Eastern European Banking Model

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

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

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

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

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

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

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

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

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

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Top Tips for Relieving Pain from Aging

There is an extensive array of pain relief treatment that are available in the market these days. Identifying which one is right for pain caused by aging is crucial to make sure that you remain in good health. Your medical service provider can prescribe pain relief medicine to treat pain from aging that you are suffering from. Your doctor will offer the right diagnosis, identify any underlying problems, and make sure you undergo the correct treatment procedure for the pain that you are going through.

If you want to find ways to relieve pain from aging, here are some great tips that you need to keep in mind.

Pain can bring about a lot of mental and physical stress on your body. Furthermore, stress renders a vital role in creating pain from aging, and exercise is good for removing stress. Exercise boosts cardiovascular fitness as well as muscular strength. Regular exercise is an crucial part of a healthy way of life. Think of exercise not as something that you have to do, but rather as something you wish to do because it makes you feel better about yourself. An effective workout routine not only improves your physical health, it also helps lessen anxiety and decrease the risk that you would develop mental health conditions like depression.

One alternative you may wish to research more about is stem cell therapy. With every new year comes process innovation and technological upgrades that are constantly enhancing the way that patients are treated and medical care is provided. This involves all fields of healthcare, like stem cell therapy. Going through stem cell therapy for arthritis is a life-changing choice. Needing to undergo this procedure can be quite scary and stressful for a lot of patients. Arthritis is normally more commonplace among older individuals, nonetheless, younger individuals can also be affected for a host of reasons. Make sure that you go for a reliable provider, because there are so many clinics out there that do not actually produce any significant results.

A physical therapist has the proper training, education, and experience that is needed to address your condition and be certain that you receive the right treatment to reduce your pain. However, you also have to ensure that you are hiring a physical therapist that is perfect for you and has all the right credentials required for hime to legally conduct his practice. Find out how many years they’ve been practicing and how many of their patients were like you. Reliable physical therapists have the required education, mastery, and experience to inspect and analyze any back, neck, and spine issue, including the ones that may not be as simple to spot.

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What You Should Know About This Year

A Guide On How To Take Care Of Your Water Heater

Water heating systems are useful almost in all homes. When you need heated water you will be forced to heat the water manually if you do not have a water heater read more. When you have a water heater installed in your house; it helps you to conserve water. The water heater always provides you hot water when you need it. You have to take care of your water heater if you want to enjoy the benefits that comes with it. The best way to extend the life of water heater is by taking care of it read more. The installation company offers professional maintenance services, or you can choose to do it yourself.

The first step is to read the manual. Commonly, most people avoid reading the manual. The manual contains some vital information on how to use the water heater. When you read the manual you can know where the unit is located in the house because some people are not aware. When doing any maintenance make sure you turn off the source of fuel. Switch off the beaker before you begin the maintenance process if you are using an electronic system.

Get rid of sediments and debris regularly in a year. Start by turning off the water supply and connect a garden hose to a drain valve. Let the water drain from the tank until it remains clear read more. You can repeat the process by draining few gallons of water monthly read more for details. Remember to check the Anode rod. The anode rods are mostly made from alloy, magnesium, and aluminum. The role of the rod is to protect the tank from corrosion.

Many water heaters tanks have a thin lining that protects them from metal corrosion. The rode needs replacement when it becomes corroded and can no longer work. It is preferable to replace the rod before it fails to work to extend the life of the heater. You have to confirm the condition of the anode rod after three years.

Make sure you take care of the temperature and pressure relief valve. When there are incredibly high temperatures and pressure; the valve helps in removing expanded water inside the tank. Confirm whether the temperature and valve is in good working condition. You could be in danger when the pressure and temperature exceed the limit. You must replace the valve if you realize it is not working read more.

Maintain your unit heating to make sure the system lasts long. Insulate the units for them to run longer. Before you refill the tank ensure that the pressure and drain valve are closed read more.

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Things that Children Will Enjoy During Summer Camping

Some children may want to go to camp in summer since they enjoy the experience in such camps. Some people may think that the activities at such summer camps are usually the same of which they will need to know why the children love to go for summer camps. An individual can get some information on what usually happens in summer camps when they visit some sites which offer articles about the same.

Some of the activities will include adventures as there are different places that such children can visit during the summertime. An individual may get some children who would want to visit some warrior camps and have some fun there as well as visit some wizards places to learn one or two things. Some children are usually provided with some roles they can play, which will make the whole experience amazing.

Some children will be interested in singing as well as dancing during the summer camp. Some people may not have an idea of the places that the children would want to go to camp during the summer holidays. Some of the best camps will provide a variety of options of which musical theater may be an option. Thus, some children may use the opportunity to pursue their talent in singing or even dancing, which they will find it easier when they are at the summer camps.

Some children may use the opportunity to learn how they can play various instruments which will also be part of developing talent. Some children may also be interested in reading of which they will have a variety of books in such summer camps. It will be easy for such children to read and get all the necessary knowledge about poetry among other skills during the summer camp.

Aside from dancing and singing, some people may send their children to some rock star summer camps which they will find interesting, especially when they are music genius. It will be an easy way for the children to experiment on different instrumentals as well as singing which will make them have a good time at such summer camps. For the children who are interested in science, they will get some summer camps which will offer such activities.

Choosing the right camp for the child will help them increase the knowledge they have learned in class as they will have a better environment to experiment of some of the theories learned. It will require an individual to find some of the unique camps that will provide some of the above ideas so that they can take their children to have some good time.

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