 Dec.
2009
Net book
value
at 31 Dec.
2009
Net book
value
at 31 Dec.
2008
Current-year
depreciation
and
amortisation
2009
Property and equipment 92,439 2,047 (532) 93,954 (64,568) 29,386 31,089 (3,750)
Intangible assets
Land and buildings 71,906 — (4) 71,902 (48,088) 23,814 25,954 (2,140)
Fixtures, fittings and equipment 20,533 2,047 (528) 22,052 (16,480) 5,572 5,135 (1,610)
Software 2,653 240 — 2,893 (1,827) 1,066 1,279 (453)
Total 95,092 2,287 (532) 96,847 (66,395) 30,452 32,368 (4,203)
Intangible assets 2,893 528 (1) 3,420 (2,311) 1,109 1,066 (486)
81
Annual Report 2010
IFRS Financial Statements – Notes
(28) Companies wholly or partly owned by OeKB AG
Oesterreichische Entwicklungsbank AG, Vienna CI x 100.00 31 Dec. 2010 6,199 782
„Österreichischer Exportfonds“ GmbH, Vienna CI x 70.00 31 Dec. 2010 10,554 465
OeKB EH Beteiligungs- und Management AG, Vienna OC x 51.00 31 Dec. 2010 87,626 4,255
OeKB Versicherung Aktiengesellschaft, Vienna OC x 51.00 31 Dec. 2010 35,285 1,829
PRISMA Kreditversicherungs-Aktiengesellschaft, Vienna OC x 51.00 31 Dec. 2010 27,051 5,154
PRISMA Risikoservice GmbH, Vienna OC x 51.00 31 Dec. 2010 11,176 2,136
OeKB Südosteuropa Holding Ges.m.b.H., Vienna OC x 51.00 31 Dec. 2010 11,472 (28)
OeKB Financial Services D.O.O., Belgrade OC x 26.01 31 Dec. 2010 448 45
Hrvatsko Kreditno Osiguranje d.d., Zagreb OC x 24.99 31 Dec. 2010 4,977 (115)
CCP Austria Abwicklungsstelle für Börsengeschäfte GmbH, Vienna OC x 50.00 31 Dec. 2010 252 (104)
OeKB Business Services GmbH, Vienna OC x 100.00 31 Dec. 2010 2,121 73
OeKB Zentraleuropa Holding GmbH, Vienna OC x 100.00 31 Dec. 2010 4,266 2,401
AGCS Gas Clearing and Settlement AG, Vienna OC x 20.00 31 Dec. 2009 2,798 (86)
APCS Power Clearing and Settlement AG, Vienna OC x 17.00 31 Dec. 2009 2,078 (241)
CISMO Clearing Integrated Services and Market Operations GmbH, Vienna OC x 18.4999 31 Dec. 2009 2,581 1,778
ECRA Emission Certificate Registry Austria GmbH, Vienna OC x 12.50 31 Dec. 2009 290 39
Einlagensicherung der Banken und Bankiers Gesellschaft m.b.H., Vienna OC x 0.10 31 Dec. 2009 77 22
EXAA Abwicklungsstelle für Energieprodukte AG, Vienna OC x 8.06 31 Dec. 2009 1,167 283
„Garage Am Hof“ Gesellschaft m.b.H., Vienna OC x 2.00 31 Dec. 2009 4,276 975
OeMAG Abwicklungsstelle für Ökostrom AG, Vienna OC x 12.60 31 Dec. 2009 5,745 699
CEESEG Aktiengesellschaft (former Wiener Börse AG), Vienna OC x 6.6046 31 Dec. 2009 276,390 101,872
Budapest Stock Exchange Ltd., Budapest OC x 18.35 31 Dec. 2009 20,045 5,143
Link-up Capital Markets S.L., Madrid OC x 5.90 31 Dec. 2009 5,705 (2,061)
Banking Act
category1
Directly
held
Indirectly
held
Type of
investment
in %
Share-
holding
Financial information
Reporting
date of latest
annual
accounts
Equity as
defined in
sec. 224(3)
UGB2, in EUR
thousand
Profit for
the year,
EUR
thousand
Investments in other unconsolidated companies, held at amortised cost
Unconsolidated subsidiaries, held at amortised cost
Companies accounted for under the equity method (joint ventures)
Fully consolidated companies
Company name and registered office
Credit
Institution/
Other
Company
1 “Other Company” (OC) refers to companies that are neither Credit Institutions nor Financial Institutions by the definitions of the Austrian Banking Act.2 “UGB” refers to the Austrian Commercial Code.
OeKB EH Beteiligungs- und Management Group, a sub-group of companies which is accounted for under theequity method as a result of a joint venture agreement, had equity of EUR 103.5 million and profit for the year in 2010 of EUR 13.9 million. In the financial year, OeKB received a dividend of EUR 3,109,000 from OeKB EH Beteiligungs- und Management AG.
82
Annual Report 2010
IFRS Financial Statements – Notes
(29) Other assets
EUR thousand 31 Dec. 2010 31 Dec. 2009
Sundry assets 14,750 9,340
Positive fair values of derivative contracts 4,569,118 1,364,287
Prepayments and accrued income 44,919 61,178
Total 4,628,787 1,434,805
An analysis of the derivative positions by remaining term to maturity is set out in note 46.
(30) Deposits from banks
EUR thousand
31 Dec. 2010 31 Dec. 200931 Dec. 201031 Dec. 2009
Domestic banks 620,627 543,506 56,025 174,498
Foreign banks 80,788 114,051 653,733 148,539
Total 701,415 657,557 709,758 323,037
Repayable on demand Other deposits
The sub-group operates primarily in the credit insurance sector. In 2010, with more than 2,500 insurance policies in force, the sub-group generated total premium income of EUR 75.0 million (2009: EUR 63.3 million).The claims ratio (claims expenses as a percentage of premium income) was 29.6% in the financial year (2009: 113.3%).
83
Annual Report 2010
IFRS Financial Statements – Notes
(32) Debt securities in issue
Debt securities in issue included EUR 18,461.4 million (2009: EUR 17,557.3 million) of liabilities at fair valuethrough profit or loss, for which the amount repayable on maturity was EUR 16,875.1 million (2009: EUR 17,602.7 million).
