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Komercni Banka (KMCA)

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Tuesday 30 April, 2002

Komercni Banka

Annual Report 12/16

Komercni Banka
30 April 2002



Annual Report 2001, part 12/16

27 Amounts owed to banks



Amounts owed to banks comprise:
                                                                      31 December 2001                 31 December 2000
                                                                                  CZKm                             CZKm
Current accounts                                                                 1,046                            1,122
Amounts owed to banks                                                           29,872                           40,671
Total amounts owed to banks                                                     30,918                           41,793



28 Amounts owed to customers


Amounts owed to customers, by type of deposit, comprise:
                                                                          31 December 2001             31 December 2000
                                                                                      CZKm                         CZKm
Current accounts                                                                   131,474                      110,432
Savings accounts                                                                    21,386                       24,863
Term deposits                                                                      118,668                      104,811
Deposits from budget of public sector                                                7,469                        7,784
Off-budget deposits of public sector                                                 7,522                        5,852
Loans from customers                                                                31,875                       25,768
Total amounts owed to customers                                                    318,394                      279,510



Amounts owed to customers, by type of customer, comprise:
                                                                       31 December 2001                31 December 2000
                                                                                   CZKm                            CZKm
Private companies                                                               113,792                          80,747
Other financial institutions                                                      4,257                           2,225
Insurance companies                                                               2,699                           2,441
Public administration                                                             8,326                          14,053
Individuals                                                                     118,527                         123,524
Non-residents                                                                     5,509                             828
Deposits - bills of exchange                                                     31,607                          25,029
Private entrepreneurs                                                            16,732                          14,944
Government agencies                                                               6,665                          15,565
Other                                                                            10,280                             154
Total amounts owed to customers                                                 318,394                         279,510



29 Certificated debt


Certificated debts comprise:
                                                                    31 December 2001                   31 December 2000
                                                                                CZKm                               CZKm
Bonds                                                                         20,433                             29,499
Mortgage bonds                                                                 7,059                              6,600
Total certificated debts                                                      27,492                             36,099



Publicly tradable mortgage bonds are issued to fund the Group's mortgage
activities.

Certificated debts are repayable, according to remaining maturity, as follows:

                                                                    31 December 2001                   31 December 2000
                                                                                CZKm                               CZKm
In less than one year                                                          9,985                              8,936
In one to two years                                                                0                              9,947
In two to three years                                                         16,173                                  0
In three to four years                                                             0                             16,116
Five years and thereafter                                                      1,334                              1,100
Total certificated debts                                                      27,492                             36,099



The bonds and medium-term notes detailed above include the following bonds and
notes issued by the Group:                      

Name                                                Interest rate                                            Issue date

Bonds of Komercni banka, a. s., CZ0003700429        6M PRIBOR plus 15 basis points (bps)                    10 February
                                                                                                                   1997
Zero coupon bonds of Komercni banka, a. s.,         Zero coupon (issued with discount for CZK 3,805       8 August 1997
770970000947                                        million)
Bonds of Komercni banka, a. s., CZ0003700452        6M PRIBOR plus 10 basis points                         29 September
                                                                                                                   1997
Mortgage bonds of Komercni banka, a. s.,            8.125% (mortgage bonds 2)                               13 May 1999
CZ0002000110
Mortgage bonds of Komercni banka, a. s.,            8.0% (mortgage bonds 1)                                15 June 1999
CZ0002000102
Bonds of Komercni banka, a. s., CZ0003700528        8.0%                                                   10 September
                                                                                                                   1999
Mortgage bonds of Komercni banka, a. s.,            6M PRIBOR plus 350 basis points (mortgage bonds 3)     15 September
CZ0002000151                                                                                                       2000
Bonds of Komercni Finance, B. V.                    7,125                                                   14 May 1996
Total bonds


