Hypo Group Alpe Adria’s two main businesses, banking and leasing, today operate transnationally through its over 350 locations in the extended Alps to Adriatic region made up of Austria, Northern Italy, Slovenia, Croatia, Bosnia and Herzegovina, Serbia, Montenegro, Germany, Hungary, Bulgaria, Macedonia and Ukraine. The Group ranks among the leading financial service providers in this high-growth region.

With over 1.2 million customers, the Group’s standing in the markets of the region is extremely strong, with some 7,000 highly-motivated employees on the ground providing customer-tailored services.

As part of its Alps to Adriatic strategy, Hypo Group Alpe Adria will concentrate more intensively than ever before on high-volume banking and leasing activities for retail, public and corporate customers in the extended Alps to Adriatic region. In line with this policy, the Group expanded its network in 2007 by setting up a leasing company in Ukraine. For strategic reasons, too, the Executive Board of Hypo Group Alpe Adria took the decision in the second half of the 2007 to sell its shares in Hypo Alpe-Adria-Bank (Liechtenstein) AG; and a 51 % interest has been so far disposed of. In 2008 steps have also been taken to dispose of the remaining 49 % interest. As a result of this reduction in the Group’s interest and the increased focus on the extended Alps to Adriatic region, Liechtenstein is no longer reported separately in the annual report.

A capital increase of EUR 125 m was subscribed for by Berlin & Co Capital S.à.r.l. in December 2006. This was followed by a second tranche in March 2007, worth an additional EUR 125 m. In May 2007 the contract was signed for Munich-headquartered Bayerische Landesbank’s (BayernLB) acquisition of a majority interest in the Group – of 50.0 % plus one share. After a second major capital increase in the second half of the year of EUR 600 m and further changes in the equity holdings of existing shareholders, the Group’s ownership structure at 31 December 2007 was as follows: BayernLB 57.31 %, Kärntner Landes- und Hypothekenbank- Holding 16.04 %, Hypo-Bank Burgenland AG, a subsidiary of Grazer Wechselseitige Versicherung AG, 26.45 %. Berlin & Co Capital S.à.r.l. held 0.18 % and Hypo Alpe Adria staff foundation 0.02 %.

Hypo Group Alpe Adria’s new core shareholder, BayernLB, is a strategic partner whose all-round experience and financial muscle is the perfect complement to the Group’s above average growth. The security provided by a strong, long-term owner, an even wider variety of products and services and BayernLB’s global network opens up fresh international opportunities to Hypo Group Alpe Adria’s customers.

With effect from 1 June 2007, Tilo Berlin was appointed Chairman of the Executive Board of Hypo Group Alpe Adria, and Siegfried Grigg returned to Grazer Wechselseite Versicherung AG as Deputy Chairman of that company’s Executive Board. The arrival of BayernLB, and the capital increases between December 2006 and December 2007 which raised a total of EUR 850 m, puts Hypo Group Alpe Adria in the best possible position for future growth in its core markets.

BayernLB’s majority interest was positively received by Moody’s rating agency and is reflected in its favourable Bank Financial Strength Rating (BFSR). At balance sheet date the Group had a non-guaranteed long-term rating of A2 and a guaranteed long-term rating of Aa2, both with stable outlook. The BFSR was D- and the mortgage bond rating was Aaa.