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The IT efficiency improvement programme agreed at the end of 2005 will result in sustainable cost savings of € 20 m per year by 2008. The programme got off to a good start and the related measures are progressing on schedule. While additional costs of € 1.3 m were expected for 2006, the actual net effect (synergies less initial costs) was positive, realising € 1.2 m. For 2007, net cost reductions are expected to be between € 10 m and € 12 m.
Austria
Maintaining and further developing BA-CA’s systems landscape in Austria remained a focus of activities. Work concentrated on supporting sales activities and enhancing settlement efficiency in BA-CA. The flexible and platform-independent Open WAVE Architecture (OWA) provides the basis for further development of the SaM (Sales Manager) branch platform and various projects aimed at improving the efficiency and quality of credit processes (e.g. for the Erfolgskredit loan product, TELOS). Adjusting systems to take account of national and international regulations presents a growing challenge.
The BASEL II implementation project which was started within BA-CA in 2002 continued in 2006 as a Group project carried out in cooperation with UniCredit. A standard common governance structure was defined and implemented, and all CEE subsidiaries were successfully integrated in the BASEL II project. Preparations were made for the supervisory review required for adoption of the advanced IRB approach in Austria.
Another focus of ICT is on Group solutions enabling extensive functions to be efficiently implemented at several banks. A successful example in this context is the Group Web Solution (GWS). GWS is already used in the Czech Republic and preparatory work for the roll-out in other countries has been carried out. Consolidation of the iSeries servers in Vienna was also completed in 2006 as planned, leading to further efficiency enhancement and cost savings.
In addition to project work and activities to support current operations, efforts to raise cost efficiency are continuing. The expansion of software development in Budapest will reduce development costs on a sustainable basis. In 2006, the services of some 70 new software developers were used in Budapest. Standardised process and project management and the Open WAVE Architecture are in place as a prerequisite for cross-locational project handling. Although the computer centre recorded significantly higher volume and additional new tasks, costs were further reduced by a significant amount in 2006.
CEE integration
The central CEE Integration Programme was set up in Vienna in 2006 with the objective of managing integration activities of 22 local banks in 14 countries and making adjustments to the corporate governance system. All integration projects will be completed and the related synergies promised to the market will be realised by the end of 2007. The programme covers the following groups of countries:
Merger countries (Slovakia, Czech Republic, Bulgaria, Romania, and Bosnia and Herzegovina). Integration of the local banks in these countries encompasses business, operations and systems. CORE02, the BA-CA standard application portfolio for CEE, is used in Slovakia, Romania, and Bosnia and Herzegovina.
In Romania, the merger of HVB Bank and Banca Comerciala Ion Tiriac to form HVB Bank Tiriac was successfully completed; the two bank’s systems have been standardised, taking into account the merger with UniCredit Bank Romania. In Bosnia and Herzegovina, the integration of our banking subsidiary was completed with the implementation of our standard core bank system CORE02. The new Group system EuroSIG is used in the Czech Republic. In Bulgaria, a decision was made to adopt FlexCube from iFlex, which will also be implemented in Russia.
Integration countries (Russia, Estonia, Latvia, Lithuania, Turkey and Croatia). Banks in these countries were transferred to BA-CA from other Group members, with the exception of Croatia. BA-CA sold the Croatian bank Splitska banka to comply with merger control requirements. At the same time, preparations were made for the integration of Zagreba?ka banka. Activities relate to the integration of operations in these countries, their inclusion in the regulatory reporting system and the implementation of the required Group standards. The CORE02 system will be implemented at the pan-Baltic bank.
Transformation countries (Slovenia, Serbia and Hungary) are those where BA-CA holds equity interests in banks. Under the CEE Integration Programme, activities in these countries focus on rebranding. The Group has opted for a uniform brand structure in CEE, generally adopting the UniCredit Bank brand; in countries with a strong local presence, the local name is added. The rebranding will be completed by the end of 2007. Our Hungarian banking subsidiary was the first bank to adopt the new brand name at the beginning of 2007.
As part of the integration programme and in close cooperation with our colleagues at Bank Austria Creditanstalt Ljubljana, the euro was successfully introduced in Slovenia.
“EuropaKonto”, a payment product which has become well established, was adjusted to the new circumstances and will be available in the future to all customers of UniCredit Group under the product name “European Gate”. WAVE developed the “Group Web Solution” product as a future Internet banking platform to be used across the Group.