Nordea Bank Abp · OMXHEX:NDA_FI
Nordea Bank Abp — Investor Presentation (September 2005)
83 slides from Nordea Bank Abp's investor presentation, Sep 7, 2005
Slide 1: Poland and the Baltic countries – fast growing banking markets
Poland and the Baltic countries – fast growing banking markets “Nordea is the only bank, which is able to serve customers through its own network in the Nordic region, Poland and the Baltic countries” Thomas Neckmar 7 September 2005
Slide 2: Agenda
Agenda 15.00 – 15.40 Introduction Thomas Neckmar, Executive Vice President Head of Poland and Baltic countries 15.40 - 16.00 Nordea in Estonia Christer Rosenström, Country manager 16.00 - 16.15 Coffee break 16.15 - 16.45 Macroeconomics in Estonia Vahur Kraft, New general manager Nordea Estonia 16.45
Slide 3: Poland and the Baltic countries - emerging bank markets with a large potential
Poland and the Baltic countries - emerging bank markets with a large potential z 46 million people in Poland and the Baltic countries Helsinki z 10 million people in north-west Russia Stockholm St Petersburg z Fastest growing region in the world after Tallinn China Riga Vilnius Moscow z GDP growth 5
Slide 4: Poland and Baltic countries (cont.)
Poland and Baltic countries (cont.) Inhabitants GDP per capita Deposits/GDP Deposits/GDP Lending/GDP Lending/GDP Millions USD -03 -03 Estonia 1.4 6,739 42 % 51 % Helsinki Latvia 2.3 4,944 26 % 45 % Stockholm St Petersburg Lithuania 3.5 5,403 16 % 22 % Poland 38.6 5,410 40 % 32 % Tallinn Riga Vilnius
Slide 5: Strong market growth and Nordic presence
Strong market growth and Nordic presence z Expected GDP growth in the Baltic sea region 5-7% annually z Rapidly growing exports and imports z Sweden and Finland - largest direct investors in the Baltic countries z Poland and the Baltic countries expected to be one of the top 5 most interesting purch
Slide 6: Underlying assumptions of banking industry
Underlying assumptions of banking industry 2005-2008 z Demand for banking services will be significantly higher than GDP growth z Volume growth is expected to compensate for pressure on margins z Cost efficient distribution with sophisticated technology z Market eager to accept new products and serv
Slide 7: Nordea's entry in the Baltic sea region
Nordea’s entry in the Baltic sea region Read more on www.nordea.com/history 7 7 September 2005
Slide 8: International Moscow Bank
International Moscow Bank z Founded 1989 – Nordea (KOP) one of founders z Present ownership structure: – HVB 53% – Nordea 26% – BCEN-Eurobank 16% – EBRD 5% z 95,000 personal customers and 8,000 corporate customers z 15 branch offices and 13 regional offices z Total assets 2004 USD 3,524m z Russia’s
Slide 9: The Baltic sea region is well integrated in Nordea
The Baltic sea region is well integrated in Nordea z The Baltic and Polish operations are fully integrated into the Group as any other Nordic unit in terms of customer programmes, product development, credit granting processes, compliance and auditing z Nordea is the only major international financi
Slide 10: Nordea strengthens market position in Poland
Nordea strengthens market position in Poland z In June, Nordea signed an agreement to purchase Sampo’s Polish life and pension companies z Acquisition provides enhanced platform for continued profitable growth in the Polish market – good cross-selling opportunities z Nordea has a strong market posit
Slide 11: Nordea's operations in the Baltic Sea Region
Nordea’s operations in the Baltic Sea Region End of Q2/05 Estonia Latvia Lithuania Poland Total Customers 40,000 27,000 13,000 925,000 1,005,000 Branches/salespoints 10 11 8 36 65 Number of FTEs 217 213 129 861 1,430 Total assets, EURm 836 701 429 1,506 3,472 Lending, EURm 702 592 385 1,166 2,845 De
Slide 12: Targeted customer groups
Targeted customer groups Ambition to be among the leading banks in the Baltic countries and among the top 5 in Poland in our targeted segments: z Nordic corporate customers z Best large local corporate customers z Municipalities z Employees of our corporate customers z High-income earners z Customer
Slide 13: Nordea's strategy in Poland and the Baltics
Nordea’s strategy in Poland and the Baltics z Focus on well-defined customer segments z Increase share of wallet among existing clients z Leverage on Nordea’s strengths in terms of size, product offering and multi-channel distribution capacity z Base scenario is organic growth z Expanding branch net
Slide 14: Distribution strategy
Distribution strategy To be among the best banks in the country when it comes to modern distribution of our banking services. To ensure low fixed costs and a cost income ratio of under 50% z Limited number of full service branches z Sales outlets z Agents z e-Banking z Contact centres z Cards, etc 1
Slide 15: Priorities
Priorities z We prioritise top-line growth and cost efficiency allowing us to: – maintain price leadership within targeted customer segments z Increase market share by – proactive sales – more to existing customers – increased focus on advisory services – new customers to be acquired based on our st
Slide 16: Priorities (cont.)