(33) Provisions
Employee benefit provisions 104,565 (4,299) — 8,092 108,358
Other provisions 402,822 (11,334) — 145,911 537,399
Total 507,387 (15,633) — 154,003 645,757
EUR thousand 1 January 2010 Amounts
used
Release Additions 31 December
2010
Movement in provisions in 2010
Included in employee benefit provisions are provisions for vacation pay and similar obligations in the amount of EUR 3.9 million (2009: EUR 3.9 million). Movements in provisions for long-term employee benefits were as follows:
EUR thousand
31 Dec. 2010 31 Dec. 200931 Dec. 201031 Dec. 2009
Bonds issued 24,825,728 24,681,425 24,825,728 24,681,425
Other debt securities in issue 5,571,110 5,194,635 — —
Total 30,396,838 29,876,060 24,825,728 24,681,425
Debt securities in issue Of which listed
EUR thousand
31 Dec. 2010 31 Dec. 200931 Dec. 201031 Dec. 2009
Public sector 496,775 402,849 2,271 12,150
Other 78,949 64,624 30,058 37,127
Total 575,724 467,473 32,329 49,277
Domestic customers
(31) Deposits from customers
Foreign customers
84
Annual Report 2010
IFRS Financial Statements – Notes
Present value of defined benefit obligation (DBO), representing
the total long-term employee benefit provisions at 1 January 79,027 21,604 100,631 96,647
Service cost 815 712 1,527 1,521
Interest cost 3,604 997 4,601 4,988
Benefits paid 3,404 907 4,311 4,075
Actuarial gain or loss 1,326 621 1,947 1,550
DBO at 31 December 81,368 23,027 104,395 100,631
EUR thousand Pension Termination
benefits
Total 2010 Total 2009
Long-term employee benefit provisions at 31 December 81,368 23,027 104,395 100,631
Movement in non-current employee benefit provisions
The pension provisions relate to obligations under direct pension commitments or under single-employee agreements. In the prior years, the pension obligations for a portion of the staff were transferred to a pensionfund under a defined contribution plan. In connection with this, contributions in the amount of EUR 0.7 million(2009: EUR 0.7 million) were paid to the pension fund in 2010. The pension provisions include entitlements of the other employees, and of former employees who were already receiving a pension before the time of thetransfer, as well as disability pension obligations in respect of all present employees.
The full change in non-current employee benefit provisions is recorded within staff costs. Staff costs also included the contributions of EUR 0.1 million to the termination benefit fund (2009: EUR 0.1 million).
The item “other provisions” at 31 December 2010 included an interest rate stabilisation provision of EUR 530.4million (2009: EUR 392.1 million) made in order to stabilise the interest rates for the export financing scheme.Information on the measurement of this provision is provided in note 11. In the year under review, an addition of EUR 52.9 million to the interest rate stabilisation provision was made from interest income and an addition ofEUR 85.4 million was made from valuation results.
Pension provision 79,027 75,648 75,383 74,128
Termination benefit provision 21,604 20,999 18,934 17,656
EUR thousand 2009 2008 2007 2006
Long-term employee benefit provisions 100,631 96,647 94,317 91,784
Historical information on DBO
85
Annual Report 2010
IFRS Financial Statements – Notes
EUR thousand 31 Dec. 2010 31 Dec. 2009
Negative fair values of derivative contracts 2,070,576 1,740,916
Accruals and deferred income 38,351 45,484
Sundry liabilities 32,688 34,316
Total 2,141,615 1,820,716
31 Dec. 2010 31 Dec. 2009 31 Dec. 2010 31 Dec. 2009
Deferred tax assets Deferred tax liabilitiesEUR thousand
Loans and advances to banks and customers — — — —
Securities 4,069 2,619 16,106 11,280
Employee benefit provisions 10,117 9,791 — —
Other provisions 38,899 36,253 — —
Total 53,085 48,663 16,106 11,280
Deferred tax assets and liabilities
Net deferred taxes 36,979 37,383
(35) Other liabilities
Accruals and deferred income included deferrals of up-front payments received for services in connection withthe export guarantee business, and deferrals related to the issue of debt securities by the Group.
The share capital of EUR 130,000,000 is divided into 880,000 no-par-value shares. These registered ordinaryshares with restricted transferability are represented by provisional share certificates made out in the name ofeach individual shareholder.
OeKB AG is the parent institution of the OeKB “banking group” for the purposes of section 30 Austrian BankingAct. The regulatory capital resources of the OeKB Group as determined under the Banking Act shows the following composition at 31 December:
(36) Capital and capital management
(34) Tax assets and tax liabilities
Tax assets and liabilities respectively include deferred tax assets and deferred tax liabilities arising from temporary differences between the IFRS carrying amounts and the corresponding tax base in Group companies. No deferred taxes were recognised for any interests in companies.
Deferred taxes arose on the following items:
86
Annual Report 2010
IFRS Financial Statements – Notes
EUR thousand
Risk-weighted assets (based on Standardised approach to credit risk) 318,141 403,677
Trading book — —
Regulatory capital requirement
Banking book1 25,451 32,294
Foreign exchange risk 78 2,713
Operational risk (Basic Indicator approach) 24,315 24,419
1 8% of total risk-weighted assets.
2010 2009
The resulting consolidated capital ratio (regulatory capital resources as a percentage of total risk-weighted assets) at the end of the financial year was 144.4%, compared to 104.7% at the end of 2009. The consolidated Tier 1 capital ratio was 107.6%, compared to 78.5% one year earlier. The high excess cover was reflected in acover ratio (capital resources as a percentage of the capital requirement) of 921.3% (2009: 710.9%).
Section 3 Austrian Banking Act exempts OeKB AG — in respect of transactions related to export promotion acti-vities under the Export Guarantees Act and the Export Financing Guarantees Act 1981 — from the requirementson solvency (under sections 22 to 22q Austrian Banking Act), on liquidity, on open foreign currency positionsand on large-scale investments (under sections 25 to 27 Austrian Banking Act). The banking group as definedunder section 30 Austrian Banking Act, unlike the IFRS basis of consolidation, does not include the investmentsin insurance companies. The strategic aim of capital management in the OeKB Group is to ensure a sustainedstable capital base. There were no material changes in capital management. At all times during the reporting period, the Group satisfied the capital requirements of the national supervisor.