Name                                                             Maturity date    31 December 2001    31 December 2000
                                                                                              CZKm                CZKm
Bonds of Komercni banka, a. s., CZ0003700429                  10 February 2002               6,124               5,973
Zero coupon bonds of Komercni banka, a. s., 770970000947         8 August 2004               5,581               5,841
Bonds of Komercni banka, a. s., CZ0003700452                 29 September 2002               3,861               4,000
Mortgage bonds of Komercni banka, a. s., CZ0002000110              13 May 2004               4,160               4,000
Mortgage bonds of Komercni banka, a. s., CZ0002000102             15 June 2004               1,565               1,500
Bonds of Komercni banka, a. s., CZ0003700528                 10 September 2004               4,867               4,775
Mortgage bonds of Komercni banka, a. s., CZ0002000151        15 September 2007               1,334               1,100
Bonds of Komercni Finance, B. V.                                   14 May 2001                   0               8,936
Total bonds                                                                                 27,492              36,099



Six-month PRIBOR was 448 basis points as of 31 December 2001 (2000: 557 basis
points).


30 Accruals, provisions and other liabilities

Accruals, provisions and other liabilities comprise:
                                                                             31 December 2001         31 December 2000
                                                                                         CZKm                     CZKm
Settlement balances and outstanding balances                                                3                      350
Payments in clearing                                                                    3,208                    6,557
Other payables to customers                                                               197                    1,766
Other trading payables                                                                    529                      497
Other liabilities                                                                       4,650                    5,109
Provisions, accruals and deferred income                                                2,826                    2,928
Provision for other credit commitments                                                  1,851                    1,363
Other provisions                                                                        3,229                    1,567
Total accruals, provisions and other liabilities                                       16,493                   20,137



As of 31 December 2001, the balance of the provision for other credit
commitments was CZK 1,851 million. This covers credit risks associated with
issued credit commitments, off balance sheet credit instruments and the
estimated participation in the expected losses on the guaranteed portfolio of
off balance sheet exposures of the Bank pursuant to the Guarantee Agreement
dated 29 December 2000.

Other provisions are composed of the following balances:

                                                   1 January 2001   Additions      Disposals           31 December 2001
Restructuring provision (refer to Note 11)                      0         100              4                         96
Provisions for contracted commitments                       1,567       4,602          3,036                      3,133
Total                                                       1,567       4,702          3,040                      3,229



Provisions for contracted commitments principally comprise life and non-life
technical reserves held by the Group's insurance subsidiary in the amount of CZK
2,407 million as at 31 December 2001 (2000 - CZK 1,109 million), the provision
for outstanding vacation days, legal disputes and termination of rental
agreements.


31 Deferred income taxes

Deferred income taxes are calculated on all temporary differences under the
liability method using a principal tax rate effective for the following year,
that is 31 percent (2000: 31 percent).

The movement on the deferred income tax account is as follows:
                                                                                31 December 2001       31 December 2000
                                                                                            CZKm                   CZKm
At beginning of period
- as previously reported                                                                    (97)                      0
- effect of adopting IAS 39 (note 39)                                                      (103)                      0
As restated at the beginning of the period                                                 (200)                   (90)
Change in consolidation (Muzo)                                                              (22)                      0
Income statement (charge)/credit
- unrealised profit on securities                                                          (170)                      0
- fixed assets depreciation                                                                   32                      0
- contractual penalties                                                                     (16)                      0
- reduction in tax associated with the sale of securities                                     42                      0
                                                                                           (112)                    (7)
Cash flow hedges - equity charge
- fair value re-measurement                                                                (438)                      0
- transfer to net profit                                                                     108                      0
                                                                                           (330)                      0
At end of period                                                                           (664)                   (97)



The movement in the deferred income tax account comprises the movement in
accelerated tax depreciation, unrealised profit on securities and contractual
penalties.



