Category Archives: Uncategorized

Woolf on Hungary’s banks

James Woolf of Flow East in Prague has taken issue with the Financial Times’ editorial on Hungary’s treatment of the country’s banking sector. The truth is that Hungary has alienated many of the banks active there with what they claim are heavy-handed measures to compensate consumers who borrowed in Swiss franc to finance their homes. The government claims the banks misled their clients, but in his letter to the editor, Woolf basically says the banks should have known better.

Sir, With reference to “Beware Hungary’s cure for Swiss franc mortgage hangover” (Inside Business, January 29): it is not often that one can find agreement with the policies of Hungary. In the case of a deliberate mismatch of income and liability by allowing foreign currency loans to be (mis)sold by banks, it is clearly not a “tricky problem for regulators and banks”. No sane investor would have unhedged currency exposure of their main asset and income against their main liability. The expectation should be financial ruin. Any bank that promotes such a structure is clearly mis-selling and should expect nothing less than a reset of the exchange rate, fines and criminal liability.


Is the Ukraine mess CE’s problem?

There’s an interesting round-up of Austria’s banking sector a couple days back in the FT, much of it devoted to how it barely survived the losses it ran up in CEE. It sure is tough to keep straight whether central Europe is being propped up by Vienna or the other way around. Consider: Ceska sporitelna had a bad year last year and only made CZK 15bn in profits. But what caught our eye was a different, broader issue. The paper quotes a certain Josef Christl as saying Ukraine’s difficulties called the whole Central European project into doubt…


And even Austrian banks that are not directly involved in Russia and Ukraine are quite likely to be affected by the conflict, says Josef Christl, a consultant and former executive director of the Austrian central bank (OeNB).

“One of the problems with the situation in Ukraine and Russia is that it calls into question the whole central and eastern European story, which is so important for the Austrian financial sector,” he says.

Europe as a whole may be downplaying the potential threat to its fragile recovery posed by the situation, but is it really correct to say CE’s future is in doubt?


Plaza Centers: Take II

So last week, we noted the sudden sale of some land in Prague 3 by Plaza Centers. For everyone who was wondering what the sudden rush was comes the news that S&P has downgraded the company as of today from to ilB from ilBB+. And it turns out it’s all about the speed of sales.

•Since the last rating activity in March 2013, the Company agreed on several
transactions but we estimate that the realization pace is insufficient to catch up with
significant gap between the sources available today for repayment and the expected
repayments in the coming 12 months.
• In our estimate, without a significant acceleration of the realization pace it appears that
the Company will find it difficult to repay its debts already in the coming 12 months.

PC’s got to raise €31m by the end of the year, and €63m by June 2014. S&P isn’t ready to bet the bank any more on that happening. And it suggests you don’t either.

Incentivizing Amazon. American-style

They don’t beat around the bush in the U.S. If they want a company, they’re pretty open about it and they let money speak.

Hillsborough County commissioners voted unanimously to award $225,000 in incentives, representing 20 percent of the total potential incentive package for the online retailer if it creates 375 jobs paying more than the state average.

County officials say if the company decides to locate in the south county, it could create 1,000 jobs with 375 of them paying an average of $47,581, the Tampa Tribune said.

On July 18, the commission will consider another break for Amazon, lowering its property taxes to $910,000 for seven years. That is a 50 percent reduction, the Tribune said.

Think they get that kind of reception in this part of the world?

Landing Amazon

Does anybody really know where Amazon is going? The Czech industrial sector hasn’t been getting much sleep lately, what with  everyone’s falling over themselves to woo the world’s largest on-line retailer. The site will have to be ready to go almost immediately, and with 30 ha rumored to be needed, there can’t be that much choice.

You’d think that choice would be made simpler depending on exactly which market is supposed to be served by the huge shed (rumored at 100,000 sqm). Will it service CEE and Austria? Then Brno would make sense (and might explain some recruitment sounding letters going out to students there). Will it serve Germany? Then surely, it will have to be placed west of Prague. But it will need quite a lot of people as well, so it’s unlikely to be a remote site.

If you have a hint, or a clue, drop us a line. Anonymous tips are always welcome in the tip box.

Why Warsaw wins

ImageIt’s become pretty commonplace to say that Warsaw’s office market is in trouble, that the pipeline is just too big and that the country’s economic boom was all just an offshoot of a binge of EU-funded road-building. The truth will turn out to be far more subtle and complex.

As we’ve been told ad naseum, Poland is long in smart, ambitious young people with highly marketable skills in finance, technology and languages, it’s also just plain big. European-big. And this is part of the reason the Warsaw Stock Exchange has quietly become one of the more attractive markets in Europe. Immofinanz didn’t just double-list there for marketing purposes, after all. It wants Polish pension fund money.

Anyway, the next time someone tells you Warsaw’s office market is past its peak, send them to links like this article.

Record stock sales and a growing economy are helping Poland solidify its position as central Europe’s busiest financial center, even as euro-area neighbors struggle to shake the sovereign-debt crisis. UniCredit SpA (UCG), JPMorgan Chase & Co. (JPM) and Societe Generale SA (GLE) are establishing investment-banking hubs in Warsaw, where equity sales of 15 billion zloty ($4.6 billion) this year exceed the $490 million in the rest of central Europe.

Get it? If that doesn’t make the doomsayers think twice, give them the link to this article: SocGen’s Russian Unit Said to Cut Hundreds of Jobs in Moscow.

Tough times for telecoms

Telecom pain has arrived in the Czech Republic, with news that the biggest employers, Telefonica and T-Mobile both announcing that layoffs are on the way. That’s good news for exactly nobody, including office developers and owners, given the size of the real estate needs these companies have. You have to wonder at times like this how flexible their lease contracts are.

For what it’s worth, Vodafone claims not be planning to fire anyone at the moment.