Page 12 - OeEB-AnnualReport_2013

Basic HTML Version

OeEB Annual Report 2013
Management report
Significant risks and uncertainties
Overview of risk policy and strategy
Based on numerous conversations with clients and
development partners, OeEB’s business is expected
to grow significantly in 2014. Market demand for the
support of development banks remains strong.
OeEB therefore plans for growth of its overall portfolio.
The probable increase in business should lead to a
corresponding rise in revenue.
In an environment of difficult economic times and of
tightened regulatory requirements (Basel III), commer-
cial banks avoid projects in risky markets. Yet, from
the standpoint of safeguarding growth in developing
countries, implementing projects has never been more
important than now. In these times more than ever, the
role of development banks is to be stable and
dependable partners and to go where the need is. For,
although the global economic forecasts for 2014 are
positive on balance, there remain downside risks.
Developing and transition countries, where demand
for financing continues to be high, could face major
challenges as a result especially of the monetary
policy decisions in the United States. Moreover, some
regions have seen only a very sluggish recovery from
the crisis of the last several years. It thus remains
difficult to predict the business trend in OeEB’s
individual target countries.
Strategic approach to risk management
To cover the very high project and country risks, OeEB
receives a 100% guarantee from the Austrian govern-
ment for every financing deal.
Project risks are assessed conservatively, which also
has the effect of reducing reputation risk to OeEB.
In view of the backing by the Republic of Austria
through government guarantees, OeEB’s share capital
of EUR 5 million represents and meets the minimum
requirement under the Austrian Banking Act. In the
next several years OeEB will therefore not undertake
any projects on the basis of its equity without ob-
taining an Austrian government guarantee.
OeEB is a wholly-owned subsidiary of OeKB and
follows a risk policy and strategy consistent with that
of the OeKB Group. Internal control systems within the
meaning of the Austrian Banking Act were developed
in 2010 together with OeKB for OeEB’s Investment
Finance and Advisory Programmes business processes
and the Foreign Trade Programme segment. These
systems of internal control are reviewed annually. For
the Equity Investments segment, this process is being
developed in detail in early 2014.
Business outlook