Deferred income tax assets and liabilities are attributable to the following
items:
                                                                              31 December 2001         31 December 2000
Deferred income tax liabilities                                                           CZKm                     CZKm
Accelerated tax depreciation                                                              (83)                     (83)
Unrealised profit on securities - equity impact                                              0                        0
Unrealised profit on securities - P/L impact                                             (170)                        0
Revaluation of hedging derivatives                                                       (391)                        0
Other temporary differences                                                               (21)                     (14)
                                                                                         (665)                     (97)
Deferred income tax assets
General and specific loan loss provisions                                                  421                    2,387
Reserves and provisions for assets                                                         454                        0
Other provisions                                                                           236                        0
Provisions for non-banking receivables                                                      64                        0
Tax loss carry forwards                                                                    428                      240
Unrealised losses on securities                                                            207                      292
Fixed assets depreciation                                                                   22                        0
Other temporary differences                                                                 86                      268
                                                                                         1,918                    3,078
Net deferred income tax asset before adjustment                                          1,253                    2,981
Adjustment for uncertain realisation of tax asset                                      (1,917)                  (3,078)
Net deferred income tax liability                                                        (664)                     (97)



The reduction in the unrecognised deferred tax asset as of 31 December 2001 when
compared with the prior year end reflects primarily changes in the treatment of
the general reserves held by the Bank as of 31 December 2001 pursuant to the
prospective application of amendments to the Act on Reserves. The Act as
presently drafted requires that the Bank release these provisions in the
accounting periods ending 31 December 2005.



32 Subordinated debt

In 1998, Komercni Finance, B. V. (a wholly owned subsidiary of the Bank) issued
guaranteed step-up callable notes due 15 May 2008, bearing interest at 9 percent
per annum to 15 May 2003 and then interest at a rate per annum equal to the sum
of the six-month dollar deposit LIBOR for the relevant payment period plus 5
percent. The notes constitute direct, unsecured, unconditional, subordinated
obligations of Komercni Finance, B. V. which are irrevocably, fully and, subject
to subordination, unconditionally guaranteed as to principal, premium and
interest by the Bank. The notes are redeemable at the option of Komercni
Finance, B. V. in whole on any interest payment date on or after 15 May 2003.
The nominal value of the subordinated debt is USD 200 million.



33 Share capital

The Bank's share capital, legally registered in the Register of Companies on 11
February 2000, is CZK 19,005 million and consists of 38,009,852 ordinary shares
with a nominal value of CZK 500 each (ISIN: CZ0008019106).

In connection with the sale of the State's controlling interest in the Bank held
by the National Property Fund of the Czech Republic, Societe Generale S. A.,
incorporated under French law, having its registered office address at 29,
boulevard Haussmann, 75009 Paris, France, acquired a 60.001 percent shareholding
in the Bank on 4 October 2001. Societe Generale is a French joint stock company
registered in the Register of Companies (Registre du Commerce et Societes) under
no. RCS Paris 552 120 222. Societe Generale operates as a licensed bank pursuant
to a resolution issued on 4 May 1864 and is subject to the regulatory
requirements of the French Companies Act (Loi sur les Societes Commerciales
66-537, 24 July 1966) and the French Banking Act (Loi Bancaire 84-46, 24 January
1984).


34 Analysis of cash and cash equivalents reported in the cash flow statement

                                                   31 December 2001         31 December 2000         Change in the year
                                                               CZKm                     CZKm                       CZKm
Cash and balances with central banks                         18,124                   19,994                    (1,870)
Current accounts with other banks                               237                      893                      (656)
Amounts owed to banks                                       (1,046)                  (1,122)                         76
Total                                                        17,315                   19,765                    (2,450)




35 Commitments and contingent liabilities

Legal disputes

The Group conducted a review of legal proceedings outstanding against it as of
31 December 2001. Pursuant to the review of significant litigation matters in
terms of the risk of losses and litigated amounts, the Group has recorded a
provision of CZK 75 million for these legal disputes. The Group has also
recorded an accrual of CZK 24 million for costs associated with cross-border
legal actions brought against a foreign client in connection with losses
incurred in the Bank's trade finance area.

The Group has been notified that certain parties against which it is taking
legal action may file counterclaims against it. The Group has no information
that such claims have yet been filed in any court. The Group will contest any
such claims and, taking into consideration the opinion of its internal and
external legal counsel, believes that any asserted claims made will not
materially affect its financial position. No provision has been made in respect
of these matters.



