GSS NEWSLETTER...Secondary offering prospectus for Transgaz listing will soon be available 24...

GSSNEWSLETTERISSUE 138October 2012

Issue 138, October 2012

2

CONTENTS

Editorial 5

John’s CornEr 6

austria 8Austrian economy at a standstill – but probably not for long 8

BElarus 10National Bank decreases refinance rate to 30% 10

IFC to take part in development of a plan to improve investment climate in Belarus 10

Bosnia and hErzEgovina 11Foreign direct investment on the rise again 11

Bulgaria 12New legislation for public offerings to protect investor interest 12

Bulgaria suspends its plans to adopt the euro 13

New Double Tax Treaty signed between Bulgaria and Switzerland 13

Croatia 14Fitch says Croatia is on the right track 14

CzECh rEpuBliC 15Recalculation of PX index bases 15

Economic activity was below CNB forecast in Q2 16

Inflation comes in slightly below CNB forecast in August 16

hungary 17National Bank of Hungary’s review on the IG2’s operation 17

Hungarian Government expects foreign companies to reinvest in Hungary 18

Foreign government bond holdings reach all-time high in August 2012 18


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KazaKhstan 19Volume of KASE trading decreased by 10.6% 19

Kyrgyzstan 20Business activity in the Kyrgyzstan market 20

poland 21New proposals for tax withholding process 21

romania 23Victor Cionga confirmed general manager of BVB 23

BVB Rulebook covering public offerings becomes more flexible 23

Secondary offering prospectus for Transgaz listing will soon be available 24

Nuclearelectrica extends deadline for submission of tenders by listing intermediaries 24

russia 25MICEX-RTS announces new trading platform for FORTS and Standard markets 25

MICEX-RTS to expand list of currency market participants 25

Non-government pension funds (NPF) to create reserves for cumulative part of pension savings 26

Central Bank of Russia to toughen capital requirements for banks 26

Derivatives on financial instruments of foreign issuers to be launched 26

sErBia 27General Meeting of European Association of Central Counterparty Clearing Houses (EACH) 27

slovaK rEpuBliC 28Bratislava Stock Exchange trading review August 28

Successful government bond auction 29

slovEnia 30Slovenian Government will not tax financial transactions yet 30

Possible integration of Ljubljana and Vienna Stock Exchanges 30

Dun & Bradstreet downgrades Slovenia’s rating 30

Amended Double Taxation Agreement between Slovenia and Switzerland 31


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uKrainE 32NSSMC to tighten control over rating agencies 32

azErBaiJan 33Switzerland to cooperate with Azerbaijan in securities market development 33

your ContaCts 34

disClaimEr 37

imprint 38


5

the Central Depository’s outlook, benefits could be achieved from the accelerated harmonization with best European set-tlement practices and with regard to the applicable standards of processing corporate actions and to the technical settle-ment system.

UniCredit Tiriac Bank has signed letters of intent for T2S participation with both Romanian depositories (the Central Depository for instruments traded on the Stock Exchange and the National Bank of Romania in its quality of depository for Government bonds).

With the political turbulences of the past weeks, this summer was a “hot” one. Parliament impeached the President Ba sescu on July 6 for “serious infringement of the Constitu-tion”. A referendum was held on July 29, 2012 to decide if President Ba sescu should be dismissed two years before his mandate ends. Despite more than 80% voting for his impeachment, the referendum was declared invalid for lack of quorum - less than 50% of registered voters went to the polls.

The sixth review of the current IMF-EU-WB precautionary loan agreement was concluded in early August with mostly posi-tive assessments. The IMF noted delays in the privatization programme but also that the 1H 2012 budget deficit target of 1.1% of GDP was met. Romania has not drawn any of the EUR 2.5 billion (soon to be EUR 3.0 billion) disbursed by the IMF through the precautionary agreement (plus EUR 1.4 billion provided by the European Commission). The sev-enth review will begin after the parliamentary elections or in November and will focus on next year’s budget.

The latest Romanian loan via fixed instruments has been effected by the reopening on September 4, 2012 of the issue of bonds launched in 2008 (with maturity in 2018 and 6.50% coupon). This attracted funds of 750 million at a yield of 5.10%, which is below the original issue of 6.69%. The issue was oversubscribed more than four times the total amount of bids made, 3.6 billion, demonstrating the extremely high interest of investors in Romania.

UniCredit Tiriac Bank through its Global Securities Services Department has remained a top provider in the Romanian Capital Market due to flexible approach to clients’ needs. We would like to thank our clients for the trust granted. This is also an opportunity to reiterate our commitment to providing high quality services, using our employees’ expertise and professionalism.

We are looking forward to working with you.

Sincerely yours,

Irina SavastreHead of Global Securities Services Romania

EdITORIaL

Dear Clients, Partners and Friends, I have the pleasure to present to you the latest issues and developments in the Romanian Capital Market.

With autumn starting, students going back to class and the 2013 budgets being under the pen this can both be consid-ered a time to take stock and a time for a new start.

For the Romanian Capital Market the year started with the extended application of global accounts and a system without pre-validation for instruments at CSD level (the only exception being the RASDAQ market) and the launching of OTC Turna-round trades. Both market updates were required and expected by market participants in order to create a proper infrastructure for the announced IPO and SPO for State owned companies.

Talking about the announced new listings - comprised also in the IMF list - I would like to shed some light on the updated list of the companies where the State intends to sell packages of shares and the status of these processes. Thus, IPOs are expected for the Romanian airline company Tarom for 20% of its shares and the gas producer Romgaz with 15% of the compa-nies’ shares. For both companies the intermediaries have been designated and the Preliminary Prospectus is drafted. An SPO is expected for 15% of Transgaz, the Romanian gas transporter. In all cases the dates have yet to be announced.

In order to support these future offers, Bucharest Stock Exchange issued at the beginning of September amend-ments to the provisions of the BVB Rulebook to align the stock market’s regulatory framework to international prac-tice, allowing adaptations to the offers with diverse system mechanisms for implementation.

In May 2012 the Central Depository signed with the presi-dent of the European Central Bank a Framework Agreement for participation to the pan-European settlement platform, TARGET2 Securities. By signing the Agreement, according to

Irina SavastreHead of GSS Romania


6

To guarantee or not to guarantee: John Gubert on the role of custodians

JOhN’S CORNER

In the brave new world of AIFMD and UCITS V, custo-dians become guarantors. If we look at history, this is less scary than it sounds. But, if we look at the current risk profile of the custody business, the changes should certainly give grounds for serious concern to both regulators and regulated.

The new regulations will undoubtedly impact the structure of markets. An intended target of the regulations must be the shadowy world of re-hypothecation. The AIFMD requires separation of the prime brokerage and depository function. It comes at a time when a recent FSA survey showed that a quarter of UK based hedge funds had little idea of the quantum of their assets that were re-hypothecated. Loss of use of client assets will eliminate a key profit stream of the prime brokers, who are already being squeezed in other major areas of their product armoury (asset finance and derivative clearing) by global bank Prime Services operations.

The regulations may also result in the development of opera-tor model custody arrangements. These are feasible in most markets and we considered them in an article in this newslet-ter a couple of months ago. As we stated then, they have advantages of dis-intermediating the sub-agent (or more normally their nominee structure) from asset ownership. But they retain the challenges of cash risk (as the sub-agent remains the cash bank) and operational risk (as the sub-agent becomes account operator). Moreover, the model brings other liabilities including contractual ones with the CSD, potential fiscal and regulatory ones as well as increased market side operational risk, especially if multiple accounts are needed by a global custodian at a CSD.

Historically, Global Custodians have rarely had claims due to sub-custodian delinquency. Thus the optimists at the regulatory bodies claim the concerns in the market are flawed. If only history always repeated itself! The Russian registration problems of a few years back were as close as many got to financial loss. Bankruptcy and administration has not, to my knowledge, led to any material losses or disputes over title between global custodians and sub-custodians. As long as the assets are administered efficiently (posted to client accounts and reconciled regularly) the courts in most countries and insolvency practitioners, in general, recognise beneficial ownership rights.

However, there have been major events on the periphery of the traditional global to sub- custodian structures that have been more problematical. Lehman gave us a key example of the problems of re-hypothecation as legal ownership passed from fund to prime broker and on to third parties. But this was due to a major flaw in the UK “light regulation” regime where no correlation was required between assets used by the prime brokerage and loans made to the funds (in the US the SEC enforces a 140% cap). MF Global clients lost money apparently due to commingling of their assets and the proprietary assets of the firm; in other words, apparent maladministration.

There have been several cases on fund of hedge funds, where the regulators have challenged administrator claims that they were responsible for the safe keeping of the fund units and had no line of responsibility into the activity of the underlying funds. And the new regulations do clearly now make administrators liable for ensuring the contractual rights of funds in derivative contracts; a demanding area of sub-stantial legal uncertainty.

The challenge of the new regulations, in this ever more uncertain world, is that the intent is clear. A depository is required to return to the fund the assets entrusted to it. There are exemptions in respect of events out of the control of the global custodian. It is debateable whether this covers unilateral action by a CSD; it is unlikely it will cover loss of assets due to mutualisation of losses in such an entity. It is debateable it will cover default of a CCP as regulators would expect segregation and portability of positions. It would not cover any shortfall due to poor practice in the funds’ transfer business (and this should provide a boost to entities such as Vestima and FundSettle). It would definitely not cover dispute over ownership of assets between an insolvency practitioner and a global custodian. And it leaves open the exact definition of what constitutes adequate due diligence by both administrators and custodians.