The regulatory capital requirement for credit risk is determined in accordance with the provisions of section 22aAustrian Banking Act (Standardised approach to credit risk). The capital required to be held for operational riskis determined by the Basic Indicator approach under section 22j of the Act. The banking group does not hold a trading book. At Group level, the risks are aggregated in accordance with the concept of economic capital.Through the analysis of risk-bearing capacity, the economic capital required is compared with the economic capital available, and both measures are monitored.
Paid-up share capital 130,000 130,000
Reserves (including goodwill or gains on acquisition) 218,522 193,487
Minority interests 3,026 3,026
Intangible assets (1,109) (1,066)
50% deductions under section 23(13)4a Banking Act (investments in insurance companies) (8,049) (8,449)
Tier 2 capital (reserve for general banking risks under section 57 Banking Act) 124,897 113,906
50% deductions under section 23(13)4a Banking Act (investments in insurance companies) (8,050) (8,448)
Surplus regulatory capital 409,393 363,030
Total regulatory capital resources 459,237 422,456
Tier 1 capital 342,390 316,998
Total regulatory capital requirement 49,844 59,426
Total risk-weighted assets 318,141 403,677
Regulatory capital requirement under section 22 Austrian Banking Act
Consolidated regulatory capital resources under section 24 Austrian Banking Act
87
Annual Report 2010
IFRS Financial Statements – Notes
The cash flow statement shows the cash position and cash flows of the OeKB Group. The cash position recorded, in the narrow sense, consists of cash and balances with central banks.
For credit institutions, the cash flow statement has very limited relevance. The cash flow statement is neither a substitute for liquidity planning, nor is it used in managing liquidity risks.
Other Information and Risk Report
(38) Analysis of remaining maturities
(37) Information regarding the cash flow statement
EUR thousand
Loans and advances to banks 42,320 1,490,877 7,064,029 14,715,793 4,879,323 28,192,342
Loans and advances to customers 1,772 331,447 478,289 204,158 390,484 1,406,150
Securities at fair value through profit or loss 280,115 40,765 66,511 537,214 406,696 1,331,301
Deposits from banks 737,843 645,451 5,000 7,726 15,153 1,411,173
Deposits from customers 586,046 — — — 22,007 608,053
Debt securities in issue — 4,244,948 5,545,432 14,357,604 6,248,854 30,396,838
Repayable
on demand
Not more
than
3 months
Over 3 months
but not more
than 1 year
Over 1 year
but not more
than 5 years
Over
5 years
Total
Residual maturities at 31 December 2010
Total 324,207 1,863,089 7,608,829 15,457,165 5,676,503 30,929,793
Total 1,323,889 4,890,399 5,550,432 14,365,330 6,286,014 32,416,064
EUR thousand
Loans and advances to banks 10,322 1,325,947 6,115,590 21,453,600 1,388,544 30,294,003
Loans and advances to customers 19,483 368,919 464,296 231,828 474,128 1,558,654
Securities at fair value through profit or loss 257,166 21,400 64,563 237,027 40,257 620,413
Deposits from banks 657,557 304,557 15,000 — 3,480 980,594
Deposits from customers 495,791 — — — 20,959 516,750
Debt securities in issue — 4,306,961 2,884,673 15,611,986 7,072,440 29,876,060
Repayable
on demand
Not more
than
3 months
Over 3 months
but not more
than 1 year
Over 1 year
but not more
than 5 years
Over
5 years
Total
Residual maturities at 31 December 2009
Total 286,971 1,716,266 6,644,449 21,922,455 1,902,929 32,473,070
Total 1,153,348 4,611,518 2,899,673 15,611,986 7,096,879 31,373,404
88
Annual Report 2010
IFRS Financial Statements – Notes
The balance sheet contains no subordinated assets.
As a participant in the tenders of Oesterreichische Nationalbank (the Austrian central bank), OeKB pledged col-lateral in the form of bonds and other fixed income securities totalling EUR 5,111.2 million (2009: EUR 5,133.8million). For trading on the futures exchanges in Frankfurt and London, OeKB pledged collateral in the totalamount of EUR 30.4 million (2009: EUR 31.5 million).
To secure credit risks in connection with derivative transactions, OeKB received collateral in the form of deposits of EUR 645.0 million (2009: EUR 145.0 million).
(39) Loans and advances to and deposits from joint ventures, unconsolidated subsidiaries and other investees
EUR thousand 31 Dec. 2010 31 Dec. 2009
Deposits from customers
Joint ventures and unconsolidated subsidiaries 47,961 30,413
Unconsolidated other companies 5,308 2,770
Deposits
(40) Subordinated assets
(41) Assets pledged as collateral
The remaining maturity is the period from the balance sheet date to the contractual maturity date of the assetor liability; in the case of instalments, the remaining maturity is determined separately for each instalment.Accrued and deferred interest is assigned to the maturity class of “Not more than 3 months”.
(42) Contingent liabilities and commitments
The off-balance sheet contingent liabilities of EUR 27.4 million (2009: EUR 16.3 million) related to a guaranteegiven by Oesterreichische Entwicklungsbank AG. At the balance sheet date the OeKB Group had total undrawncredit commitments of EUR 3,723.5 million (2009: EUR 2,638.7 million).
89
Annual Report 2010
IFRS Financial Statements – Notes
As part of the deposit insurance system operated by the Vienna-based Banken and Bankiers GmbH, in accordance with section 93 Austrian Banking Act, OeKB and Exportfonds are required to guarantee a propor-tionate amount of deposits.
Obligations arising under leases (all of which are operating leases) and rental agreements for 2011 amount toEUR 1.4 million (at the end of the prior year the obligations for 2010 were EUR 1.4 million). The correspondingobligations for the five-year period from 2011 to 2015 were EUR 8.3 million (at the end of the prior year the obligations for the five-year period from 2010 to 2014 were EUR 7.9 million). Rent paid for 2010 was EUR 1.4million (2009: EUR 1.3 million).