Commitments arising from the issuance of guarantees

Commitments from guarantees represent irrevocable assurances that the Group will
make payments in the event that a customer cannot meet its obligations to third
parties. These assurances carry the same credit risk as loans and therefore the
Group makes provisions against these instruments on the same basis as is
applicable to loans.



Purchase of Societe Generale's Prague branch

Pursuant to the Share Purchase Agreement dated 12 July 2001, the Bank will
acquire the business of Societe Generale's Prague branch. It is anticipated that
the Bank will complete the acquisition of the business and assets and
liabilities of Societe Generale's Prague branch in the first quarter of 2002.
For further information refer to Note 46.



Capital commitments

As of 31 December 2001, the Group had capital commitments of CZK 88 million
(2000: CZK 34 million) in respect of current capital investment projects.
Management is confident that future net revenues and funding will be sufficient
to cover this commitment.



Commitments arising from the issuance of letters of credit

Documentary letters of credit, which are written irrevocable undertakings by the
Group on behalf of a customer (mandatory) authorising a third party
(beneficiary) to draw drafts on the Bank up to a stipulated amount under
specific terms and conditions, are collateralised by the underlying shipments of
goods to which they relate and therefore have significantly less risk. Cash
requirements under open letters of credit are considerably less than the
commitments under issued guarantees, avals or stand-by letters of credit.
However, the Group records provisions against these instruments on the same
basis as is applicable to loans.



Commitments to extend credit, undrawn loan commitments, unutilised overdrafts
and approved overdraft loans

The primary purpose of commitments to extend credit is to ensure that funds are
available to a customer as required. Commitments to extend credit represent
unused portions of authorisations to extend credits in the form of loans,
guarantees or stand-by letters of credit. Commitments to extend credit issued by
the Group represent issued loan commitments or guarantees, undrawn portions of
and approved overdrafts loans. Commitments to extend credit or guarantees issued
by the Group which are contingent upon customers maintaining specific credit
standards (including the condition that a customer's solvency does not
deteriorate) are revocable commitments. Irrevocable commitments represent
undrawn portions of authorised loans and approved overdraft facilities because
they result from contractual terms and conditions in the credit agreements.



Financial commitments and contingencies comprise:
                                                                                   31 December 2001   31 December 2000
                                                                                               CZKm               CZKm
Non-payment guarantees                                                                        5,524              4,768
Payment guarantees                                                                            5,307              4,731
Letters of credit uncovered                                                                     667                895
Stand by letters of credit                                                                      781                616
Commitments from guarantees                                                                  12,279             11,010
Received bills of exchange/acceptances and endorsements of bills of exchange                     20                  9
Total contingent liabilities                                                                 12,299             11,019
Committed facilities                                                                         15,648             15,789
Undrawn credit commitments                                                                   15,773             18,920
Confirmed letters of credit                                                                       5                 92
Other irrevocable commitments                                                                31,426             34,801
Unutilised overdrafts and approved overdraft loans                                           20,834             17,710
Letters of credit covered                                                                       298                345
Total contingent and irrevocable commitments                                                 64,857             63,875



The Group provides a variety of credit facilities to its largest clients
including Czech entities which are part of international groups and which are
State owned. Of the Group's committed facilities and guarantees, CZK 8,971
million is revocable (2000: CZK 7,565 million). All other committed facilities,
undrawn credit commitments and unutilised overdrafts are irrevocable and are not
subject to further approvals by the Group.

The risk associated with off balance sheet credit commitments and contingent
liabilities is assessed similarly as for loans to customers, taking into account
the financial position and activities of the entity to which the Group issued
the guarantee and taking into account the collateral obtained. As of 31 December
2001, the Group created provisions for these risks amounting to CZK 1,851
million (2000: CZK 1,363 million).

As of 31 December 2001, payment guarantees include an amount of EUR 100 million
relating to a credit derivative agreement (see Note 22).





Finance lease commitments

The Group has entered into finance leases in respect of equipment (computers,
ATMs and cars), the payments for which extend over a three year period.