7 John’s Corner

The reality is that ever more careful selection of agents and enhanced due diligence is needed. In a previous existence, I always sought to select agents who had strong domestic business in their countries; that gave some comfort as dif-ferential treatment of investors based on nationality would undoubtedly cause the country in question serious prob-lems. I also looked for agents who had a good foothold in the market; at times of crisis, it is always advantageous to have powerful mutual interest partners. And I also looked for organisations where we had a meaningful Group to Group flow, as that gave us voice at a senior level.

And above all, I focused on integrity, asset safety, opera-tional competence and commitment. The only real change in today’s environment is that the global custodian will have to use the “no” word more often. No to structures that impede its right and access to assets; no to countries that do not have clear laws recognising beneficial ownership and account segregation; no to markets with mutualisation of losses and no to legal documentation obfuscating liability.

I can assure you that we, at UniCredit GSS, firmly believe that our terms of business mean that we pass all these tests!

John GubertChairman Global Securities Services Executive Committee

John Gubert also appears on blog.globalcustodian.com


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Austria

Market Capitalisation HRK 397.2 bnYTD Dev. of Market Capitalisation 2.307Number of SE Transactions p.m. 96000YTD Dev. of SE Transactions 7.107SE Turnover (Zagreb SE) HRK 5977.5 mnMonthly Index Performance (Crobex/ZSE) 0.017GDP per Capita (2012e in EUR) 36,629GDP Real 2012e (Change against prev. year in %) 0.83-Month Money Market Rate (current in %) 0.14Inflation in 2012e (yearly average in %) 2.2.../EUR -Upcoming Holidays none

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9/25/2012 3:59 PM

Market Capitalisation EUR 68.5bn

YTD Dev. of Market Capitalisation 6.4%

Number of SE Transactions p.m. n.a.

YTD Dev. of SE Transactions n.a.

SE Turnover (Vienna SE) EUR 1.2bn

Monthly Index Performance (ATX/VSE) 0.1%

GDP per Capita (2012 in EUR) 36,629

GDP Real 2012 (Change against prev. year in %) 0.8

3-Month Money Market Rate (current in %) 0.14

Inflation in 2012 (HVPI yearly average in %) 2.2

Upcoming Holidays Oct 26, Nov 1

Source: Thomson Datastream

Source: UniCredit, National Statistics

ATX

aUSTRIa

Austrian economy at a standstill – but probably not for longThe cooling of the international economic climate and the ongoing recession in some countries around Europe are increasingly afflicting Austria’s economy. „The August reading of the Bank Austria Business Indica-tor sank visibly compared to the previous month to just -0.7 points. This means the indicator has been negative for three months in a row“, says Stefan Bruckbauer, chief econo-mist at Bank Austria. After some shallow economic develop-ment recently, the clouds really began to gather over Austria’s economy again at the end of the summer. „The Austrian economy has now fallen off its growth trajectory from past quarters. Tricky international conditions continue to weigh down on developments in Austria, meaning the best-case scenario in the coming months is that economic activity will stagnate“, continued Bruckbauer.

The deterioration in the sentiment among Austrian consum-ers was instrumental in the now much gloomier economic prospects in comparison to the previous months. Although consumers in Austria are still essentially much more optimistic than in most other European countries, the latest downturn in conditions on the labour market with rising unemployment and now stagnating employment levels are obviously having an effect in Austria too.

By contrast, the mood among manufacturers across Europe has already hit rock bottom and is now brightening up. In what are the main European sales markets for Austrian com-panies, industrial confidence weighted with Austria‘s share of foreign trade has even improved slightly.

Consequently, Austrian manufacturers are now also looking more positively to the coming months. „The current senti-ment, which is unmistakably dominating the picture drawn by the business indicator, clearly illustrates that Austria’s com-petitive industrial companies are standing their ground even in a very challenging European environment. The uncertainty surrounding the euro crisis is prompting private consumers to be more cautious, which is therefore resulting in more subdued consumer behaviour. Of course, this is having an adverse knock-on effect on economic growth“, said Bank Austria economist Walter Pudschedl, analysing the situation.


9 Austria

Written and edited by: Thomas Rosmanitz Head of Relationship Management Austria Global Securities Services, AustriaTel. +43 50505 58515 · [email protected]

Under the present conditions at economists at Bank Aus-tria do not anticipate any economic growth in Austria in the third quarter of 2012. In fact, latest early indicators even point towards an increasing risk of a slight contraction in economic development in autumn. The decision by the ECB to purchase government bonds, the green light given by the German Constitutional Court for the ESM and the measures adopted for a European banking supervision framework all represent concrete progress towards solving the euro crisis. This will positively influence the sentiment in the coming months and thereby lay the foundations for a reversal of the current economic growth trend.

What is more, towards the end of the year the somewhat weaker euro (in comparison to 2011) will support Austrian export economy, even though there are not likely to be any significant boosts to growth for the time being. Austria should be spared another recession, however, in the euro zone eco-nomic output is expected to contract both in the third and in the fourth quarter of 2012. This means the eurozone will register a 0.5% decline in GDP for 2012 as a whole.

Thanks to the powerful upturn in growth at the start of the year, Austrian economy will expand moderately throughout 2012 as a whole, in spite of stalling in the second half of the year. This is also helped by the relatively favourable develop-ment in the manufacturing sector, which, despite signs of weakness, has proven to be amazingly stable in what is a very challenging international environment. „We stick by our opti-mistic growth assessment of up to 1% for 2012, even though the latest indicators suggest that the risk of falling short of this target has risen“, said Bruckbauer. It is still possible that the Austrian economy will be able to return to a more buoyant growth path in the coming year. „For 2013 we anticipate an increase in GDP of 1.2% as we reckon the foundations are now being laid for a successful resolution to the euro crisis, and the markets, notwithstanding any volatility, will gradually calm down“, explained Bruckbauer optimistically.

„We assume that inflation in the coming months will sink below the two-percent mark, even though the declining trend is likely to be less marked than previously assumed due to the upward trend in commodity prices and the weaker euro exchange rate. Inflation over 2012 as a whole will come in at just above 2%“, said Bruckbauer. The slack economic activity means inflation will not be subject to any upside risks from the economy in the near future, while the economists at Bank Austria do not expect to see any adverse consequences arising from the monetary policy measures of the European Central Bank either.

The new programme launched by the ECB to buy up govern-ment bonds will not increase the amount of money in circu-lation as the bond purchases are neutralised. „We assume that the ECB will succeed in draining liquidity in time once the economy has regained momentum and the threat of inflation has therefore passed. For 2013 we expect to see inflation fall to an annual average of 1.9%“, concluded Bruckbauer. The rather mild economic growth means there is no demand-pulled inflation on the horizon. The increase in commodity prices is also likely to be subdued on account of the global slowdown in economic activity, thereby constituting a lim-ited upside risk. Once the euro crisis calms down the euro exchange rate will consolidate again, and hence be able to support stable price trends once again.

Impact on investors For information purposes only.


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Market Capitalisation BYR 8.6bn

YTD Dev. of Market Capitalisation n.a.

Number of SE Transactions p.m. (BCSE) 1,796

YTD Dev. of SE Transactions -6.1%

SE Turnover (BCSE) BYR 1,865bn

Monthly Index Performance (BCSE) 2.1%

GDP per Capita (2012 in EUR) 393


3-Month Money Market Rate (current in %) n.a.

Inflation in 2012 (yearly average in %) 1.3

BYR/EUR 0.00009

Upcoming Holidays none


BELaRUS

National Bank decreases refinance rate to 30%Starting from September 12, 2012 the National Bank of the Republic of Belarus for the eighth time in 2012 decreased the refinance rate by 0.5% to 30%.

According to the National Bank the inflation trend in the first part of 2012 was at the planned level. The National Bank intends to further decrease the refinance rate in order to slow down the inflation processes.

Impact on investors Decrease of the refinance rate on the base of positive trends of inflation in 2012.

IFC to take part in development of a plan to improve investment climate in BelarusThe International Finance Corporation (IFC) in cooperation with the National Agency of Investment and Privatization of the Republic of Belarus developed a road map towards improving the country’s investment climate and attracting direct investments.

During the cooperation in the development of the road map the Government accepted nine laws aimed at the improve-ment of the investment climate and IFC experts have pre-pared comments and recommendations to 28 draft laws including laws as “On investment” and “On Public–private partnership“.

Impact on investors The legislation improvement aims at an efficient investment in-flow in Belarus.

