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HVB Bank aims to draw Czech clients by administering EU funds

HVB Bank Czech Republic AS, a unit of UniCredit SpA, and insurer Ceska Pojistovna AS, said a joint contract with the Czech government to administer Europe Union funding to companies will help win thousands of new clients. HVB, the No. 4 bank in the country, joined forces with Ceska Pojistovna, the nation's largest insurer, to win the four-year government contract on June 9. The two companies will administer transfers totaling between 15 billion Czech koruna ($676 million) and 30 billion koruna a year to at least 10,000 companies that qualify for funding, according to Finance Ministry estimates. HVB, which has 15,000 corporate clients, will open accounts for all companies and institutions receiving EU funding. An estimated 10% of new clients will become permanent customers, Dusan Hladny, director of HVB's corporate client division, said at a press conference in Prague yesterday.

The country joined the EU in May 2004. Membership in the bloc is allowing Czech companies, towns and organizations to tap billions of euros from EU cohesion and structural funds, designed to help fund projects in poor regions. Demand for loans is rising, because companies and regional governments must start the projects with their own funding before receiving money from the EU and the Czech government. HVB currently has a share of about 15% of the Czech corporate loan market. It has 24 branches. Joining forces with Ceska Pojistovna, which will use 179 branches for the project, will help the two companies tap clients outside of major cities and bolster demand for loans and insurance, said Pojistovna Deputy Business Director Petr Kopecky. HVB and Ceska Pojistovna won the contract to administer the funding accounts for the Finance Ministry for the symbolic amount of 0.50 koruna. It beat the Czech Republic's three biggest banks, which bid between 1,200 koruna and 100 million koruna for the contract, according to HVB. Ceska Sporitelna AS, a unit of Erste AG which has administered the funding for two years and also bid on the contract, is contesting the decision. (Bloomberg)