Assets held under finance leases:                                                           31 December     31 December
                                                 31 December 2001      31 December 2001            2000            2000
                                                                                                   
                                               including interest    excluding interest
                                                                                              including       excluding
                                                                                               interest        interest
                                                             CZKm                  CZKm            CZKm            CZKm
Leased assets                                               1,531                 1,353             998             873
Paid instalments                                            1,067                   951             722             644
Amounts due                                                   464                   402             276             229
Remaining maturity of remaining instalment:
Up to 1 year                                                  175                   149             144             119
1 to 5 years                                                  289                   253             132             110
Over 5 years                                                    0                     0               0               0
Total                                                         464                   402             276             229



Taxation

Czech tax legislation and practice has changed significantly in recent years.
Many parts of the legislation remain untested and there is uncertainty about the
interpretation that tax authorities may apply in a number of areas. Management
of the Group has applied revised tax legislation on a prudent basis. Tax
positions taken by the Group are subject to examination and could be challenged
by tax authorities. As a result there may be uncertainty about the potential
impacts, should the interpretation of tax authorities differ from that applied
by the Group.

During 2001, the Czech tax authorities undertook detailed reviews of the Bank's
tax position, specifically focusing on corporate income taxation for the period
1997 to 1999 and 2000. The findings from these tax reviews had an immaterial
impact on the Bank's tax position and have been reflected in the financial
statements for the year ended 31 December 2001.

Management considers that the Group is not exposed to any material tax risks and
therefore no provision has been made in this respect.



36 Derivative financial instruments

In the normal course of business the Group enters into financial instrument
transactions to hedge its liquidity, interest and foreign currency risks. The
Group also enters into speculative financial derivative transactions for the
purpose of generating profits from short-term fluctuations in market factors.
The Group also acts as a principal to derivative transactions with its clients.
With regard to special structured deals carried out on behalf of customers, the
Group fully eliminates market risks associated with these products by entering
into an opposite position with a banking counterparty (back to back
transactions). The Group operates a system of market risk and counterparty
limits which are designed to restrict exposure to movements in market prices and
counterparty concentrations. The Group also monitors adherence to all limits on
a daily basis and follows up on any breaches of these limits and takes
corrective action to reduce the risk exposure.

The following tables set out notional and fair values of financial derivative
instruments categorised as other and hedging (refer to Note 3 (m) to these
financial statements).



Financial derivative instruments designated as other:

                                    Notional value       Notional value              Fair value              Fair value
                                  31 December 2001     31 December 2001        31 December 2001        31 December 2001

                                            Assets          Liabilities                Positive                Negative
                                              CZKm                 CZKm                    CZKm                    CZKm
Interest rate instruments
Interest rate swaps                         60,483               60,483                   1,836                   1,854
Forward Rate Agreements                    135,051              135,051                     512                     488
Options                                      4,400                4,400                      94                      89
Total                                      199,934              199,934                   2,442                   2,431
Foreign currency instruments
Currency swaps                              83,507               82,883                   2,208                   1,637
Cross currency swaps                        22,279               21,372                     993                     109
Forwards                                     4,746                4,673                      90                      24
Call options                                 1,231                1,344                      26                       0
Put options                                    985                  872                       0                      26
Total                                      112,748              111,144                   3,317                   1,796
Other instruments
Credit options                              20,506               20,506                       0                       0
Forwards on debt securities                  1,813                1,813                       0                       1
Total                                       22,319               22,319                       0                       1
Total                                      335,001              333,398                   5,759                   4,228


                                    Notional value       Notional value              Fair value              Fair value
                                  31 December 2000     31 December 2000        31 December 2000        31 December 2000

