• The cyclical sectors which started to recover first, slow down their growth in 2012;

• The banks are more willing to provide sufficient financing in 2011 despite the low demand as yet;

• Lending opportunities remain an important condition for the exit from the crisis.

Lending to the corporate sector in the region of Central and Eastern Europe stands at a good level, however, divergences in the access to bank financing in the different countries are likely to persist also in the following months. This is one of the key findings of the latest corporate lending analysis conducted by Central and Eastern Europe and Poland Strategic Planning at UniCredit. Larger economies, such as Turkey and Russia, register double-digit growth in demand of loans until February 2012, whereas in smaller countries such the Baltic States, corporate lending registers shrinking of volumes.

Business environment is improving, but foreign direct investments are slow to recover.

“Latest business climate data indicate better results with respect to companies’ expectations. Nevertheless, industrial growth in the region of Central and Eastern Europe will register, albeit slight, negative results as a result of weaker external demand,” said Gianni Franco Papa, Head of UniCredit’s CEE Division. In his opinion South Eastern Europe will continue to see slow growth. In addition, since January the cyclical sectors are partially losing their momentum. The only exception is the production of machines and equipment which has been developing very well thanks to the strong demand by China.

“On the whole, business environment has been improving significantly over the last few years, however, regulations, taxes and political factors continue to be serious impediments to the business in CEE,” explained Gianni Papa.

Following the crisis, which started in 2008, the CEE region sees a significant change in capital flows. The flow of foreign direct investments (FDI) has recovered only partially from its lowest levels compared to other developing markets, such as Latin America or Asia, and FDI levels remain much lower than the pre-crisis ones.

According to UniCredit’s report encouraging competitiveness continues to be the major challenge for Central and Eastern Europe. Economists point out that the region can still make use of the lower production costs compared to the 15 old Member States of the European Union.

Loan price increased and collateral requirements became stricter in 2011

Lending is an important condition for the exit from the crisis, especially at the stage of recovery. This is confirmed by the latest CEE corporate sector data indicating a strong positive correlation between bank loans and the investment activity. However, demand also plays a significant role. According to UniCredit’s team of economists investment activity shrank the most in the sectors with the most lending before the crisis.

“Shrinking of lending at the peak of the crisis significantly changed the sources of financing and led to cost-reducing measures,” commented Fabio Mucci, Head of CEE and Poland Strategic Planning at UniCredit. So a lot of companies substituted financing from parent companies, and to a lesser extent issuing of obligations, for bank loans.

The companies, which suffered the most from the limited access to lending during the crisis, considerably reduced their labour costs in order to cope with liquidity problems. At the same time as a result of the crisis the investment activity of the most indebted sectors remained at low levels.

“In 2011 there is an increasing tendency for banks to provide sufficient financing despite the low demand as yet,” said Fabio Mucci. He quoted the findings of a UniCredit study, conducted among 12,000 companies in 16 CEE countries. Nevertheless, a great part of the companies find that in 2011 lending conditions became more rigid, loan price was higher and collateral requirements became stricter. At the same time 44% of companies surveyed replied that currently they do not need any loans.

The corporate sector is very attractive to banks because of the low level of indebtedness of companies in Central and Eastern Europe compared to the countries in Western Europe. UniCredit’s team of economists considers that in our region there is still much potential to be exploited. In the countries which are part of the Eurozone, lending to the corporate sector reaches 50% of GDP, whereas in Turkey it reaches 32%, in Russia – 28% and in the Czech Republic – 21%.

UniCredit is a leading bank in corporate banking in CEE

UniCredit supports the development of companies’ international business and activities through its wide network of local banks in various countries in Central and Eastern Europe and through its Western European branches in third countries. Over 1650 managers service around 4500 German and between 2000 and 3000 Austrian and Italian companies operating in Central and Eastern Europe. Development and support of companies’ international business is a crucial part of UniCredit’s strategy with respect to corporate clients. This is also confirmed by the high number of international clients serviced at the bank. The latest customer satisfaction data indicate that all segments serviced by UniCredit have much better results than competitors and the customer satisfaction of international clients is the highest.

In Bulgaria UniCredit Bulbank is a leader in corporate banking with a 16% market share in lending to companies and a 17.6% share in corporate deposits. The bank services approximately 9800 corporate clients.

About UniCredit

UniCredit is a leading European bank having major activities in 22 countries. The bank operates on 50 markets globally, with over 9,500 branches and more than 160,000 employees (as of 31 December 2011).

In the CEE region UniCredit runs the largest international banking network numbering approximately 3,800 branches. The Group operates in Austria, Azerbaijan, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Estonia, Germany, Hungary, Italy, Latvia, Lithuania, Kazakhstan, Kyrgyzstan, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Turkey and Ukraine.

More information for media:

UniCredit Bulbank, Identity & Communications Department

Viktoria Blajeva, Phone: + 359 2 9264 993, wjlj/ebwjepwbAvojdsfejuhspvq/ch

Magdalena Ivanova, Phone: + 359 2 9232 528, nbhebmfob/jwbopwbAvojdsfejuhspvq/ch