Written and edited by: Evgenia Klimova Head of Product and Business Development Global Securities Services, RussiaTel. +7 495 232 5298 · [email protected]


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Source: Bloomberg


Bosnia_Herzegovina

Market Capitalisation HRK 397.2 bnYTD Dev. of Market Capitalisation 2.307Number of SE Transactions p.m. 96000YTD Dev. of SE Transactions 7.107SE Turnover (Zagreb SE) HRK 5977.5 mnMonthly Index Performance (Crobex/ZSE) 0.017GDP per Capita (2012e in EUR) 3,577GDP Real 2012e (Change against prev. year in %) 2.53-Month Money Market Rate (current in %) -Inflation in 2012e (yearly average in %) 2.6BAM/EUR 1.95Upcoming Holidays none

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BIFX

Market Capitalisation (Sarajevo SE) BAM 4.2bn

YTD Dev. of Market Capitalisation -4.7%

Number of SE Transactions p.m. 847


SE Turnover (SASE) BAM 22.9mn

Monthly Index Performance (SASX-10/SASE) -0.8%

Market Capitalisation (Banja Luka SE) BAM 3.7bn


Number of SE Transactions p.m. 2,294

YTD Dev. of SE Transactions 26.0%

SE Turnover (BLSE) BAM 33.0mn

Monthly Index Performance (BIRS/BLSE) 2.3%





EUR/BAM 1.95

Upcoming Holidays 25 October

BOSNIa aNd hERzEGOvINa

Foreign direct investment on the rise againAccording to data of the Central Bank of Bosnia and Herze-govina (CBBH), the inflow of foreign direct investments (FDI) in 2011 amounted to BAM 566.9 million, or 2.2% of GDP, which is more than what was recorded in 2010 (2010 inflow BAM 430.9 million). The gradual increase in inflows in the last two years is encouraging, but they are still significantly lower than in the period before the global crisis, and it is obvious that the recession’s effects on direct foreign investments have not yet been annulled and also that Bosnia and Herzegovina has not been able to attract investments in the volume they amounted to before the recession.

With regard to the structure of foreign direct invest-ment, BAM 389.3 million refer to investment in equity and BAM 185.1 million to other capital forms, while the amount of retained earnings was negative (BAM -8.0 million).

In terms of geographical distribution of investment inflows a significant change was recorded compared to the pre-vious year because most investments were from Russia (BAM 142.6 million), Austria (BAM 106.2 million) and Serbia (BAM 98.3 million). At the same time, a decline in investments from some countries which used to be the major investors in the previous years was recorded in 2011.

The majority of investments were effected in activities related to financial intermediation in a total amount of BAM 162.0 mil-lion, then in the sphere of trade (wholesale and commission trade) in the amount of BAM 96.4 million and in the real estate sector, amounting to BAM 74.3 million. Investments in financial intermediation are largely related to the banking sector, which in 2011 again recorded a high profit, indirectly influencing the level of retained earnings.

The total balance of direct investments for 2011 amounted to BAM 10.6 billion and the largest share still refers to Austria (BAM 2.34 billion) and Serbia (BAM 1.83 billion).

According to statistical principles audits were performed over the amounts of flows and balances of foreign direct invest-ments for the years preceding 2011.


Written and edited by: Amra Telac evic Relationship Manager Global Securities Services, Bosnia and Herzegovina Tel: +387 33 491 816 · [email protected]


12

Market Capitalisation BGN 9.6bn




SE Turnover (Bulgarian Stock Exchange) BGN 95.7mn

Monthly Index Performance (SOFIX) 3.0%





EUR/BGN 1.96




Bulgaria

Market Capitalisation HRK 397.2 bnYTD Dev. of Market Capitalisation 2.307Number of SE Transactions p.m. 96000YTD Dev. of SE Transactions 7.107SE Turnover (Zagreb SE) HRK 5977.5 mnMonthly Index Performance (Crobex/ZSE) 0.017GDP per Capita (2012e in EUR) 5,434GDP Real 2012e (Change against prev. year in %) 3.53-Month Money Market Rate (current in %) 1.93Inflation in 2012e (yearly average in %) 3.3EUR/BGN 1.96Upcoming Holidays none

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SOFIX

BULGaRIa

New legislation for public offerings to protect investor interestAt the end of August 2012 the Council of Ministers filed a draft of the Public Offering of Securities Act in Parliament. The draft is intended to transpose Directive 2010/73/EU of November 24, 2010 amending Directive 2003/71/EU on the prospectus to be published when a public offering of securities is made and also amending Directive 2004/109/EU on the harmonization of transparency requirements in relation to issuers whose securities are admitted to trading on a regulated market.

The introduction of Directive 2010/73/EU aims at protecting investors, improving legal clarity of the rules on prospectuses, while also reducing red tape for businesses when raising capital in the European markets.

Among the most important amendments are:

■■ Introduction of the requirement for approval by the General Meeting of bondholders of a bondholders’ trustee bank in order to avoid its unilateral election by the issuer and to ensure protection of bondholders’ interests.

■■ Amendments in the tender offer regime: changes in the threshold for mandatory tender offers (with the new thresh-old being 1/3 if no person owns directly or through related persons more than 50% of the votes, replacing the current threshold of 50%), changes in the way of determining the tender offer price to ensure a fair price for shareholders, introducing hypotheses for extended tender offer periods and exceptions from the obligation to register a tender offer, changing the squeeze-out period, and definition of related parties.

■■ A public company shall cease to be public if a unani-mous decision for this is taken at the General Meeting of shareholders which is attended by all shareholders of the company.

Source: National Assembly of the Republic of Bulgaria

Impact on investors The Public Offering of Securities Act’s draft amendments aim, among others, at protecting investors to a higher extent and improving the tender offer regime.


13 Bulgaria

Written and edited by: Borislav Hitov Relationship Manager Global Securities Services, BulgariaTel. +359 2 923 2670 · [email protected]

Bulgaria suspends its plans to adopt the euro“The Bulgarian government has announced that it is suspend-ing its plans to adopt the euro, which had been scheduled for sometime after 2015”, a Wall Street Journal article Bul-garia’s Lessons for Euro-Skeptics begins. “The momentum has shifted in our thinking and among the public”, Finance Minister Simeon Djankov told the Journal. “The public rightly wants to know who would we have to bail out when we join? It’s too risky for us and it’s also not certain what the rules are and what are they likely to be in one year or two”, Mr. Djankov added.

Bulgaria established its currency board back in 1997 – origi-nally fixing the Bulgarian lev (BGN) to the German mark – and is now maintaining its fixed exchange rate to the euro. “It has worked”, the Wall Street Journal notes. “Bulgaria’s currency board has also forced its government to control spending, as the central bank is not free to print money to support government borrowing. Bulgaria today would not only meet the Maastricht Treaty’s criteria for joining the euro zone – it would be one of its star members, with public debt less than 20% of GDP”, the Journal added.

Impact on investors Bulgaria has suspended its plans to enter the euro zone choosing to keep its fixed exchange rate to the euro thereby keeping the stability path.

New Double Tax Treaty signed between Bulgaria and Switzerland A new Double Tax Treaty (DTT) between the Republic of Bul-garia and the Swiss Confederation was signed in September. It has been emphasized that the DTT protects the interests of both states and contributes to bilateral cooperation.

The new Treaty rectifies a substantial omission in the existing DTT, where there has been no provision about exchange of information between the two countries. The inclusion of texts about banking secrecy would allow exchange of banking information for tax purposes and would ensure transparency and the possibility to take decisive and effective measures against money laundering, tax fraud and tax avoidance. The new DTT texts are consistent with the OECD Model Tax Convention and with the relevant EU directives transposed by Bulgaria.

The Double Tax Treaty between Bulgaria and Switzerland will enter into force after its ratification by the National Assembly.

Source: Ministry of Finance

Impact on investors The updated DTT between Bulgaria and Switzerland is envisaged to protect the interests of both states and contribute to bilateral cooperation, and also provide for exchange of information between the two countries.


14

Market Capitalisation HRK 189.2bn




SE Turnover (Zagreb SE) HRK 187.1mn

Monthly Index Performance (Crobex/ZSE) -1.1%





EUR/HRK 7.45




Croatia

Market Capitalisation HRK 397.2 bnYTD Dev. of Market Capitalisation 2.307Number of SE Transactions p.m. 96000YTD Dev. of SE Transactions 7.107SE Turnover (Zagreb SE) HRK 5977.5 mnMonthly Index Performance (Crobex/ZSE) 0.017GDP per Capita (2012e in EUR) 11,160GDP Real 2012e (Change against prev. year in %) 2.03-Month Money Market Rate (current in %) 2.5Inflation in 2012e (yearly average in %) 2.8EUR/HRK 7.45Upcoming Holidays none

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CROBEX

CROaTIa

Fitch says Croatia is on the right track “The Croatian government has a credible deficit-reduction plan and is taking a right approach to growth by focusing its efforts on attracting investment and trying to use funds from international institutions and EU funds”, said Michele Napolitano, associate director at Fitch’s emerging-Europe sovereign team in London. Moreover, Napolitano stated that the Croatian government in six months created a budget framework more tailored for a low-growth trajectory, which is what countries with low-growth trajectories need to do. It improved tax compliance and initiate changes in the legal framework that should make it easier to cut public expendi-tures in the future. “They also have a credible deficit-reduction plan”, Napolitano said.

Fitch Ratings underlined that Croatia’s government had made progress in addressing the country’s fiscal challenges and the key challenge facing it would be to further reduce its deficit and implement structural reforms against a backdrop of prolonged low economic growth.

Last week Fitch revised Croatia’s outlook to stable from negative while affirming its long-term foreign currency and local currency Issuer Default Ratings at ‘BBB-’ and ‘BBB’ respectively. According to Fitch, comprehensive labour market reform, which tackles rigidities in both the private and public sector, is important to improve competitiveness, support medium-term GDP growth potential and preserve Croatia’s investment grade rating. The government has car-ried out changes to the labour laws which tackle the flexibility of wages in the public sector.