Priorities (cont.) z SME strategy to support profitable growth using e-based solutions and proper risk management z Increased fee income – sale of Market’s products – customer programmes z Diversify income sources by carefully choosing services with best growth potential adding value to our targeted
Slide 17: Planned investments
Planned investments z Investments in a few well placed branches and sales points in addition to existing network z Investment in multichannel distribution – improved efficiency and reduced operational risks; improved customer perception and brand image z Investments in products and IT development –
Slide 18: Volume growth - Estonia
Volume growth - Estonia 10% market share EURm corporate lending 800 11% market share mortgage lending 700 600 500 400 4.6% market share corporate lending 300 0.9% market share 200 mortgage lending 100 0 1999 2000 2001 2002 2003 2004 H1 2005 Deposits Lending 18 7 September 2005
Slide 19: Volume growth - Latvia
Volume growth - Latvia 6% market share corporate lending EURm 11% market share 700 mortgage lending 600 500 400 300 0% market share corporate lending 200 0% market share mortgage lending 100 0 1999 2000 2001 2002 2003 2004 H1 2005 Deposits Lending 19 7 September 2005
Slide 20: Volume growth - Lithuania
Volume growth - Lithuania 6% market share corporate lending 450 7% market share mortgage lending 400 350 300 250 200 0% market share 150 corporate lending 100 0% market share 50 mortgage lending 0 1999 2000 2001 2002 2003 2004 H1 2005 Deposits Lending 20 7 September 2005
Slide 21: Volume growth - Poland
Volume growth - Poland 1.4% market share corporate lending EURm 1.6% market share mortgage lending 1200 1000 800 600 0% market share corporate lending 400 0% market share mortgage lending 200 0 1999 2000 2001 2002 2003 2004 H1 2005 Deposits Lending 21 7 September 2005
Slide 22: Personal customer lending - market volume & Nordea share
Personal customer lending - market volume & Nordea share EURm EEKbn 25000 Poland 5% 30 Estonia 14% 25 20000 4% 12% 20 10% 15000 3% 8% 15 10000 2% 6% 10 4% 5000 1% 5 2% 0 0% 0 0% 05 05 01 02 03 04 97 98 99 00 01 02 03 04 1/ 1/ 20 20 20 20 19 19 19 20 20 20 20 20 H H EURm EURm 2500 1400 Lithuania 14%
Slide 23: Strong growth in total income – Poland and the Baltic countries
Strong growth in total income – Poland and the Baltic countries EURm 100 94.5 90 80 74.2 70 60 53.5 50.9 50 40 35.9 27.4 30 18.7 20 10 0 1999 2000 2001 2002 2003 2004 H1/05 23 7 September 2005
Slide 24: Strong growth in total income (cont.)
Strong growth in total income (cont.) Poland Estonia EURm EURm 60 25 48.2 19.6 50 42.1 20 40 15.9 28 15 12.9 30 26.6 10.0 10.1 10 9.1 20 15.6 7.0 10.8 8.0 10 5 0 0 1999 2000 2001 2002 2003 2004 H1 / 05 1999 2000 2001 2002 2003 2004 H1 / 05 Latvia Lithuania EURm EURm 18 7 6.5 15.9 16 6 14 5 12 10.8 4
Slide 25: Operating profit at all time high – Poland and the Baltic countries
Operating profit at all time high – Poland and the Baltic countries EURm 25 21.7 20 17.0 15 13.0 10 5.7 5.1 5 0.4 0 -5 -3.0 1999 2000 2001 2002 2003 2004 H1/05 *) Before goodwill depreciation and taxes 25 7 September 2005
Slide 26: Operating profit at all time high (cont.)
