Business Briefs

Germany's HVB to spin-off Bank of Austria

HVB, Germany's second-largest bank, plans to spin-off up to 25 percent of Bank Austria-Creditanstalt, a leading player in central and eastern European banking markets, in an attempt to ease its capital woes. HVB, which made a €858 million net loss last year, has seen a collapse in its share price by 90 percent and has failed to benefit from growing international investor interest in retail banking in central and eastern Europe. The company is now valued at €4 billion. HVB's acquisition of Bank of Austria in 2000 was heavily criticised in Austria which has always been wary of German takeovers of major Austrian companies. The merger went through after HVB agreed to give Bank of Austria control of the joint group's Central and European branch, which is now the most influential in the region. HVB now aims to raise an extra €1 million through an IPO of its stake of Bank of Austria, which is said to be worth well over €5 billion.

Munich Re increases profit but fails to reach target

The world's biggest insurer, Munich Re, reported a quadrupling of 2002 net profits to €1.1 billion ($1.18 billion) on Thursday, but still fell short of market expectations. Analysts had expected net profits of €1.86 billion. The group said full-year premium income increased by 10.8 percent to €40 billion due to an upturn in the reinsurance business and said it expected reinsurance renewals this year to further improve profitability. According to Munich Re, profits were hit by €5.7 billion in writedowns on its equity holdings and by the strengthening of reserves for US losses. The group has assured it has no current liquidity problems.

BMW signs joint-venture deal with China

German car maker has signed a deal worth €450 million ($483) with China's biggest van maker Brilliance China to produce luxury cars for the Chinese market. BMW is already strong in Asia due to operations in the Philippines, Indonesia and Thailand. China's car market is growing fast, with sales up 60% last year to 1.2 million cars. The deal, a joint venture, which should produce around 30, 000 3 Series and 5 Series BMWs a year, is the company's first major deal in China, which only allows Western manufacturers to build in the country via joint ventures.

Deutsche Bahn gains poor ratings for ticket system

The Deutsche Bahn has undergone severe criticism for its new ticket system. A survey conducted by Stiftung Warentest, a state-funded consumer protection organization which compares products and series, shows many tickets were sold at too high prices. Every fourth enquiry for a more reasonable connection did not result in a cheaper fare, although theoretically possible. In the survey, Deutsche Bahn's system to advise passengers gained poor marks, while Stiftung Warentest decribed its ticket system as too complicated and complex. Deutsche Bahn has been under fire since it introduced the system in December.