Loans and advances to banks 15,714 16,927
Loans and advances to customers 990 990
Other assets 10,157 6,000
Deposits from banks 990 990
Deposits from customers 25,871 22,927
Fiduciary liabilities 26,861 23,917
Fiduciary positions recognised in the balance sheet
Fiduciary assets 26,861 23,917
EUR thousand 31 Dec. 2010 31 Dec. 2009
Off-balance sheet fiduciary transactions amounted to EUR 17.4 million (2009: EUR 18.3 million). This item consists largely of foreign-aid credits processed on behalf of the Republic of Austria.
(43) Sundry off-balance sheet obligations
(44) Fiduciary assets and liabilities
(45) Supplementary information on assets and liabilities under the Austrian Banking Act
EUR thousand
Assets LiabilitiesAssetsLiabilities
Denominated in foreign currency 603,000 21,069,556 136,842 23,090,408
Issued or originated outside Austria 2,434,755 28,443,750 2,710,376 30,228,774
31 December 2010 31 December 2009
90
Annual Report 2010
IFRS Financial Statements – Notes
Interest rate swaps (OTC) 5,739,785 13,968,572 3,152,993 22,861,350 630,004 399,956
Currency swaps (OTC) 8,142,969 7,438,060 1,877,415 17,458,444 3,939,115 1,670,621
Notional amount at 31 Dec. 2010 — Remaining maturity Positive
fair values
Negative
fair valuesNot more than 1 year
Over 1 year butnot more than
5 years
Over5 years
Total2010
EUR thousand
Total 13,882,754 21,406,632 5,030,408 40,319,795 4,569,118 2,070,576
Currency derivatives
Interest rate derivatives
(46) Derivative financial instruments
(47) Fair value of financial instruments
The table below presents the carrying amounts and fair values of financial assets and liabilities, analysed by category.
Fair values are determined as described in note 6. The market values of loans and advances to banks and customers and of deposits from banks and customers are based on inputs that in the case of assets and of liabilities are directly or indirectly observable. The same is true of the market values of derivatives reported in other assets and other liabilities (level 2).
The determination of the market values of other financial instruments is based on prices quoted on an activemarket (level 1). No reclassifications occurred in the fiscal year or prior year.
Interest rate swaps (OTC) 2,423,047 14,724,541 3,374,708 20,522,296 504,605 388,729
Currency swaps (OTC) 4,772,127 8,962,011 2,931,132 16,665,270 859,682 1,352,188
Notional amount at 31 Dec. 2009 — Remaining maturity Positive
fair values
Negative
fair valuesNot more than 1 year
Over 1 year butnot more than
5 years
Over5 years
Total2009
EUR thousand
Total 7,195,174 23,686,552 6,305,839 37,187,566 1,364,287 1,740,916
Currency derivatives
Interest rate derivatives
91
Annual Report 2010
IFRS Financial Statements – Notes
Loans and receivables Total 2010Financial instruments
at fair value
Other financial
instruments,
at amortised cost
EUR thousand
Cash and balances at central banks 83,060 83,060 83,060 83,060
Loans and advances to banks 28,192,342 28,899,548 28,192,342 28,899,548
Loans and advances to customers 1,406,150 1,408,050 1,406,150 1,408,050
Allowance for impairment losses
on loans and advances (224) (224) (224) (224)
Other financial instruments 24,920 36,050 1,331,301 1,331,301 1,356,221 1,367,351
Other assets 59,669 59,669 4,569,118 4,569,118 4,628,787 4,628,787
Deposits from banks 1,411,173 1,411,420 1,411,173 1,411,420
Deposits from customers 608,053 608,053 608,053 608,053
Debt securities in issue 11,935,472 12,478,330 18,461,366 18,461,366 30,396,838 30,939,696
Other liabilities 71,039 71,039 2,070,576 2,070,576 2,141,615 2,141,615
Carrying
amount
Fair value 2010
Assets
Liabilities
Fair value Carrying
amount
Fair value Carrying
amount
Fair value Carrying
amount
Fair value
Loans and receivables Total 2009Financial instruments
at fair value
Other financial
instruments,
at amortised cost
EUR thousand
Cash and balances at central banks 189,273 189,273 189,273 189,273
Loans and advances to banks 30,294,003 31,073,527 30,294,003 31,073,527
Loans and advances to customers 1,558,654 1,559,445 1,558,654 1,559,445
Allowance for impairment losses
on loans and advances (74) (74) (74) (74)
Other financial instruments 25,475 36,606 620,413 620,413 645,888 657,019
Other assets 71,617 71,617 1,364,287 1,364,287 1,435,904 1,435,904
Deposits from banks 980,594 980,908 980,594 980,908
Deposits from customers 516,750 516,750 516,750 516,750
Debt securities in issue 12,318,731 12,657,793 17,557,328 17,557,328 29,876,060 30,215,121
Other liabilities 79,799 79,799 1,740,916 1,740,916 1,820,716 1,820,716
Carrying
amount
Fair value 2009
Assets
Liabilities
Fair value Carrying
amount
Fair value Carrying
amount
Fair value Carrying
amount
Fair value
92
Annual Report 2010
IFRS Financial Statements – Notes
Risk management — essentially, the identification, monitoring, assessment, reporting, planning and treatment ofrisks — consists of important processes designed to ensure the security and profitability of the enterprise in the interest of customers and owners. Every risk assumed by the OeKB Group must be consistent with the Executive Board’s risk policy and strategy, which aims to assure a sustained stable return on equity through aconservative approach to all risks, including financial risks and risks arising from business operations in general.
The Internal Capital Adequacy Assessment Process (ICAAP) implemented in the OeKB Group serves to assurethe maintenance of the defined bank-specific level of capital adequacy and, as a measurement and control tool,forms an integral part of the management process.
A key variable in the measurement and management of risk is economic capital; it is calculated using the con-cept of Value at Risk (VaR) over a one-year time horizon. In the ICAAP, credit risk, market risk, operational riskand business risk are taken into account quantitatively, through the calculation of economic capital (businessrisk is considered to be the risk that earnings will suffer as a result of changes in the business environment —such as markets, customer behaviour or technology — or of inappropriate or inadequately implemented businessstrategy). Liquidity risk is managed on the basis of cash-flow and funding projections (using idiosyncratic andsystemic stress assumptions) that are compared critically with the counterbalancing capacity. In this context,risk essentially is defined as the danger that the actual outcome will be less favourable than the expected outcome. In other words, risk is the level of probability of a specified unexpected loss.