                                            Assets          Liabilities                Positive                Negative
                                              CZKm                 CZKm                    CZKm                    CZKm
Interest rate instruments
Interest rate swaps                         55,347               55,347                   1,573                   1,135
Forward Rate Agreements                     80,790               80,790                      52                      49
Options                                      4,400                4,400                      60                      55
Total                                      140,537              140,537                   1,685                   1,239
Foreign currency instruments
Currency swaps                              59,329               59,128                   1,453                   1,115
Cross currency swaps                           638                  694                       1                     159
Forwards                                     7,695                7,620                     143                     170
Call options                                 8,511                8,295                      32                      22
Put options                                      0                    0                       0                       0
Total                                       76,173               75,737                   1,629                   1,466
Other instruments
Credit options                                   0                    0                       0                       0
Forwards on debt securities                      0                    0                       0                       0
Total                                            0                    0                       0                       0
Total                                      216,710              216,274                   3,314                   2,705



Financial derivative instruments designated as other at nominal values per
remaining maturity:

                                               Up to 1 year         1 to 5 years            Over 5 years          Total
                                                       CZKm                 CZKm                    CZKm           CZKm
Interest rate instruments
IRS                                                  16,782               29,046                  14,655         60,483
FRA                                                 135,051                    0                       0        135,051
Options                                                   0                  400                   4,000          4,400
Total                                               151,833               29,446                  18,655        199,934
Foreign currency Instruments
Swaps                                                83,474                   33                       0         83,507
Cross currency swaps                                  1,056               21,223                       0         22,279
Forwards                                               4714                   32                       0          4,746
Call options                                          1,231                    0                       0          1,231
Put options                                             985                    0                       0            985
Total                                                91,460               21,288                       0        112,748
Other instruments
Credit options                                            0               20,506                       0         20,506
Forwards on debt securities                           1,813                    0                       0          1,813
Total                                                 1,813               20,506                       0         22,319
Total                                                245,10               71,240                  18,655        335,001



Note: The remaining maturity of forward rate agreements (FRA) covers the period
to the fixing date when off balance sheet exposures are reversed.

Financial derivative instruments designated as hedging:

                             31 December 2001        31 December 2001         31 December 2001         31 December 2001
                              Notional assets    Notional liabilities      Positive fair value      Negative fair value
                                         CZKm                    CZKm                     CZKm                     CZKm
Foreign currency instruments
Swaps                                       0                       0                        0                        0
Cross currency swaps                        0                       0                        0                        0
Total                                       0                       0                        0                        0
Interest rate instruments
Interest rate swaps                    65,555                  65,555                    2,033                       81
FRA                                     2,800                   2,800                       27                        0
Total interest                         68,355                  68,355                    2,060                       81
Total                                  68,355                  68,355                    2,060                       81


                                                                31 December 2000                       31 December 2000
                                                                 Notional assets                   Notional liabilities
                                                                            CZKm                                   CZKm
Foreign currency instruments
Swaps                                                                      3,881                                  3,775
Cross currency swaps                                                       1,785                                  1,891
Total                                                                      5,666                                  5,666
Interest rate instruments
Interest rate swaps                                                       38,287                                 38,287
FRA                                                                       10,200                                 10,200
Total interest                                                            48,487                                 48,487
Total                                                                     54,153                                 54,153



Remaining maturity of derivatives designated as hedging:
                                         Up to 1 year            1 to 5 years                Over 5 years         Total
                                                 CZKm                    CZKm                        CZKm          CZKm
Interest rate swaps                            14,000                  41,555                      10,000        65,555
Forward rate agreement                          2,800                       0                           0         2,800
Total                                          16,800                  41,555                      10,000        68,355



The Group treats as hedges only those contracts where it has the ability to
demonstrate that all criteria for recognising the transactions as hedges set out
in IAS 39 have been met. Further information on hedges is provided in Notes 3
(m) to these financial statements.

The substantial increase in notional values of forward rate agreements (FRA) is
primarily due to the Group acting as a market maker in respect for these
instruments.



Credit risk of financial derivatives

Credit exposure or replacement cost of financial derivative instruments
represents the Group's credit exposure from contracts with a positive fair
value, that is, it indicates the estimated maximum potential losses of the Group
in the event that counterparties fail to perform their obligations. It is
usually a small fraction of the notional amounts of the contracts. The credit
exposure of each contract is indicated by the credit equivalent calculated
pursuant to generally applicable methodology using the current exposure method
and involves the fair market value of the contract (only if positive, otherwise
a zero value is taken into account) and a portion of nominal value, which
indicates the potential change in fair market value over the term of the
contract. The credit equivalent is established depending on the type of contract
and its maturity. The Group assesses credit risks of all financial instruments
on a daily basis.

