Following the restructuring at the end of 2007, the Investment Banking division of Hypo Group Alpe Adria comprises the Asset Management, Brokerage, Corporate Finance, Research und Treasury Sales sections. As the only investment banking unit in South Eastern Europe, Hypo Group Alpe Adria can draw on its own sales network in the region as well as on local specialist teams.

2008 was the first full year following restructuring for the Investment Banking unit in its current form. As a result of the difficult market environment, the unit had to cope with challenging conditions throughout the whole year. Nevertheless, in total, a satisfactory contribution to the result was made. An important reason for this was the decision at the beginning of 2008 to reduce the Bank’s own business as far as possible and to focus on profitable customer business. Most sections were successful in opening up the business segment and Group Investment Banking was able to start 2009 with a full deal pipeline.

The focus of this new unit’s activities in 2008 was to develop a functioning and efficient structure, to implement the Investment Banking strategy and to create a solid basis for future business.

The sales network, an important asset for Hypo Group Alpe Adria, was successfully deployed in 2008. The number of employees was increased in nearly every branch office with an existing Investment Banking unit. Hypo Group Alpe Adria made good use in particular of their expertise in the area of research and very quickly built up a highly qualified team with wide geographical coverage, to cover the fixed income and equity asset classes and to make important macro- and micro-economic contributions to company publications.

In the period under review, a clear trend away from high-risk products to lower-risk or risk-averse forms of investment could be detected amongst the customers. The division recognised this in good time and expanded its product portfolio accordingly.

Treasury Sales

Asset Management

2008 for the Asset Management section was characterised by the harmonisation of internal activities. Quite apart from in Austria, Hypo Group Alpe Adria is now active in Italy, Slovenia, Croatia, Serbia and Bosnia. In addition, the focus lay on shaping asset management and the administration of special mandates as positively as possible, given the negative conditions.

Brokerage

Hypo Group Alpe Adria is the only financial institution in South Eastern Europe to have its own Group-wide associated brokerages and can therefore act cross-border as a securities broker. The section concentrated mainly on the development of two projects in 2008, whose implementation is planned for 2009: these Group-wide projects cover the automation of order placing and processing; as well as increasing efficiency on the custody side. Through deploying a unified order routing system throughout the whole Group in the future, possible sources of error can be eliminated, and efficiency increases and cost savings can be realised. Following implementation, customers will for the first time be able to access the share and bond markets of South Eastern Europe much more swiftly. Once the project has been successfully implemented, Hypo Group Alpe Adria aims to position itself as a driving force in brokerage and custody in South Eastern Europe.

Corporate Finance

Corporate Finance focuses on the purchase and sale of interests in companies, take-overs, privatisations, capital increases and transactions involving blocks of shares, and consultancy services for participants in strategic investments and joint ventures – and as such, opportunities were severely limited in 2008 because of the financial crisis. Lack of liquidity on the part of the market participants and the associated dearth of financing options in many cases prevented planned sales of interests from going ahead. Nevertheless the section, which is still in its early days, was able to see through some transactions successfully. A full deal pipeline for the year confirms that the strategic path taken is indeed the right one, and that, because of insufficient liquidity, it is a case of waiting for the right point in time to come for the deals to be realised.

Research

The Research department is composed of one team of experts established for many years and based in Zagreb, and smaller teams out in the individual countries, which have local knowledge and can prepare reports and make these quickly available to the expert team without any bureaucracy. The first research reports and market analyses were circulated within Hypo Group Alpe Adria in 2008. The reports will also be published in the first quarter of 2009 and will therefore be available to customers. Hypo Group Alpe Adria intends to position itself as a research and analysis specialist in the wider South Eastern Europe and developed the necessary expertise in all the countries in the year under review.