real estate, financial services, infrastructure

Financial Services

Kardan operates in the financial services sector through its 99% (December 31, 2008: 80%) holding in KFS.  KFS holds an approximately 90% interest in TBIF Financial Services B.V. (TBIF), a sub-holding company for Kardan’s banking and lending businesses. The remainder is held by the management.

 

KFS also owns 40% of TBIH Financial Services Group N.V. (TBIH), the holding company for insurance and pension activities. Vienna Insurance Group (VIG), the leading Austrian insurance company, which is widely active in CEE and CIS, holds 60%. End of July 2010 KFS signed an agreement with VIG to sell its 40% shareholding in TBIH to VIG and to buy from VIG a transferable five year call option to purchase 92.6% of the shares of Doverie Pension Fund.  The completion of the transaction is subject to conditions precedent, among others, regulatory approvals.

 

The strategy of Kardan Financial Services B.V. (KFS) is based on seizing early business opportunities and establishing a platform for building banking, lending, insurance, and pension activities in emerging markets. Currently, all activities are concentrated in CEE/CIS countries.

 

2010 Outlook

 

In the financial services sector in CEE, the general economic environment has shown signs of improvement. If this trend continues, lending activities should increase and provision for bad loans is expected to decrease throughout 2010. On the other hand, profits made on the investment in bonds should be lower as further upside is expected to be limited. Although the election of a new president and the formation of a new government in the Ukraine may stabilize the political environment, it is too early to conclude that the economic environment will improve as a result.

The total number of employees in 2010 is likely to decrease as a result of the adaptation of the reorganization to the effects of the financial crisis. On the other hand, if markets improve this may result in an increase of the number of employees. Except for an increase of the stake in VAB Bank (Ukraine) no further investments are anticipated.