Nevertheless, in Fitch’s view, the low labour participation rate in the economy is a key structural bottleneck. “Revamping state companies may result in a higher level of unemploy-ment, but hopefully part of the workforce will be absorbed by the private sector when private investment will kick off following EU accession,” Napolitano concluded.

Source: Croatian News Agency (HINA)


Written and edited by: Snjez ana Brunc ic Relationship Manager Global Securities Services, CroatiaTel. +385 1 630 5400 · [email protected]


15

Market Capitalisation CZK 1.1trn


Number of SE Transactions p.m. n.a.

YTD Dev. of SE Transactions n.a.

SE Turnover (Prague SE) CZK 55.7bn

Monthly Index Performance (PX) -1.1%





EUR/CZK 24.92




Czech

Market Capitalisation HRK 397.2 bnYTD Dev. of Market Capitalisation 2.307Number of SE Transactions p.m. 96000YTD Dev. of SE Transactions 7.107SE Turnover (Zagreb SE) HRK 5977.5 mnMonthly Index Performance (Crobex/ZSE) 0.017GDP per Capita (2012e in EUR) 15,901GDP Real 2012e (Change against prev. year in %) 3.33-Month Money Market Rate (current in %) 0.59Inflation in 2012e (yearly average in %) 2.4EUR/CZK 24.92Upcoming Holidays none

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PX-50

CzECh REpUBLIC

Recalculation of PX index bases

PX index base valid as of September 24, 2012:The PSE has announced that in compliance with the Prin-ciples of Updating the PX Index Base, the Exchange day of 31 August, 2012 became the effective date for establish-ing the PX index base valid as of 24 September, 2012. The requirements of the �Principles� regarding base issues of the PX Index were met by 14 issues traded in the SPAD regime. The updated PX index base will compile 14 base issues.

The number of securities applied in the index calculation is being reduced in case of an issue of �EZ and ERSTE GROUP BANK because of the overrun of the maximum limit of shares in the market capitalization and in case of an issue of KITD because of not reaching the trade value of 10% on the Prague Stock Exchange in comparison to the trade value on the foreign market.The updated base composition can be found on PSE’s webpage

As of September 24, 2012, PSE will start to use a new cal-culation formula that takes into account the free float of listed issues. The index will be calculated in real-time during the trading hours of the Prague Stock Exchange. The opening value of the PX index is equal to the value established at the beginning of trading on the basis of the first price change of an index constituent on the Prague Stock Exchange. The closing PX index value is equal to the value established on the basis of the last price change of an index stock on the Prague Stock Exchange.

A new value of the PX index is calculated with each single price change of an index constituent. Criteria for inclusion of issues into the PX composition remained unchanged. The new rules can be found on PSE’s webpage.


16 Czech Republic

PX-GLOB Index Base Valid as of September 24, 2012:PSE has announced that in compliance with the Principles of Updating the PX-GLOB Index Base, August 31, 2012 became the effective date. The updated base will be in effect as of September 24, 2012. In case of �EZ, the number of securities applied in the index calculation is being reduced.

There are some changes, mainly regarding the harmonization of the date when the new composition enters into force with the date used for PX Index. The updated composition of the PX-GLOB index becomes effective on the first trading day after the third Friday in March, June, September and Decem-ber. The new index value is calculated on an end-of-day basis at the end of the trading session using the closing prices of issues included in the composition. Criteria for inclusion of issues into the PX-GLOB composition remains unchanged.


Economic activity was below CNB forecast in Q2According to the Czech Statistical Office CZSO’s estimate, GDP adjusted for price, seasonal and calendar effects declined by 1% year on year in 2012 Q2. In quarter-on-quarter terms, it decreased by 0.2%. Compared to the cur-rent CNB forecast the reported growth in economic activity in 2012 Q2 is 0.6 percentage points lower in year-on-year terms and 0.8 percentage points lower in quarter-on-quarter terms. This difference in the deviation from the CNB forecast is due to a revision of the GDP estimate for 2012 Q1, which the CZSO also published.

The expenditure structure of economic activity in 2012 Q2 also recorded deviations from the CNB forecast. The decline in household consumption was more pronounced than expected by the CNB. By contrast, the year-on-year stagnation of fixed investment defied CNB’s expectations that this demand component would record a significant year-on-year decline. However, this deviation was partly offset by changes in inventories, which decreased considerably rather than recording the expected year-on-year stagnation.

Owing to the above developments, total gross capital for-mation fell somewhat less than expected by the CNB. The year-on-year decline in government consumption, reflecting continuing fiscal consolidation, roughly fulfilled CNB’s expec-tations. The year-on-year rates of growth of real exports and imports of goods and services lagged somewhat behind CNB’s expectations, amid a slightly smaller-than-expected year-on-year improvement in net exports.

Written and edited by: Tomas Vacha Relationship Manager Global Securities Services, Czech RepublicTel. +420 955 960 777 · [email protected]

The published data represent a downside risk to the cur-rent CNB forecast in the area of domestic economic activity. According to the forecast, a marked slowdown in external demand and generally subdued domestic demand amid con-tinuing fiscal consolidation will lead to a decline of almost 1% in the Czech economy this year. Net exports will be the only component to make a positive contribution to economic growth. Next year, GDP growth will edge up as external demand gradually recovers. Growth will be fostered by all expenditure components except government consumption.


Inflation comes in slightly below CNB forecast in AugustThe price level increased by 3.3% year on year in August 2012. Annual headline inflation thus rose slightly compared to July. Monetary-policy relevant inflation, i.e. inflation adjusted for the first-round effects of changes to indirect taxes, also increased somewhat in August, reaching 2%, which means that it was exactly at the level of the CNB’s target.

Annual headline inflation was 0.1 percentage point lower in August than the CNB’s current forecast. The downward deviation from the forecast was due in roughly equal meas-ure to lower-than-expected annual growth in food prices and lower adjusted inflation excluding fuels, which remains negative. The downward deviation in the food price forecast decreased slightly compared to the previous month, while the difference for adjusted inflation excluding fuels increased. Fuel prices grew much faster in August than the CNB had expected, thereby reducing the deviation of inflation from the forecast. Administered prices and the first-round effects of changes to indirect taxes were in line with the forecast.

The published data continue to bear out the message of the CNB’s current forecast regarding the anti-inflationary effect of the domestic economy. This year’s elevated inflation is due to a combination of several one-off factors, in particular the VAT change, growth in food prices and administered prices and the gradual pass-through of the earlier exchange rate deprecia-tion to consumer prices. According to the forecast, headline inflation should be slightly above 3% for the rest of this year as a result of the VAT increase. Headline inflation is expected to fall to the CNB’s target in late 2012/early 2013. Monetary-policy relevant inflation will be noticeably lower than headline inflation throughout this year owing to the VAT change and is expected to decline below the target at the end of this year.

Source: CNB



17

Market Capitalisation HUF 16,127.4bn




SE Turnover (Budapest SE) HUF 276,437.3mn

Monthly Index Performance (BUX) 1.4%





EUR/HUF 283.62

Upcoming Holidays 22, 23 October



Hungary

Market Capitalisation HRK 397.2 bnYTD Dev. of Market Capitalisation 2.307Number of SE Transactions p.m. 96000YTD Dev. of SE Transactions 7.107SE Turnover (Zagreb SE) HRK 5977.5 mnMonthly Index Performance (Crobex/ZSE) 0.017GDP per Capita (2012e in EUR) 11,140GDP Real 2012e (Change against prev. year in %) 3.43-Month Money Market Rate (current in %) 5.21Inflation in 2012e (yearly average in %) 3.4EUR/HUF 283.62Upcoming Holidays none

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9/25/2012 3:59 PM

BUX

hUNGaRy

National Bank of Hungary’s review on the IG2’s operation The National Bank of Hungary (NBH) issued an announce-ment on the newly launched intraday clearing system‘s (InterGiro2, IG2) first two months of operation. The IG2 was introduced on July 1, 2012 with the main purpose to enable Hungarian banks to effect transfer orders and make funds available for the beneficiary within 4 hours of receiving the order by the remitting bank. Thus Hungarian banks are now able to offer intraday, batch-based HUF clearing for small value, domestic commercial payments cleared through the IG2, operating parallel to the Real Time Gross Settlement system (VIBER) mainly used for high value transactions.

In mid-September the NBH issued a report on its review on the IG2 system’s performance in its first two months. According to the NBH the more than 24 million domestic forint transfers initiated electronically in Hungary each day in the last two months settled smoothly within four hours instead of the overnight basis applied before. As another evidence of the flawless operation the turnover of the months July and August combined add up to HUF 9000 billion (approx. EUR 31 billion), which covers more than 84% of all simple HUF transfers.

There has been no coverage issue reported during these months, that is, no payments failed within the 4-hour period for lack of coverage, which indicated that all participants were technically, operationally and from a liquidity-management point of view well-prepared for the switch. No operational issues have been raised by the operator Giro Zrt. either.

All in all, so far, the introduction of the IG2 intraday clearing has proved to be a success story and continues to operate with unchanged efficiency.

