Following the examples of Raiffeisen and Erste Banks, Hypo Bank has decided to do their part in reviving the real estate market. In the next six months, Hypo will lower their interest rates on housing loans by 15% on property whose construction they financed. Hypo is prepared to set aside 70 million euros. Currently, Hypo holds 14% of the 13,000 apartments available on the market. This high level of unsold apartments threatens to bring down the real estate market, with a realistic danger that the contractors may not be able to cover their financial obligations toward the banks.

The interest rate will be 5.5% for the clients of Hypo Bank, with a six month grace period and no deposit. Like the other banks, the Hypo Alpe Adria Bank (HAAB) has conditioned their contractors to lower prices by at least 10%. Since a number of the banks have announced reductions in their housing prices by 30%, it is not surprising that Hypo is trying to negotiate with their contractor’s additional price reductions that could go up to 20%. Presently, 700 apartments will become a part of this special offer, with most of them in Zagreb. The offer begins April 1st and ends late September. Although Hypo did not budget 70 million euro for housing loans, it will redirect the funds from low demand categories such as corporative sector loans. Mr. Krešimir Starčević, the Member of the Board of HAAB pointed out that ‘’the offer has a potential of being prolonged after the six months has expired, but this will depend on the interest of the corporative sector, bank (profitability) and the cost of international financing.’’ Starčević added that the development strategy for this year is mainly in public sector financing. The state loans will reach 330 million euro, with large participation from Hypo Bank, while the remaining 35 million euro is planned to go to local authorities. To respond to the question if interest rates will grow in the future, Markus Ferstl, the President of the Board of HAAB, commented ‘’at this moment we did not plan for it, but it will depend on the overall market situation’’. According to the unofficial information we received, the Hypo Group will go through restructuring, with part of their sister banks going on sale – the Serbia and Montenegro markets are also mentioned). Markus Ferstl commented that ‘’these are rumors as we have not received any confirmation from our headquarters’’. By the end of March, the bank should publish the business results for 2008 in which its credit portfolio increased for 16.5%, and for 2009 they plan 3.6 billion kuna of new placements. As of March 1st, Slavonska Bank was officially acquired by Hypo, with long-term plans of becoming the third (largest) bank on the Croatian market by 2012. After the official acquisition, former management Board members of Slavonska Bank, Mr. Ivan Mihaljević and Tadija Vrdoljak, became part of the HAAB Management Board. Otherwise, Raiffeisenbank (RBA) was the first to come out with a special offer and favorable interest rates. Raiffeisenbank has a portfolio of 1,300 available apartments or 10% of the apartment market (in Zagreb a somewhat smaller share). With their partner companies, RBA offered 555 apartments in 17 cities, with the offer lasting three months. Both the bank and the contractor are reducing an equal share of their profit: RBA reduced the interest rate on housing loans by 10-25%, while the contractor lowered the apartment prices by 10- 20%. The offered prices will be 950 – 3150 euro per square meter, which is the most that both sides can offer.
(PD)