The Czech cabinet will pick up the winner of a tender for 51 % in České radiokomunikace (ČRa) most likely in the 2nd week of April. Ministers can either follow a recommendation provided by the Finance Ministry, or postpone the privatization, or sell ČRa’s assets piecemeal. Rumors say that there have been only two bidders for the majority in ČRa, both offering about CZK 600 per share, which is substantially less than the government hoped to receive (roughly CZK 1000).
ČSOB, the third largest financial group in central and eastern Europe and the Czech Republic's biggest bank reported a more than 60 % increase in net profit last year. The net profit rose to CZK 4.69bn (USD 22.9m) and the bank predict a further increase to more than CZK 6bn this year. The ČSOB results include IPB results in 2000. Acquisition of IPB more than doubled ČSOB's balance sheet and gave the merged bank a domestic market share of 23.4 % in primary deposits. In 2002, ČSOB considers a public offering. With ROE equal to 14.7 % (up from 9.6 % in 1999), ČSOB was the most profitable Czech bank in 2000. "At the horizon of 2002 we are able to reach a cost/income ratio of 55 %," said Mr. Pavel Kavánek, ČSOB’s Chairman and CEO.
The tax arrears owed to the Czech government amounted to CZK 101.5bn (USD 2.66bn) at the end of February. The single largest source of tax arrears is the VAT, which is responsible for about CZK 37.8bn. The share of tax arrears in due tax payments is about 3.6 %, which is a level comparable to that in the EU.
The Senate is about to address a draft law on economic competition this week. At present, companies are considered dominant in a market, if their market share exceeds 30 %. The new draft law introduces a concept of market power that takes into account also other criteria than the simple market share. The new criteria include economic and financial power, barriers for entry, or the market structure. The draft law - inspired by EU legislation – also defines collective dominance and makes hidden forms of violation of the competition more difficult. If the draft law passes through the Senate, the new Act becomes effective on July 1. This would facilitate closing of the negotiations focused on competition with the EU (Chapter 6).
Euro stop-losses pushed the Czech crown to a historical high of 34.109 against EUR in Monday afternoon trading. In the evening, the crown weakened to 34.16/21 but stayed well above the level of Friday evening (34.45/47). The CZK strengthened also against the USD, up to 38.16/20 from late Friday’s 38.59/60. The Czech central bank (CNB) has said it would intervene if the crown strengthens too much but it has no set any target for the currency.
Bonds continued their rally for the third consecutive day. Massive buying started as soon as in the morning and concerned nearly all segments of the bond market. The longest state 6.95/16 rose 74 basis points to 106.73/03, yielding 6.24/21 %. The state 6.75/05 rose 35bps to 104.47/77, yielding 5.44/35 %. With respect to absence of relevant statistical data to be published tomorrow, the growing trend should not be interrupted.
| late March 26 | bond yield | late March 23 |
| CZK/EUR | 34.16/21 | - | 34.45/47 |
| CZK/USD | 38.16/20 | - | 38.59/60 |
| State 6.75/05 | 104.47/77 | 5.44/35 | 104.12/42 |
| State 6.95/16 | 106.73/03 | 6.24/21 | 105.99/29 |
(Martin Kupka)