Impact on investors Based on the NBH’s review of the first two months of the IG2 system’s operation, both the introduction and the operation of the intraday small value, domestic payments clearing have been smooth and effective, successfully accelerating the payment cycle of these transfers to 4 hours instead of the previous overnight clearing.


18 Hungary

Hungarian Government expects foreign companies to reinvest in HungaryThe Hungarian Government has launched a project to build up strategic cooperations with foreign-owned multinational companies present in Hungary with the intention to make them reinvest a more considerable part of their profits. 40 companies are in the scope of the Government’s plan and the first agreement has already been concluded with Coca-Cola. Talks are ongoing with names such as Knorr-Bremse, ThyssenKrupp, Bombardier, Nokia Siemens or Opel.

Also they expect from the strategic agreements to motivate multinationals to involve more Hungarian suppliers in their activities and effect more trainings for their employees.

Source: MTI – Econews


Foreign government bond holdings reach all-time high in August 2012The Government Debt Management Agency (GDMA) reported that foreign investors bought Hungarian forint-denominated government securities worth HUF 180.8 billion (EUR 650 million) in August 2012, which increased the stock invested in these instruments to HUF 4,724 billion (approx. EUR 16.9 billion) by the end of the current month. In addition, foreigners’ holdings reached a new all-time high at a HUF 4,767 billion level on August 29. The stock held by foreign investors rose altogether by 24.4% or HUF 927.2 billion (EUR 3.2 billion) in the first eight months of 2012.

The GDMA added that retail investors also increased their holdings of HUF government securities designed for the gen-eral public, for August this meant an added HUF 53.2 billion (EUR 1.8 billion).

The GDMA began publishing its monthly reports after the Government decided in April on a set of measures to boost the purchase of government securities by private individuals and approved HUF 1.96 billion (EUR 675 million) additional funding to the State Treasury for this purpose. The above numbers show a promising trend, in line with the expecta-tions.

Source: MTI – Econews

Impact on investors According to the GDMA’s latest monthly report, HUF-denominated government securities have grown more popular since the beginning of the year, mainly reflected by the increase in foreign investors’ holdings, which reached an all-time high level by the end of August 2012.

Written and edited by: Ágnes Temesvári Relationship Manager Global Securities Services, HungaryTel. +36 1 301 1838 · [email protected]

mailto:[email protected]


19

Market Capitalisation KZT 11,408.5bn




SE Turnover (KASE) KZT 6.8bn

Monthly Index Performance (KASE) 1,008.3





EUR/KZT 194.25


Source: Bloomberg


Kazakhstan

Market Capitalisation HRK 397.2 bnYTD Dev. of Market Capitalisation 2.307Number of SE Transactions p.m. 96000YTD Dev. of SE Transactions 7.107SE Turnover (Zagreb SE) HRK 5977.5 mnMonthly Index Performance (Crobex/ZSE) 0.017GDP per Capita (2012e in EUR) 7,608GDP Real 2012e (Change against prev. year in %) 5.53-Month Money Market Rate (current in %) 2.25Inflation in 2012e (yearly average in %) 7.1EUR/KZT 194.25Upcoming Holidays none

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9/25/2012 3:59 PM

KASE

KazaKhSTaN

Volume of KASE trading decreased by 10.6% The volume of KASE trading decreased by 10.6% in the period January to August 2012 totalling KZT 17.6 trillion (USD 118.4 billion).

With regard to the results of trades of September 14, 2012 the index of KASE grew by 2.78% and reached 1008.34 points. The volume of transactions with papers included in the “basket” of KASE’s index made up 56.3 million Tenge.

In August 2012 the volume of trading on Kazakhstan Stock Exchange (KASE) in all market sectors made up KZT 6.82 bil-lion (equivalent of USD 45.63 million) decreasing by 10.9% (by 12.4% expressed in USD) compared to the same period last year.

The volume of transactions on Kazakhstan Stock Exchange’s (KASE) repo market made up KZT 882.09 billion (equiva-lent of USD 5906.46 million) decreasing by 10.63% (10.3% expressed in USD) compared to the same period last year.

At the same time the volume of corporate bonds traded on Kazakhstan Stock Exchange (KASE) reached KZT 6 bil-lion (equivalent of USD 40.19 million), which is a decrease by 7.2% (8.8% expressed in USD) compared to the same period last year.

The value of share trading on Kazakhstan Stock Exchange (KASE) reached KZT 47.48 billion (equivalent of USD 319.85 million) and decreased against the same period of 2011 by 17.7% (by 16.1% expressed in dollars).

Source: www.kase.kz


Written and edited by: Zhanat Aktaeva Head of trade settlement unit Global securities servicesTel. +7(727)2583-015 · [email protected]


20

Market Capitalisation KGS 10,380mn

YTD Dev. of Market Capitalisation n.a.


YTD Dev. of SE Transactions -86%

SE Turnover (KSE) KGS 63.0mn

Monthly Index Performance (KSE) 297.9

GDP per Capita (2012 in EUR) 744.3

GDP Real 2012 (Change against prev. year in %) n.a.



EUR/KGS 60.44



KyRGyzSTaN

Business activity in the Kyrgyzstan marketIn August 2012 trade volumes in Kyrgyzstan increased by 71.06% in comparison with the same period of the previous year with 176 trades provided, which made up KGS 117.76 million (USD 2.5 million).

Source: www.kse.kg


Written and edited by: Zhanat Aktaeva Head of trade settlement unit Global securities servicesTel. +7(727)2583-015 · [email protected]


21

Market Capitalisation PLN 462.4bn




SE Turnover (WSE) PLN 19.4bn

Monthly Index Performance (WIG20) -3.3%

Monthly Index Performance (WIG) 3.5%





EUR/PLN 4.13

Upcoming Holidays 1 November



Poland

Market Capitalisation HRK 397.2 bnYTD Dev. of Market Capitalisation 2.307Number of SE Transactions p.m. 96000YTD Dev. of SE Transactions 7.107SE Turnover (Zagreb SE) HRK 5977.5 mnMonthly Index Performance (Crobex/ZSE) 0.017GDP per Capita (2012e in EUR) 11,027GDP Real 2012e (Change against prev. year in %) 3.93-Month Money Market Rate (current in %) 4.70Inflation in 2012e (yearly average in %) 3.7EUR/PLN 4.13Upcoming Holidays none

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9/25/2012 3:59 PM

WIG-20

pOLaNd

New proposals for tax withholding processThe Ministry of Finance has recently drafted amendments to the Act on Corporate Income Tax that – if implemented – would significantly change the tax withholding procedure, shifting tax-paying obligations from issuers to the entities running securities accounts.

Currently taxes are calculated and withheld by the issuers, who pay out dividend income and it is their responsibility to examine the tax status of their shareholders and to apply the correct tax rate in accordance both with local tax laws and international agreements. Custodians are only responsible for withholding taxes on interest coming from Treasury debt securities.

While this distinction seems to be clear and the majority of market participants got used to the process in connection with not very clear tax regulations it may create confusion for foreign investors. The point is that different issuers adapt different documentation requirements when verifying the tax status of the client and while for a vast majority of entities a certificate of tax residency is sufficient to apply the reduced rate in accordance with the relevant Double Taxation Treaty, some of them want to be absolutely on the safe side in case of any audit from the tax authorities and decide to require additional documentation to be provided (e.g. declarations concerning the lack of permanent establishment in Poland or additional confirmation of beneficial ownership).

Furthermore one may face different opinions with respect to the validity of a tax certificate as well as a more or less flex-ible approach to slight discrepancies in the documents. As a result it has become quite common in the market that a client may receive one dividend payment taxed at the reduced rate and the other one taxed at the full rate even on the same day.

Bank Pekao along with the local custodian community addressed this issue to the Ministry of Finance arguing that such a situation clearly does not help to attract investors to the market and that withholding tax procedures need to be unified. As a result of these discussions the Ministry has decided to simply shift tax-paying obligations to entities run-ning the accounts viewing it as the most effective way of unifying the approach.


22 Poland

In accordance with the recently disclosed draft of the changes to the Corporate Income Tax Law all dividends will thus be paid gross to banks and brokers and these institutions shall calculate the relevant tax amounts crediting their clients with net amounts and withholding taxes to the tax office.

It should be noted that the draft does not bring any changes to interest coming from commercial debt securities, which seems to be a somewhat inconsistent approach and has been already raised by the Custodian Banks Council, which opts for unifying all dividends and interest income payments irrespective of whether coming from Treasury or commer-cial instruments. This proposal aims at specifying that taxes related to all income payments (all dividends, all interest and all redemptions) shall be withheld by local banks and brokers maintaining securities accounts.

Written and edited by: Krzysztof Pekrul Relationship Manager Global Securities Services, PolandTel. +48 22 5245864 · [email protected]

The second issue that is currently being discussed by the banking and brokerage community is related to the fact that the Ministry proposes to amend the WHT procedure as of January 1, 2013, which appears to be a very short vacatio legis. While the banks in general welcome the change as it is in line with interests of their clients, some of them may find it difficult to amend their procedures and systems in order to be able to accommodate this additional tax risk effectively in such a short time. Taking into consideration the above, as well as due to the fact that these changes still require parlia-mentary approval, it is very difficult to foresee at the moment whether the proposed implementation date will not be shifted.