As of 31 December 2001, the Group has a potential credit exposure of CZK 10,872
million (2000: CZK 5,947 million) in the event of non-performance by
counterparties to its financial derivative instruments. This amount represents
the gross replacement cost at market rates as of 31 December 2001 of all
outstanding agreements in the event of all counterparties defaulting and does
not allow for the effect of netting arrangements.

The Group is selective in its choice of counterparties, sets limits on
transactions with its customers and in respect of increased credit exposure or a
customer that has no limit for deposit composition and intends to enter into
financial derivative transactions. As such, the Group considers that the actual
credit risk associated with financial derivatives is substantially lower than
the exposure calculated pursuant to credit equivalents.



37 Related Parties

Parties are considered to be related if one party has the ability to control the
other party or exercise significant influence over the other party on making
financial or operational decisions. As of 31 December 2001, the Bank was
controlled by Societe Generale which owns 60 percent of its issued share
capital.

A number of banking transactions are entered into with related parties in the
normal course of business. These include loans, deposits and other types of
transactions. These transactions were carried out on commercial terms and at
market rates.



Amounts due to and from the Group companies

As of 31 December 2001, the Group had loans outstanding of CZK 1,552 million
(2000: CZK 1,451 million) to the group associates. The amounts of associated
undertakings placed with the Group totalled CZK 88 million (2000: CZK 342
million).

The following table summarises loans issued to associated undertakings and
deposits with the Group:
                                                                          31 December 2001            31 December 2000
                                                                                      CZKm                        CZKm
Company
CAC Leasing, a. s.                                                                     890                         868
Vseobecna stavebni sporitelna KB, a. s.                                                662                           0
MUZO, a. s.                                                                              0                         583
Total loans                                                                          1,552                       1,451
CAC Leasing, a. s.                                                                       6                           5
Vseobecna stavebni sporitelna KB, a. s.                                                 82                         147
MUZO, a. s.                                                                              0                         190
Total deposits                                                                          88                         342




Amounts due to and from the Societe Generale Group entities

As of 31 December 2001 the Group recorded amounts due from Societe Generale on
CZK - 0.3 million and off balance sheet currency transactions with a notional
value of CZK 997 million in assets and CZK 983 million in liabilities.

The Group reported an amount of CZK 158 million owed to Societe Generale's
Prague branch arising from interbank deposits and an off balance sheet
receivable associated with interest rate instruments with a notional value of
CZK 1,703 million.


Amounts due from the related parties of the Group:
                                                          Average contractual    Interest    31 December    31 December
                                                                     maturity        rate           2001           2000

                                                                                                    CZKm           CZKm
Members of the Supervisory Board                                            -      7 - 13              0              0
Members of the Management Board                                             -   6.5 -22.8              3             16
Principal shareholders of the Bank (interest greater                        -           -              0            675
than 1%)
Total                                                                       -           -              3            691





Amounts due from the related parties of the Group include credit cards, current
accounts and common customer loans advanced at varying rates of interest.

All amounts due from principal shareholders in 2000 were fully repaid during the
year ended 31 December 2001.



Amounts due from the related parties of the Group:
                                                                                                                   CZKm
Balance at 1 January 2001                                                                                           691
Repayments                                                                                                          688
Loans newly granted                                                                                                   0
Balance at 31 December 2001                                                                                           3



Remuneration and equity compensation scheme of the members of the Management and
Supervisory Boards

Remuneration paid to the members of the Management and Supervisory Boards of the
Bank during the years was as follows:
                                                                             31 December 2001         31 December 2000
                                                                                         CZKm                     CZKm
Remuneration to the Management Board * *members*                                          205                       32
Remuneration to the Supervisory Board members**                                            30                        8
Total                                                                                     235                       40

* Remuneration to the Management Board members includes amounts paid during the
year ended 31 December 2001 to the current and former directors of the Bank
under mandate and management contracts and the equity compensation scheme.