For each risk type, the table below shows the minimum capital required under the Austrian Banking Act and thecorresponding Values at Risk based on the ICAAP:
(48) Risk management
Value at Risk under ICAAP
Risk exposure and capital requirement at 31 December 2010
EUR thousand Regulatory capital requirement
under section 22 Banking Act
Credit risk 32,132 25,452
Commodity and foreign exchange risk 38,915 78
Other market risk in the banking book 42,755 —
Other risks 19,155 —
Operational risk 33,792 24,315
Value at Risk under ICAAP
Risk exposure and capital requirement at 31 December 2009
EUR thousand Regulatory capital requirement
under section 22 Banking Act
Credit risk 32,637 32,294
Commodity and foreign exchange risk 8,184 2,713
Other market risk in the banking book 72,616 —
Other risks 19,126 —
Operational risk 33,936 24,419
93
Annual Report 2010
IFRS Financial Statements – Notes
In the calculation of risk coverage, the economic capital required is compared with the economic capital available. This is done in a multi-tier system addressing various risk coverage objectives. The available capital isallocated to market risk and credit risk in proportion to the respective economic capital required. In key areas,additional limits are in place at the operations level.
Risk assessment is performed at least quarterly. Credit risks that are individually material are measured usingCredit Value at Risk; individually material market risks are measured using VaR. Credit and market risks that are not individually material are assessed by allowing a lump sum for them. Other risks (including business risk)are recognised through flat percentage-based amounts. The assessment of operational risk employs the BasicIndicator approach, expanded by a distribution assumption for estimation at a high confidence level. The systems used for this purpose are SAP, Bloomberg and proprietary systems.
Risk management is supported by the system of internal control, which serves to assure compliance with rules,standards and risk mitigation procedures. Extensive automated IT general controls, as well as reviews performedparticularly by the Internal Audit department, contribute to the effectiveness of this internal control system.
One of the priorities in 2010 was the implementation of a software solution for risk assessment and asset/ liability management, which was completed in December 2010. With this solution, all significant risk types areevaluated in a single system that also permits dynamic simulations and hence helps to achieve integrated ear-nings and risk management, both on a single-period and discounted multi-period basis. For 2011 it is plannedto use the software permanently in this integrated risk management and to expand the analyses performed.
In the area of operational risk management, in 2010 the process-oriented risk analysis and reporting was intensified in collaboration with the designated officer responsible for the internal control system as well, theExecutive Board approved an internal control system policy.
Risk management organisation
Against the backdrop of the OeKB Group’s major business activities and its specific business and risk structure,the bank has adopted a clear functional organisation of the risk management process; well-defined roles are assigned to the following organisational units:
Executive Board: In accordance with the responsibilities prescribed for it in the Austrian Banking Act, the Exe-cutive Board sets the Group’s risk policy and strategy. As part of the Group’s enterprise-wide risk management,the Executive Board, working with the Risk Management Committee, determines the acceptable aggregateamount of risk (based on the calculated capacity to assume risk), approves risk limits derived from this aggregate and decides on the procedures for risk monitoring.
Risk Management Committee: The function of the Risk Management Committee is derived from the risk policyand consists of strategic risk control and risk monitoring. The Risk Management Committee is the primary recipient of the risk reports, monitors and manages the risk profiles for the individual risk types, and, as needed, decides actions based on the risk reports. The committee consists of the Executive Board, the ChiefRisk Officer (CRO) and Deputy CRO, the Operational Risk Manager, Financial Risk Manager, internal control system officer and representatives from the Accounting department and business segments.
Chief Risk Officer: The implementation of the measures decided by the Risk Management Committee is over-seen by the Chief Risk Officer, supported by the Financial Risk Manager, the Operational Risk Manager and theChief Information Security Officer (CISO).
94
Annual Report 2010
IFRS Financial Statements – Notes
”Risk Controlling” department: The “Risk Controlling” department is responsible for the measurement and as-sessment of financial risks, the operating-level financial risk accounting and the implementation and monitoringof internal controls in respect of financial risk, including the monitoring of internal limits and the actual imple-mentation of the Internal Capital Adequacy Assessment Process, such as the determination of the Group’s aggregate risk.
Operational risk management: The directions on the management of operational risk are implemented in theGroup’s business operations by the Organisation, Construction, Environmental Issues and Security department(known as OBUS), with the exception of information security matters, which are the responsibility of the ChiefInformation Security Officer. The activities falling into the areas of operational risk management, of informationsecurity and of the internal control system officer are subject to ongoing coordination.
Asset and Liability Management Committee: Based on analysis of risks and returns, the Asset and LiabilityManagement Committee (ALCO) defines structural targets and constraints for the business-level control unitsto manage the asset-liability structure of the Group’s portfolios and balance sheet.
Internal Audit: The organisational units involved in the risk management process and the procedures appliedare regularly reviewed by the Internal Audit department.
Supervisory Board: The Supervisory Board has oversight of all risk management arrangements in the OeKBGroup; it receives quarterly reports on the Group’s risk situation. These risk reports present in detail the financial risk situation and the economic capital for operational risk. The Audit Committee of the SupervisoryBoard also monitors the effectiveness of the system of internal control.
Market risks arise from a potential change in risk factors that may lead to a reduction in the market value of thefinancial items. The specific types of market risk distinguished are interest rate risk, foreign exchange risk andequity price risk. The Group’s market risks relate only to banking book positions, as no trading book is main-tained.
Risks are assessed by the Value-at-Risk concept for estimating maximum potential losses. In addition, interestrate and exchange rate sensitivity ratios are determined, and the effects of extreme market movements are cal-culated through stress tests using two methods. First, the economic capital determined through the ICAAP istested under various scenarios (expected shortfall, credit migration, and correlations). Additionally, for marketrisks, the impact of several specific scenarios is calculated (for example, historical contingencies such as BlackMonday and September 11, 2001).