Impact on investors The proposed changes to the tax withholding process will for sure be in favour of foreign clients’ interest as they will allow for a much more consistent approach to tax docu-mentation and minimise the risk that their income pay-ments will be overtaxed due to missing additional docu-mentation requirements. No exact implementation date can however be given yet.



23

Market Capitalisation RON 82.0bn




SE Turnover (Bucharest SE) RON 443mn

Monthly Index Performance (BET/BSE) -2,6%





EUR/RON 4.51




Romania

Market Capitalisation HRK 397.2 bnYTD Dev. of Market Capitalisation 2.307Number of SE Transactions p.m. 96000YTD Dev. of SE Transactions 7.107SE Turnover (Zagreb SE) HRK 5977.5 mnMonthly Index Performance (Crobex/ZSE) 0.017GDP per Capita (2012e in EUR) 6,624GDP Real 2012e (Change against prev. year in %) 3.43-Month Money Market Rate (current in %) 4.93Inflation in 2012e (yearly average in %) 3.7EUR/RON 4.51Upcoming Holidays none

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BET

ROmaNIa

Victor Cionga confirmed general manager of BVB Bucharest Stock Exchange (BVB) announced that Victor Cionga has been appointed general manager of the BVB market operator. On this occasion Mr. Cionga declared, ”Under the current circumstances of tough competition on the regional level the chance for the local capital market might be going through a process of rapid modernisation in order to get the attention of new foreign and local investors and brokers (including some remote brokers). Efficient solutions to increasing competitiveness and its capacity to fulfil its major role - that of a stock exchange on a market economy - can come out from the inside of the market and only by following a more efficient cooperation between its actors (NSC, BVB, brokers, issuers, their major shareholders and investors).“


BVB Rulebook covering public offerings becomes more flexible Bucharest Stock Exchange published that the National Securities Commission has approved the updates of Book I, Rulebook-Market operator stipulations on public offerings.

The amendments to the provisions of the BVB Rulebook align the stock market regulatory framework to international prac-tice allowing to adapt offers with diverse system mechanisms for their implementation.

The amendments to the BVB Rulebook will be applicable as of September 12, 2012.



24 Romania

Secondary offering prospectus for Transgaz listing will soon be availableA secondary sales prospectus for a further 15% of state-owned shares in the gas carrier Transgaz (TGN) will be completed in a few days, says the head of the Office of State Ownership and Pri-vatization in Industry (OPSPI) without providing a specific date. The State company’s SPO was postponed several times by the Government. The new deadline for implementation of the operation was set for September as a precondition for approval of the sixth review of the agreement with the IMF.

Source: Mediafax


Written and edited by: Viviana Traistaru Relationship Manager Global Securities Services, RomaniaTel. +40 21 2002673 · [email protected]

Nuclearelectrica extends deadline for submission of tenders by listing intermediaries Nuclearelectrica extended by three weeks, until September 28, the deadline for submission of tenders. In the tender selection an intermediary will assist in the company’s IPO, who will list on the stock exchange since brokers have not decided whether to participate in the operation. In addition, the Office of State Ownership and Privatization in Industry reduced from 8,000 to 1,000 Euros the price specifications for mediating the listing of the state company.




25

Market Capitalisation RUB 18.8trn


Number of SE Transactions p.m. (MICEX) 7,963,620


SE Turnover (MICEX) RUB 15.0trn

Monthly Index Performance (MICEX) 3.9%





EUR/RUB 40.12




Russia

Market Capitalisation HRK 397.2 bnYTD Dev. of Market Capitalisation 2.307Number of SE Transactions p.m. 96000YTD Dev. of SE Transactions 7.107SE Turnover (Zagreb SE) HRK 5977.5 mnMonthly Index Performance (Crobex/ZSE) 0.017GDP per Capita (2012e in EUR) 9,520GDP Real 2012e (Change against prev. year in %) 4.13-Month Money Market Rate (current in %) 6.64Inflation in 2012e (yearly average in %) 7.5EUR/RUB 40.12Upcoming Holidays none

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9/25/2012 3:59 PM

RTS

RUSSIa

MICEX-RTS announces new trading platform for FORTS and Standard marketsThe Moscow Exchange MICEX-RTS announced that the launch of a new trading platform “Spectra” for FORTS and Standard markets is planned for the end of 2012. The plat-form should allow to significantly speed up the trading pro-cess (up to 15 times) and to contribute to the stability of the performance.

According to a stock exchange representative the new trad-ing platform is designed for a smooth transition to the forth-coming T+3 settlement.

Impact on investors Improvement of the trading process on FORTS and Stand-ard markets.

MICEX-RTS to expand list of currency market participantsThe Committee of the Currency market of the Moscow Exchange MICEX-RTS recommended to the Board of Direc-tors of the Moscow Exchange MICEX-RTS to accept the amendments to the Rules of access to the Currency market. The committee suggests providing non-banking professional participants of the financial markets with access to the Cur-rency market.

The criteria for new participants should be capital require-ments (RUB 180 million or appr. EUR 4.5 million) and respec-tive reporting obligations.

Impact on investors The new group of currency market participants should contribute to an increase of liquidity on the market, profes-sional market participants in their turn should benefit from the reduction of expenses.


26 Russia


Non-government pension funds (NPF) to create reserves for cumulative part of pension savingsThe Ministry of Finance of Russia is planning to oblige non-government pension funds (NPF) to create reserves for liabili-ties connected to the cumulative part of pension savings (to be included into the obligatory pension system).

Currently reserves are formed by NPFs for voluntary pension insurance only.

Impact on investors The reserve requirements of the NPF should contribute to the general stability of the pension system.

Central Bank of Russia to toughen capital requirements for banksThe Central Bank of Russia (CBR) is planning to set additional requirements for capital adequacy of the banks as part of the requirements of “Basel III” starting from October 1, 2013.

The base coefficient for calculation will be 5.6% and the additional coefficient for risky items will be 7.5%. At the same time, the minimal value for the H1 indicator (which stands for capital adequacy) will remain at 10%.

Parallel accounting is supposed to be required by CBR start-ing from April 1, 2013.

Impact on investors New rules for capital adequacy calculation should increase the stability of the Russian banking system.

Derivatives on financial instruments of foreign issuers to be launched The Federal Financial Market Service (FFMS) developed a draft law aimed at defining the procedure for launching deriva-tives on the securities of foreign issuers.

According to the draft law derivatives on foreign securities could be launched if the issuer complies with the following requirements:

Residence in a country of the OECD (Organization for Eco-nomic Co-operation and Development), FATF (Financial Action Task Force) or MONEYVAL (Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism);

The securities should be listed on a foreign stock exchange and included in the FFMS list;

The average monthly volume of transactions with the security for the last three months on all stock exchanges should not be less than RUB 250 million (appr. EUR 6.1 million), the capitalization should not be less than RUB 25 billion (appr. EUR 618 million);

Derivatives on bonds of foreign issuers could be launched if the issuer has a long-term credit rating not less than BBB- (Fitch Ratings and Standard & Poor’s) and Baa3 (Moody’s).

Impact on investors Potential appearance of new instruments on the Russian securities market.


27

Market Capitalisation RSD 740.2bn




SE Turnover (Belgrade SE) RSD 3.6bn

Monthly Index Performance (Belex 15) 0.0%





EUR/RSD 115.00


Source: Bloomberg


Serbia

Market Capitalisation HRK 397.2 bnYTD Dev. of Market Capitalisation 2.307Number of SE Transactions p.m. 96000YTD Dev. of SE Transactions 7.107SE Turnover (Zagreb SE) HRK 5977.5 mnMonthly Index Performance (Crobex/ZSE) 0.017GDP per Capita (2012e in EUR) 4,546GDP Real 2012e (Change against prev. year in %) 3.53-Month Money Market Rate (current in %) 12.15Inflation in 2012e (yearly average in %) 6.7EUR/RSD 115.00Upcoming Holidays none

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BELEX15

SERBIa

General Meeting of European Association of Central Counterparty Clearing Houses (EACH)The General Meeting of the European Association of Central Counterparty Clearing Houses (EACH) took place in Belgrade on September 14, 2012. The host of the General Meeting was the Serbian Central Securities Depository and Clearing house (CSD).

European central counterparty clearing houses (CCPs) formed EACH in 1991. Its participants are senior executives specialising in clearing and risk management from European CCPs, both EU and non-EU. The Serbian CSD has been a member of EACH since September 2006.


Written and edited by: Aleksandra Ilijevski Senior Relationship Manager Global Securities Services, SerbiaTel. +381 11 3028 612 · [email protected]


28

Market Capitalisation EUR 35.0bn


Number of SE Transactions p.m. 1,062.0


SE Turnover (Bratislava SE) EUR 0.4bn

Monthly Index Performance (SAX/BSSE) -0.8%








Slovakia

Market Capitalisation HRK 397.2 bnYTD Dev. of Market Capitalisation 2.307Number of SE Transactions p.m. 96000YTD Dev. of SE Transactions 7.107SE Turnover (Zagreb SE) HRK 5977.5 mnMonthly Index Performance (Crobex/ZSE) 0.017GDP per Capita (2012e in EUR) 14,073GDP Real 2012e (Change against prev. year in %) 4.53-Month Money Market Rate (current in %) -Inflation in 2012e (yearly average in %) 3.7EUR/SKK -Upcoming Holidays none

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SAX

SLOvaK REpUBLIC

Bratislava Stock Exchange trading review AugustIn August 2012, the electronic trading system of the Brati-slava Stock Exchange (BSSE) was open for members on 22 business days. A total of 1,062 transactions were con-cluded in this period, in which 265,966,076 units of securi-ties were traded and the achieved financial volume totalled EUR 358.82 million. In comparison with the previous month, this represents a decrease in the amount of traded securities (-40.37%) and a decrease in the achieved financial volume (-28.27%), with a 4.42% increase in the number of concluded transactions. The number of concluded transactions rose on a year-on-year basis by 30.31%, and the amount of traded securities increased by 0.63%.