** Remuneration to the Supervisory Board members includes amounts paid during
the year ended 31 December 2001 to the current and former members of the
Supervisory Board as well as compensation provided under the equity compensation
scheme.



As of 31 December 2001, the Group recorded a reserve of CZK 8.8 million (2000:
CZK 53 million) for an equity compensation program designed for the Management
Board, Supervisory Board and selected managers, and an estimated payable of CZK
11.1 million (2000: CZK nil) for Management Board bonuses.

                                                                          31 December 2001            31 December 2000
Number of the Management Board members                                                   5                           7
Number of the Supervisory Board members                                                  9                          12



Equity compensation program

The extended equity compensation program (the 'program'), designed to provide
compensation to the members of the Management and Supervisory Boards, was
approved by the Annual General Meeting on 31 May 2000. The terms of the program,
refined to reflect the requirements of the amended Commercial Code, were
approved by the General Meetings held on 28 March 2001 and 20 June 2001.

Under this equity compensation program each of the members of the Management and
Supervisory Boards of the Bank have a right to purchase annually a
pre-determined number of ordinary shares of the Bank at CZK 500 per share ('call
options'). The members of the Boards have a right, but not the obligation, to
put these shares on the Bank at a price of CZK 1,000 per share after these
shares have been held by Board members for a minimum period ('put options'). The
cost of the exercise of these options is borne by the Bank.

The table below summarises the program in terms of the period for acquiring call
options over a pre-determined number of shares and the call and put option
exercise period:

Period for call options over  Number of shares for call  Number of shares for call   Option exercise   Option exercise
shares                                          options                    options            period            period
                                       Management Board                Supervisory              Call               Put

                                                                             Board           options           options
05/2000-05/2001                                 134,000                     28,500   05/2000-05/2004   06/2001-05/2004
05/2001-05/2002                                 134,000                     28,500   05/2001-05/2004   06/2002-05/2004
05/2002-05/2003                                 134,000                     28,500   05/2002-05/2004   06/2003-05/2004
05/2003-05/2004                                 134,000                     28,500   05/2003-05/2004   05/2004-05/2005
Total                                           536,000                    114,000         -                 -

* Information relating to the description of the period has been simplified as a
result of varied dates of entering into agreements under the program from 31 May
2000 to 12 June 2000 which underlie the start of the period for call options
over shares and exercise of the call and put options.

Call and put option agreements were entered into with the members of the
Management and Supervisory Boards in November and December 2000.



Exercise of option rights for the year from 1 June 2000 to 31 May 2001

In January 2001, the Bank purchased its ordinary shares in the open market
following the exercise of the right to purchase the pre-determined number of
shares by each of the members of the Management Board. The members of the
Supervisory Board also exercised their rights under the scheme. The total number
of shares purchased for the Management and Supervisory Board members was
160,220. The cost to the Bank of the exercise of these shares has been charged
on an accruals basis to the accounting periods to which it relates as a
compensation expense. The aggregate charge to the consolidated profit and loss
statement for the year ended 31 December 2001 for all members of both Boards was
CZK 37 million (2000: CZK 53 million).



Exercise of option rights for the year from 1 June 2001 to 31 May 2002

The members of the Management Board and the members of Supervisory Board
exercised their rights to purchase 155,060 shares as of 31 December 2002. The
aggregate charge to the consolidated profit and loss statement for the year
ended 31 December 2001 for all members of the Boards and their rights to sell
and purchase the shares was CZK 59 million on an accruals basis



Other beneficiaries of equity compensation scheme

Under a pre-existing scheme certain members of middle management of the Bank
have rights to purchase annually a pre-determined number of ordinary shares of
the Bank. Management estimates that the cumulative rights as of 31 December 2001
amount to approximately 80,000 shares.


Current status of equity compensation schemes

The Group's management has indicated that its intention is to limit or to
terminate a substantial part of outstanding rights of the existing program.


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