The largest amount of economic capital arises in connection with the Group’s investment portfolio (see note 26,Other financial instruments), which at the end of the year had an asset mix of 17.3% investment funds and 82.7%bonds. Of these bonds, EUR 709.5 million served as a liquidity buffer in the Export Financing Scheme; the buffer’s interest rate risk is hedged by interest rate swaps. The Value at Risk of the rest of the investment portfolio is determined monthly and, at 31 December 2010, amounted to EUR 45.5 million for a holding periodof one year at a 99% confidence level. The interest rate risk is also monitored by using stress scenarios. Thus, itwas calculated that a positive interest rate shock of 200 basis points would have led to a change of EUR 32.0million in the market value of the banking book. Since 2009, an external overlay manager provides additionalrisk management for this portfolio.
(49) Market risk
95
Annual Report 2010
IFRS Financial Statements – Notes
Exchange rate risks exist above all in connection with raising long- and short-term funds for the export financingscheme. These risks are secured by an exchange rate guarantee of the Republic of Austria under the Export Financing Guarantees Act 1981. An interest rate stabilisation provision is maintained against interest rate risksunder the Export Financing Scheme.
Hedging
To assist in controlling market risks, the Group employs derivative financial instruments. The derivatives invol-ved are interest rate swaps and cross currency interest rate swaps, which are traded over the counter (OTC)and used largely as hedging instruments for debt securities issued by the OeKB Group. Instead of applyinghedge accounting under IAS 39, these hedged financial liabilities are designated at fair value through profit orloss in order to avoid accounting mismatches. The changes in value of the derivative and of the respective hedged liability are thus recorded in the income statement.
Liquidity risk is the risk of not being able to meet present or future payment obligations fully as they fall due. Inthe wider sense, liquidity risk also includes funding liquidity risk (the risk that funding can be obtained only onunfavourable market terms), and market liquidity risk (the risk that assets can be sold only at a discount).
The goal of the liquidity strategy, which forms part of the risk policy and strategy of the OeKB Group, is to secure sufficient access to required liquidity even in difficult market situations. OeKB’s decades-long excellentstanding in international financial markets coupled with the high diversification of its funding instruments, andespecially the Austrian government guarantee protecting the lenders, combine to facilitate market access forthe Group even when markets are under special stress, as the financial crisis has demonstrated.
The OeKB Group’s liquidity strategy is guided by the recommendations of the Committee of European BankingSupervisors. At the core of risk measurement are cash-flow and funding projections — based both on idio-syncratic and systemic stress assumptions — that are set against the counterbalancing capacity (representedprimarily by securities eligible for obtaining funding from central banks). Market liquidity risk is taken into account through corresponding haircuts. The survival period determined in this manner must be at least onemonth, although the goal is to achieve a far longer average survival period: The actual median length in 2010was about nine months.
The daily liquidity position is monitored, and is stabilised by means of a portfolio of diversified funding facilities.A detailed presentation of the liquidity situation is regularly produced and reported to the ALCO.
To cover any liquidity requirements arising from potential gaps between cash inflows and outflows, the OeKBGroup holds liquid assets, particularly in the form of eligible securities (securities eligible for obtaining fundingfrom central banks). In 2010, OeKB expanded its liquidity buffer for the Export Financing Scheme through thepurchase of top-rated bonds. These assets can be pledged or sold as required to meet a need for liquidity.
The long-term management of liquidity is performed based on the (negative or positive) liquidity gaps identifiedby analysing the long-term maturity structure of assets versus liabilities.
(50) Liquidity risk
96
Annual Report 2010
IFRS Financial Statements – Notes
Liquidity gap (990,434) (23,568) 939,934 (1,223,462)
EUR thousand Not more than
2 years
Over 2 years but
not more than
5 years
Over 5 years but
not more than
10 years
Over 10 years
Liquidity gaps based on long-term asset/liability maturity analysis at 31 December 2010
Maturity analysis of liabilities
The tables below show the schedule of future cash outflows and inflows based on the nominal amounts of thegross transaction, i.e. without taking netting agreements into account. The mapping into time buckets is basedon the contractual maturity structure; liabilities payable on demand are assigned to “Not more than 1 month”.
Over 1 but not
more than
3 months
Over 3 months
but not more
than 1 year
Over 1 but not
more than
5 years
Over 5 yearsEUR thousand Total Not more
than 1 month
Net book
value
Liabilities at 31 December 2010
Deposits from banks 1,411,173 1,404,827 1,396,841 — 5,427 2,559 —
Deposits from customers 608,053 579,131 579,131 — — — —
Debt securities in issue 30,396,838 29,473,418 786,432 3,178,001 5,486,340 13,994,471 6,028,174
Undrawn credit commitments and offers — 3,742,846 707,878 1,152,345 980,908 861,965 39,750
Derivatives 2,070,576 — — — — — —
Outflows — 13,877,549 519,864 1,271,581 3,977,701 6,090,219 2,018,183
Inflows — 12,134,670 504,294 1,206,543 3,527,644 5,399,408 1,496,782
Total 32,416,064 35,200,222 3,470,282 4,330,346 6,472,675 14,858,995 6,067,924
Over 1 but not
more than
3 months
Over 3 months
but not more
than 1 year
Over 1 but not
more than
5 years
Over 5 yearsEUR thousand Total Not more
than 1 month
Net book
value
Liabilities at 31 December 2009
Deposits from banks 980,594 978,972 881,777 79,063 15,348 2,784 —
Deposits from customers 516,750 470,720 470,720 — — — —
Debt securities in issue 29,876,060 29,000,381 1,176,511 2,859,580 2,833,687 15,235,338 6,895,265
Undrawn credit commitments and offers — 2,638,736 210,440 897,530 1,018,165 512,602 —
Derivatives 1,740,916 — — — — — —
Outflows — 13,670,745 49,796 610,349 2,541,282 7,468,746 3,000,571
Inflows — 12,212,638 48,549 563,038 2,135,765 6,877,031 2,588,255
Total 31,373,404 33,088,809 2,739,448 3,836,173 3,867,200 15,750,724 6,895,265
97
Annual Report 2010
IFRS Financial Statements – Notes
Credit risk is the risk of unexpected losses as a result of the default or deterioration in credit quality of counterparties. In view of its business structure, the OeKB Group distinguishes the following types of credit risk: counterparty risk/default risk, investee risk and concentration risk. The critical measure used for credit risk is Credit Value at Risk, representing the difference between an unexpected loss at a 99.99% confidence leveland the expected loss associated with the respective default.