This, however, did not affect the achieved financial volume which fell on the same basis by over 76.8%. Similar to previ-ous periods, August 2012 saw negotiated deals dominate over electronic order book transactions (i.e. price-setting deals), with the former accounting for 96.75% of the total trading volume. A total of 158 negotiated deals (in a volume of EUR 347.15 million) were concluded, as opposed to 904 electronic order book transactions (in a financial volume of 11.67 million).

Investors concentrated mainly on debt securities in August 2012, as bond transactions generated over 91.9% of the achieved volume. A total of 240 bond transactions were con-cluded in the period under review, in which 264,189,199 units of securities were traded and the financial volume exceeded EUR 330 million. In comparison with July 2012, this is a decrease in the amount of traded securities (-40.72%) and in the achieved financial volume (-33.04%), with a 6.67% increase in the number of concluded transactions.

On a year-on-year basis, they recorded an increase in the amount of traded securities (+2.90%). However, the number of concluded transactions as well as the achieved financial volume decreased on the same basis (-5.14% and -76.77%, respectively). In the month under review, negotiated deals in bonds (in a financial volume of EUR 326.7 million) again domi-nated over electronic order book transactions (EUR 3.31 mil-lion).


29 Slovak Republic

Equity securities of local companies were bought and sold in 822 transactions, in which 1,776,877 share units changed hands in a financial volume of EUR 28.81 million. All three indi-cators increased against July 2012: the number of concluded transactions by 3.79%, the amount of traded securities by 336.33%, and the achieved financial volume by 289.86%. In August 2012, negotiated deals in shares (in a financial volume of EUR 20.45 million) prevailed over electronic order book transactions (EUR 8.36 million). Transactions in share issues of Tatry mountain resorts and Best Hotel Properties (both negotiated deals and electronic order book transac-tions) generated nearly 99.33% of the total volume of share transactions.

Transactions concluded by non-residents in August 2012 accounted for 75.36% of the total trading volume, out of which the buy side represents 63.63% and the sell side 87.08%.

The SAX index ended the month of August 2012 at 192.01 points, representing a 0.79% decrease on a month-on-previous-month basis and a 14.95% decrease year on year.


Successful government bond auctionIn their latest (September 10, 2012) auction the Agency for Debt and Liquidity Management (ARDAL) sold securities worth EUR 63.3 million. From the total volume of bonds sold EUR 26 million have been purchased by foreign investors. The accepted volume was slightly higher than the originally estimated demand of ARDAL.

The total demand of investors was two times higher than ARDAL finally accepted, reaching EUR 128.7 million, of which EUR 40.5 million were from foreign investors. The state finally accepted an average price of 3.8454% p.a.

Referring to ARDAL’s statement the Slovak Republic already secured enough resources to refinance its debt needs this year.

Impact on investors New investment opportunity.

Written and edited by: Rastislav Rajninec Sales&Relationship Manager Global Securities Services, Slovak RepublicTel. +421 2 4950 2424 · [email protected]


30

Market Capitalisation EUR 16,830mn




SE Turnover (Ljubljana SE) EUR 22.2mn

Monthly Index Performance (SBI TOP) -1.8%





Upcoming Holidays31 October, 1 November



Slovenia

Market Capitalisation HRK 397.2 bnYTD Dev. of Market Capitalisation 2.307Number of SE Transactions p.m. 96000YTD Dev. of SE Transactions 7.107SE Turnover (Zagreb SE) HRK 5977.5 mnMonthly Index Performance (Crobex/ZSE) 0.017GDP per Capita (2012e in EUR) 19,532GDP Real 2012e (Change against prev. year in %) 2.83-Month Money Market Rate (current in %) 0.14Inflation in 2012e (yearly average in %) 2.9EUR/RSD -Upcoming Holidays none

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SLOvENIa

Slovenian Government will not tax financial transactions yetThe Slovenian government has decided not to implement the tax on financial transactions on its own but in coordination with other EU states. The government is going to strengthen cooperation with other EU countries in this matter. The guide-lines of the new law in the EU are predicted for 2013.

Impact on investors No additional costs on financial transactions to occur for now.

Possible integration of Ljubljana and Vienna Stock Exchanges Andrej Šketa, CEO of the Ljubljana Stock Exchange, has stated that dual listing of primary market stocks on Vienna’s Stock Exchange weren’t giving the desired results. As a con-sequence he confirmed that the Ljubljana Stock Exchange has started negotiations regarding an integration of both mar-kets. More details on the integration of both stock exchanges will be available within the next few months.

Impact on investors Possible improvement of liquidity of Slovene securities.

Dun & Bradstreet downgrades Slovenia’s ratingRating agency Dun & Bradstreet has downgraded Slovenia’s country risk rating to DB3a from DB2d as a result of a set of interrelated liquidity problems. The economy is saddled with debts resulting from the bursting of the pre-crisis investment bubble, mainly in real estate, resulting in a financially stricken banking system and economic slowdown, the agency said.



31 Slovenia

Amended Double Taxation Agreement between Slovenia and SwitzerlandSlovenia and Switzerland amended the bilateral convention on the avoidance of double taxation, a move that creates a better legal basis for efficient cooperation of tax authorities in preventing, detecting and sanctioning tax violations.

The amendments involve articles dealing with residents, taxation of operating profit, dividends, interest, license fees, capital gains, as well as exchange of information.

A press release from the Swiss government expands on this by saying that the agreement stipulates that the countries may not charge withholding tax of more than 15% on gross dividends.

If, however, a company (a Swiss company in a Slovenian company or vice versa) holds at least 25% of the share capital in the dividend paying company, withholding tax is not levied. The same applies to dividends on pension funds.

Written and edited by: Urban Koderman Settlement Manager Global Securities Services, SloveniaTel. +386 1 5876 671 · [email protected]

Moreover, the double taxation convention will be amended with a provision from the bilateral convention on the taxa-tion of interest stipulating that interest and licence fees paid between associated companies (ownership stake of at least 25% for over two years) will no longer be subject to with-holding tax.

To take effect the amended convention needs to be ratified by both parliaments.

Impact on investors Lower tax rates upon DTT for investors in future.



32

Market Capitalisation (PFTS) UAH 143.9bn

YTD Dev. of Market Capitalisation (PFTS) -29.7%

Number of SE Transactions p.m. (PFTS) 53,077

YTD Dev. of SE Transactions (PFTS) -54.5%

SE Turnover (PFTS) UAH 0.7bn

Monthly Index Performance (PFTS) -6.3%





EUR/UAH 10.55




Ukraine

Market Capitalisation HRK 397.2 bnYTD Dev. of Market Capitalisation 2.307Number of SE Transactions p.m. 96000YTD Dev. of SE Transactions 7.107SE Turnover (Zagreb SE) HRK 5977.5 mnMonthly Index Performance (Crobex/ZSE) 0.017GDP per Capita (2012e in EUR) 3,285GDP Real 2012e (Change against prev. year in %) 5.03-Month Money Market Rate (current in %) 21.35Inflation in 2012e (yearly average in %) 10.4EUR/UAH 10.55Upcoming Holidays none

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NSSMC to tighten control over rating agenciesThe market regulator National Securities and Stock Market Commission (NSSMC) initiated measures on tightening con-trol over rating agencies in Ukraine.

As long as issuers pay fees to rating agencies for their rating, it is entirely possible that they may influence the ratings. Gen-erally, a rating activity is being performed because of the compulsory character of its execution, whereas investors rarely turn for help to rating agencies by their own initiative.

The regulator’s initiative foresees not only to tighten control over rating agencies but also the possibility for them to dis-pute the rating score given by another agency, sending a letter with its argumentation to the market regulator.

The regulator is to oblige the agency’s staff to have the rele-vant expertise, coordinate the methods of defining and updat-ing credit ratings and to initiate the obligation to disclose and update the ratings.

In order to enhance the monitoring NSSMC proposes to create an association of rating agencies, which will set stand-ards and control the quality of the definition of the ranking scores.

The regulator itself is to analyze the agencies’ pricing and to control conflicts of interest between sellers and analysts.

Currently there are six local credit rating agencies author-ized by the market regulator. In addition the ratings of three international rating agencies are recognized.

Source: Interfax

Impact on investors Enhancement of monitoring of rating agencies’ activities

Written and edited by: Katherine Yevtushenko Relationship Manager Global Securities Services, UkraineTel. +38 044 590 1210 · [email protected]


33

azERBaIJaN

Switzerland to cooperate with Azerbaijan in securities market developmentAzerbaijan and Switzerland signed an agreement on technical cooperation by the Swiss government in the modernization of the securities market of Azerbaijan. Technical help will be provided for two parts of the project: update and strengthen-ing of the legal and regulative aspects and development of new financial instruments on the market.