The probability of default is determined primarily by mapping from the ratings supplied by external rating agencies (Standard & Poor’s, Moody’s and Fitch). On the basis of these ratings, counterparties are classifiedinto five internal rating categories. The data are continually updated. In the case of clients without an externalrating, internally generated criteria are applied.
The credit exposure of the OeKB Group consists largely of export credits. In keeping with the Group’s exactinglending standards, the approval of these loans and commitments is subject to high loan security requirements(such as, notably, guarantees of the Republic of Austria). To secure credit risks in connection with derivativetransactions, collateral agreements are concluded with the most significant counterparties, and downgrade trigger provisions are in place with all counterparties. These trigger clauses permit contracts to be assigned tothird parties, or to be cancelled, upon a pre-defined deterioration in rating. The entire export financing scheme is treated as investee risk with its own dedicated supply of available economic capital.
The distribution of assets in the banking book (including the investment portfolio) across rating categories was as shown in the table below. Guaranteed assets are, to the extent of the guarantee, assigned to the rating category of the guarantor; assets guaranteed by the Republic of Austria are assigned to rating category 1; no credit derivatives are employed.
(51) Credit risk
Rating
category 3
(A)
Rating
category 4
(BBB/BB)
Rating
category 5
(B and below)
Total carrying
amount
EUR thousand Rating
category 1
(AAA)
Rating
category 2
(AA)
Cash and balances at central banks 83,060 — — — — 83,060
Loans and advances to banks 27,588,223 436,087 167,874 86 73 28,192,342
Loans and advances to customers 1,363,792 — 35,012 — 7,345 1,406,150
Allowance for impairment losses
on loans and advances — — — — (224) (224)
Other financial instruments 891,179 61,986 132,946 267,101 3,009 1,356,221
Derivatives 3,542,048 636,762 390,309 — — 4,569,118
Credit portfolio by rating category 2010
98
Annual Report 2010
IFRS Financial Statements – Notes
The table below analyses the banking book assets by country category; export credits backed by a guaranteeunder the Export Financing Act are included under “Austria”.
Rating
category 3
(A)
Rating
category 4
(BBB/BB)
Rating
category 5
(B and below)
Total carrying
amount
EUR thousand Rating
category 1
(AAA)
Rating
category 2
(AA)
Cash and balances at central banks 189,273 — — — — 189,273
Loans and advances to banks 29,472,045 403,076 416,816 29 2,037 30,294,003
Loans and advances to customers 1,522,916 12,208 11,364 4,341 7,825 1,558,654
Allowance for impairment losses
on loans and advances — — — — (74) (74)
Other financial instruments 135,819 64,572 181,356 262,216 1,924 645,888
Derivatives 766,881 335,340 262,066 — — 1,364,287
Credit portfolio by rating category 2009
As at 31 December 2010 the highest exposures within the region “EU (excluding Austria)” were with the UnitedKingdom (EUR 945.9 million), Germany (EUR 420.8 million) and France (EUR 145.2 million). The highest exposures under “Other countries” were with the United States (EUR 404.0 million), Norway (EUR 13.0 million)and Australia (EUR 11.8 million).
The Group’s business operations are subject not only to the regulatory requirements but also to the volume limits set by the Executive Board for transaction types and portfolios, as well as counterparty and issuer limitsthat apply across business lines.
EUR thousand 31 Dec. 2010 31 Dec. 2009
Austria 33,347,386 32,109,050
EU (excluding Austria) 1,790,810 1,308,906
Other countries 468,471 444,877
Credit portfolio by country category
99
Annual Report 2010
IFRS Financial Statements – Notes
During the financial year, the Group had an average of 396 employees (2009: 385 employees). The number ofemployees is expressed in full-time equivalents.
The following table gives details of the aggregate compensation of the Executive Board and Supervisory Boardmembers and the termination benefits and pension expenses for Executive Board members, key managementand other employees (including changes in entitlements and provisions).
As permitted under section 266(7)b Austrian Commercial Code, the aggregate remuneration of current Executive Board members is not stated. At 31 December 2010 there were no outstanding loans to members of the Executive Board or Supervisory Board. There were also no guarantees by OeKB for these individuals.There are no management share option plans for the Executive Board or for key managers.
(53) Staff count
(54) Boards’ remuneration and loans
(52) Operational risk
Operational risk is the risk of losses resulting from inadequacy or failure of internal processes, people or systems, or from external events, including legal risks.
Standards, rules and processes are derived from the risk policy and documented in the operational risk manual.This also includes emergency management manuals and emergency plans, as well as crisis scenarios, all ofwhich are annually reviewed. The effectiveness of these plans and procedures is tested in scenario trainingevents. The maintenance and evaluation of the loss database on an ongoing basis helps to assure a permanentprocess of optimisation of operational risks. In view of the high importance of information security, the Grouphas a dedicated information security officer.
Risk mitigation is also promoted by an effective system of internal control. In 2010 a key area of activity wasthe further development and refinement of a process-oriented internal control system together with the staff member responsible for this system. This further development will be extended to the subsidiaries in 2011.