This project is also supported by the International Bank of Reconstruction and Development (World Bank Group).

Impact on investors The project of international cooperation should contribute to the development of Azerbaijan’s securities market.



34

yOUR CONTaCTS

Central TeamTomasz Grajewski Tel. +48 22 524 5867 [email protected]

Sven Trahan Tel. +43 50505 57311 [email protected]

Michael Slavov Tel: +43 50505 58511 [email protected]

Evelyne Wininger Tel. +43 50505 42788 [email protected]

Philipp Aschl Tel. +43 50505 58508 [email protected]

Pawel Muszalski Tel. +43 50505 57315 [email protected]

Markus Winkler Tel. +43 50505 58547 [email protected]

AustriaUniCredit Bank Austria AG Julius Tandler-Platz 3 A-1090 Vienna Austria

Günter Schnaitt Tel. +43 50505 58501 [email protected]

Thomas Rosmanitz Tel. +43 50505 58515 [email protected]

Tina Fischer Tel. +43 50505 58512 [email protected]

Stephan Hans Tel. +43 50505 58513 [email protected]

Bosnia and HerzegovinaUniCredit Bank d.d. Zelenih beretki 24 71 000 Sarajevo Bosnia and Herzegovina

Lejla Sabljica Tel. +387 33 491 777 [email protected]

Amra Tela c evic Tel. +387 33 491 816 [email protected]

Belma Kovac evic Tel. +387 33 491 810 [email protected]

BulgariaUniCredit Bulbank AD 6 Vitosha Boulevard, 2nd floor BG-1000 Sofia Bulgaria

Veselin Stefanov Tel. +359 2 923 2818 [email protected]

Borislav Hitov Tel. +359 2 923 2670 [email protected]

CroatiaZagrebacka Banka d.d. Savska 62 HR-10000 Zagreb Croatia

Valerija Bezak Tel. +385 1 6305 430 [email protected]

Snjez ana Brunc ic Tel. +385 1 6305 400 [email protected]


35 Your Contacts

Czech RepublicUniCredit Bank Czech Republic a.s. Zeletavska 1525/1 CZ-140 92 Prague 4 Czech Republic

Michal Stuchlík Tel. +420 955 960 780 [email protected]

Tomáš Vácha Tel. +420 955 960 777 [email protected]

Zbynek Oborny Tel. +420 955 960 779 [email protected]

Alena Kalasova Tel. +420 955 960 778 [email protected]

HungaryUniCredit Bank Hungary Zrt. Szabadsag ter 5 – 6, 6th floor H-1054 Budapest Hungary

Júlia Romhányi Tel. +36 1 301 1923 [email protected]

Barbara Rubint Tel. +36 1 301 1914 [email protected]

Ágnes Temesvári Tel. +36 1 301 1838 [email protected]

Lívia Mészáros Tel. +36 1 301 1921 [email protected]

KazakhstanJSC ATF Bank Furmanov Street 100 KZ-050000 Almaty Kazakhstan

Vladimir Vassilyev Tel. +7 727 258 3015 (2031) [email protected]

Saida Abdraimova Tel. +7 727 258 3015 (1263) [email protected]

PolandBank Polska Kasa Opieki SA 31 Zwirki i Wigury Street PL-02-091 Warsaw Poland

Tomasz Grajewski Tel. +48 22 524 5867 [email protected]

Mariusz Pie kos Tel. +48 22 524 5852 [email protected]

Kamil Polak Tel. +48 22 524 5863 [email protected]

Marta Boboryk Tel. +48 22 524 58 61 [email protected]

Krzysztof Pekrul Tel. +48 22 524 5864 [email protected]

Marek Cioroch Tel. +48 22 524 5862 [email protected]

RomaniaUniCredit Tiriac Bank S.A. 1F, Expozitiei Blvd. RO-012101, Bucharest 1 Romania

Irina Savastre Tel. +40 21 200 2670 [email protected]

Viviana Traistaru Tel. +40 21 200 2673 [email protected]

Andreea Albu Tel. +40 21 200 2678 [email protected]


36 Your Contacts

RussiaZAO UniCredit Bank 9, Prechistenskaya Emb. RU-119034 Moscow Russian Federation

Alexander Nazarov Tel. +7 495 258 73 49 [email protected]

Ksenia Liskina Tel. +7 495 258 7258 – 3455 [email protected]

Svetlana Vlasova Tel. +7 495 258 7258 – 3453 [email protected]

Evgenia Klimova Tel. +7 495 232 5298 [email protected]

SerbiaUniCredit Bank Serbia JSC Omladinskih Brigada 88 RS-11070 Belgrade Serbia

Jasmina Radic evic Tel. +381 11 3028 611 [email protected]

Aleksandra Ilijevski Tel. +381 11 3028 612 [email protected]

Goran Platiša Tel. +381 11 3028 687 [email protected]

SlovakiaUniCredit Bank Slovakia A.S. Sancova 1/A SK-811 04 Bratislava Slovak Republic

Zuzana Milanová Tel. +421 2 4950 3702 [email protected]

Rastislav Rajninec Tel. +421 2 4950 2424 [email protected]

SloveniaUniCredit Bank Slovenija d.d. Wolfova 1 SI-1000 Ljubljana Slovenia

Vanda Moc nik-Kohek Tel. +386 1 5876 450 [email protected]

Elmedina Garibovic Tel. +386 1 5876 597 [email protected]

Aljoša Benc ina Tel. +386 1 5876 451 [email protected]

UkrainePJSC UniCredit Bank 14a, Yaroslaviv Val UA-01034 Kyiv Ukraine

Bohdana Yefremova Tel. +380 44 230 3341 [email protected]

Katherine Yevtushenko Tel. +380 44 590 1210 [email protected]

Websitesgss.unicreditgroup.eu www.gtb.unicredit.eu www.unicreditgroup.eu www.bankaustria.at

http://www.unicreditgroup.eu


37

dISCLaImERThis publication is presented to you by:Corporate & Investment BankingUniCredit Bank Austria AGJulius Tandler-Platz 3A-1090 Wien

The information in this publication is based on carefully selected sources believed to be reliable. However we do not make any representation as to its accuracy or completeness. Any opinions herein reflect our judgement at the date hereof and are subject to change without notice. Any invest-ments presented in this report may be unsuitable for the investor depend-ing on his or her specific investment objectives and financial position. Any reports provided herein are provided for general information purposes only and cannot substitute the obtaining of independent financial advice. Pri-vate investors should obtain the advice of their banker/broker about any investments concerned prior to making them. Nothing in this publication is intended to create contractual obligations. Corporate & Investment Banking of UniCredit Group consists of UniCredit Bank AG, Munich, UniCredit Bank Austria AG, Vienna, UniCredit S.p.A., Rome and other members of the UniCredit Group. UniCredit Bank AG is regulated by the German Financial Supervisory Authority (BaFin), UniCredit Bank Austria AG is regulated by the Austrian Financial Market Authority (FMA) and UniCredit S.p.A. is regulated by both the Banca d’Italia and the Commissione Nazionale per le Società e la Borsa (CONSOB).

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We and/or any other entity of Corporate & Investment Banking of UniCredit Group may from time to time with respect to securities mentioned in this publication (i) take a long or short position and buy or sell such securities; (ii) act as investment bankers and/or commercial bankers for issuers of such securities; (iii) be represented on the board of any issuers of such securi-ties; (iv) engage in “market making” of such securities; (v) have a consulting relationship with any issuer. Any investments discussed or recommended in any report provided herein may be unsuitable for investors depending on their specific investment objectives and financial position. Any information provided herein is provided for general information purposes only and cannot substitute the obtaining of independent financial advice.

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as of 29 August 2011


38

ImpRINT

Statement pursuant to the Austrian Media Act Publisher and Media Owner

Corporate & Investment Banking Global Transaction Banking UniCredit Bank Austria AG Global Securities Services Julius Tandler-Platz 3 A-1090 Vienna Tel. +43 50505 0

Information requirements pursuant to the Austrian E-Commerce Act

Registered office and postal address Schottengasse 6 – 8 A-1010 Vienna

Swift: BKAUATWW Austrian bank code: 12000

Registered under no. FN 150714p Companies Register at the Commercial Court Vienna

Kind of business Credit institution under section 1 (1) Austrian Banking Act

Supervisory authority Austrian Financial Market Supervisory Authority (Finanzmarktaufsicht), departments banking supervision and securities supervision Otto-Wagner-Platz 5 A-1090 Vienna www.fma.gv.at

Membership Austrian Federal Economic Chamber, bank and insurance division Wiedner Hauptstraße 63 A-1040 Vienna www.wko.at Austrian Bankers’ Association Boersegasse 11 A-1010 Vienna www.voebb.at

Applicable legal regulations Applicable legal regulations are in particular the Austrian Banking Act (“Bankwesengesetz – BWG”, Federal Law Gazette/BGBl. No. 532/1993, with some amendments), the Austrian Securities Supervision Act (“Wertpapieraufsichtsgesetz – WAG”, Federal Law Gazette/BGBl. No. 753/1996, with some amendments) an the Austrian Savings Banks Act (“Sparkassengesetz”, Federal Law Gazette/BGBl. No. 64/1979, with some amendments).

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