Aggregate remuneration
Current members of the Executive Board Not disclosed Not disclosed
Former members of the Executive Board 136 135
Members of the Supervisory Board 267 255
Pension and termination benefit expenses for
Executive Board/key management 3,243 3,075
Other employees 5,651 6,035
2010 2009
Boards’ remuneration and loans
EUR thousand
100
Annual Report 2010
IFRS Financial Statements – Notes
■ Members of the Executive Board
Johannes AttemsRudolf Scholten
■ Members of the Supervisory Board
Erich Hampel, Chairman
Walter Rothensteiner, 1st Vice-Chairman
Franz Hochstrasser, 2nd Vice-Chairman
Helmut Bernkopf Peter Hofbauer (until 18 May 2010)Friedrich HondlStephan KorenReinhard Ortner (until 18 May 2010)Heimo PenkerAngelo RizzutiLudwig Scharinger (since 18 May 2010)Herbert StepicThomas UherGerald Wenzel (since 18 May 2010)Stephan Winkelmeier (until 7 June 2010)Robert ZadrazilFranz Zwickl
Staff Delegates:Martin KrullAnish GuptaAlexandra Griebl (since 14 March 2010)Christian LeicherClaudia RichterErna ScheriauOtto SchrodtUlrike Zabini
■ Government commissionersunder section 76 Austrian Banking Act
Thomas Wieser, Commissioner (since 1 January 2011)Alfred Lejsek, Commissioner (until 1 January 2011)Johann Kinast, Deputy Commissioner
The above government commissioners are also representatives of the Austrian Minister of Finance under section 6 Export Financing Guarantees Act 1981.
■ Government commissionersunder section 27 of the Articles of Association(supervision of bond cover pool)
Johannes Ranftl, Commissioner
Edith Wanger, Deputy Commissioner
(55) Board members and officials
101
Annual Report 2010
IFRS Financial Statements – Notes
(57) Date of approval for publication
The date of submission of these financial statements to the Supervisory Board for approval is 22 March 2011.
Vienna, 23 February 2011
Oesterreichische Kontrollbank Aktiengesellschaft
Signed by the Executive Board
Johannes Attems Rudolf Scholten
As a specialised institution for export services and capital market services, OeKB engages in many transactionswith its shareholders. All these transactions are conducted at arm’s length.
The following balance sheet items include transactions with shareholders of OeKB:
(56) Other related party transactions
EUR million 31 Dec. 2010 31 Dec. 2009
Loans and advances to banks 23,927 25,786
Other financial instruments 81 36
Deposits from banks 71 32
Other related party transactions
102
Annual Report 2010
IV. Auditor’s Report
Report on the Consolidated Financial Statements
We have audited the accompanying consolidated financial statements of
Oesterreichische Kontrollbank Aktiengesellschaft,
Vienna,
for the year from 1 January 2010 to 31 December 2010. These consolidated financial statements comprise the consolidated balance sheet as of 31 December 2010, the con-solidated income statement, the consolidated cash flow statement and the consolidatedstatement of changes in equity for the year ended 31 December 2010 and a summary ofsignificant accounting policies and other explanatory notes.
Management's Responsibility for the Consolidated Financial Statements and for the Accounting SystemThe Company’s management is responsible for the group accounting system and for thepreparation and fair presentation of these consolidated financial statements in accor-dance with International Financial Reporting Standards (IFRSs) as adopted by the EU. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the consolidated financial statementsthat are free from material misstatement, whether due to fraud or error; selecting andapplying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditors’ Responsibility and Description of Type and Scope of the Statutory AuditOur responsibility is to express an opinion on these consolidated financial statementsbased on our audit. We conducted our audit in accordance with laws and regulations applicable in Austria and in accordance with International Standards on Auditing, issuedby the International Auditing and Assurance Standards Board (IAASB) of the InternationalFederation of Accountants (IFAC). Those standards require that we comply with profes-sional guidelines and that we plan and perform the audit to obtain reasonable assuranceabout whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the consolidated financial statements. The procedures selected depend onthe auditor's judgment, including the assessment of the risks of material misstatement ofthe consolidated financial statements, whether due to fraud or error. In making those riskassessments, the auditor considers internal control relevant to the Group’s preparationand fair presentation of the consolidated financial statements in order to design audit pro-cedures that are appropriate in the circumstances, but not for the purpose of expressingan opinion on the effectiveness of the Group’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentationof the consolidated financial statements.
103
Annual Report 2010
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionOur audit did not give rise to any objections. In our opinion, which is based on the resultsof our audit, the consolidated financial statements comply with legal requirements andgive a true and fair view of the financial position of the Group as of 31 December 2010and of its financial performance and its cash flows for the year from 1 January to 31 December 2010 in accordance with International Financial Reporting Standards (IFRSs)as adopted by the EU.
Report on the Management Report for the Group
Pursuant to statutory provisions, the management report for the Group is to be audited asto whether it is consistent with the consolidated financial statements and as to whetherthe other disclosures are not misleading with respect to the Company’s position. The auditor’s report also has to contain a statement as to whether the management report forthe Group is consistent with the consolidated financial statements.
In our opinion, the management report for the Group is consistent with the consolidated financial statements.
Vienna, 23 February 2011
KPMG Austria GmbHWirtschaftsprüfungs- und Steuerberatungsgesellschaft
Martin Wagner ppa Renate ValaCertified Public Accountants
About this report
This report is a translation of the German-language original
and is provided solely for readers’ convenience.
In the event of disagreement or dispute, only the German
version of the report shall be deemed definitive.
Owner and publisher:
Oesterreichische Kontrollbank Aktiengesellschaft
Editor and layout:
Controlling, Reporting and Payments/
Ingrid Maygraber
Copies may be ordered from
Controlling, Reporting and Payments
Tel. +43 1 531 27-2314
Graphic design:
Gerald Schuba Corporate Communications+,
Barbara Jaumann
Translation:
Martin Focken
Photography:
Christina Häusler, Vienna (Page 14)
Philipp Horak, Vienna
(Cover and Pages 2, 4/5, 18/19, 32/33, 58/59)
Production:
Grasl Druck & Neue Medien GmbH, Bad Vöslau
Climate neutral publication
Printed on 100 % recycled paper made in Austria,
carbon neutral
Oesterreichische Kontrollbank Aktiengesellschaft
Am Hof 4 and Strauchgasse 3
P.O. Box 70
1011 Vienna, Austria
Tel. +43 1 531 27-0 or ext. no.
Internet: www.oekb.at
Bank code number 10000
Registered office: 1010 Vienna
Companies’ register no. FN 85749b
Commercial Court Vienna
UID: ATU15350402, DVR: 0052019
Information in this report is current
as of 28 February 2011.
104
O e s t e r r e i c h i s c h e K o n t r o l l b a n k G r o u p
Am Hof 4, Strauchgasse 31011 Vienna, AustriaTel. +43 1 531 27 -0
www.oekb.at