Operating profit at all time high (cont.) Poland Estonia EURm EURm 8 6.4 12 6 4.9 10.4 4 3.2 10 1.7 2.3 2 7.8 8 0 6.0 -2 6 5 -4 -2.5 4.0 4.3 4 -6 2.6 -8 2 -8.1 -10 1999 2000 2001 2002 2003 2004 H1/05 0 1999 2000 2001 2002 2003 2004 H1/05 Latvia Lithuania EURm EURm 8 2 6.7 6 5.1 1.4 4.6 2 4.1 4 1 2.2
Slide 27: Total investment in Poland and the Baltic countries
Total investment in Poland and the Baltic countries EURm Bank Total Investment EURm Profit contribution H1/05 Estonia Nordea Estonian branch 0 Nordea: EUR 14m FSB Hansabank 2,054 FSB: EUR 120m SEB Eesti Uhisbank 170 Latvia SEB: EUR 76m Nordea Latvia branch 5 FSB Hansabank SEB Latvijas Unibank 121 Li
Slide 28: Increasing contribution from emerging home markets
Increasing contribution from emerging home markets z Increased market shares in the fast growing housing loan markets z Lending increased by 39% YoY – mortgage lending up 59% z No. of new customers doubled in targeted segments, supported by newly launched customer programs Operating profit, EURm H1/
Slide 29: Nordea in Estonia
Nordea in Estonia Christer Rosenström Country manager 7 September 2005
Slide 30: Nordea Estonia
Nordea Estonia TALLINN (7branches) PÄRNU (1 branch) Nordea Estonia Number of 10 branches Number of 40,000 clients Total assets 836 TARTU (2 branches) (EURm) Number of 217 employees 2 7 September 2005
Slide 31: Strong economic growth
Strong economic growth Estonia 2004 2005 (e) 2006(e) 2007(e) GDP growth (%) 7.8 5.8 5.5 5.1 Inflation (%) 3.0 3.2 2.9 2.7 Private consumption 6.1 6.0 4.0 4.0 growth(%) Fixed investments growth (%) 6.9 7.0 8.0 9.0 Euroland GDP growth (%) 1.8 1.7 2.2 2.0 Inflation (%) 2.1 2.0 2.0 2.1 Private consumpti
Slide 32: Significant volume growth in banking market
Significant volume growth in banking market z Total lending increased by 15% in H1 2005 – Corporate lending 12% – Household lending 25% z Total deposits increased by 22% z Fast growth fuelled by – low interest rates – rising income levels – well functioning financial sector z Margin levels approachi
Slide 33: Market structure
Market structure Market shares total lending 2004 Market shares total deposits 2004 Sampo Nordea 8% Sampo Nordea 10% 8% 6% EÜP EÜP 30% 31% Hansabank Hansabank 51% 56% 5 7 September 2005
Slide 34: Volume development – Nordea Estonia
Volume development – Nordea Estonia EURm 800 700 600 500 400 300 200 100 0 1999 2000 2001 2002 2003 2004 H1 2005 Deposits Lending 6 7 September 2005
Slide 35: Nordea's approach
Nordea’s approach z One bank approach z Organic growth and investment in new branch offices z Cost efficient operations z Strong capital base z Group support z Network of Nordic clients 7 7 September 2005
Slide 36: Ambition level
Ambition level z Growth rate twice market growth rate in targeted customer groups: – Nordic corporates – Best large local corporates – Municipalities – Employees of our corporate customers – High-income earners – Customers with preference for cards and consumer finance – Small and mid-sized corporat
Slide 37: Nordea's client offering - corporate customers
Nordea’s client offering - corporate customers z Full service level including – Cash management – Credits and Credit Cards – Leasing and Factoring – Trade Finance and Bank Guarantees – Export and Project Finance – Syndications and Debt Issues – Foreign Exchange – Derivatives and Options – Capital &
Slide 38: Nordea's client offering - household customers
Nordea’s client offering - household customers z New customer programme - benefits from centralising business with Nordea z E-banking solutions z Mutual funds, more options to be launched 2006 z Debit and credit cards z Mortgage loans z Caps on mortgage loans z Car leasing 10 7 September 2005
Slide 39: Risk management
Risk management z Fully in compliance with Nordea’s Group instructions z Customer ratings and Basel II in place z Credit history excellent due to conservative approach and proper risk management z Market leader as a provider of financial risk management tools such as derivatives and commodities 11 7
Slide 40: Loan portfolio by customer group
Loan portfolio by customer group End Q2/05 End Q2/04 Public sector Public 7% sector 18% Household customers Household Companies 33% Companies 53% customers 60% 29% 12 7 September 2005
Slide 41: Lending to household customers
Lending to household customers End of Q2/05 EUR 228m Other loans 2% Housing loans 98% 13 7 September 2005
Slide 42: Lending to companies by industry
Lending to companies by industry End of Q2/05 EUR 430m State & municipalities Other 7% 2% Industrial manufacturing 15% Utilities Real Estate Services 3% 15% Construction 2% Trade 10% Hotels and Restaurants 1% Transport and Financial Services Communications 31% 14% 14 7 September 2005
Slide 43: Strong credit quality
Strong credit quality Overdue credits out of total portfolio 2005 Q2 Q1 EURm EURm z Corporate 31-60 days 2.11 0.26% 0.00 0.00% 61-90 days 0.91 0.11% 0.31 0.04% over 90 days 0.01 0.00% 0.00 0.00% z Private 31-60 days 1.55 0.19% 1.30 0.17% 61-90 days 0.43 0.05% 0.46 0.06% over 90 days 0.53 0.06% 0.43
Slide 44: Total income and operating profit
Total income and operating profit EURm 25 19.6 20 15.9 15 12.9 10 10.4 10.1 10 9.1 7.8 7 6 4.3 5 5 4 2.6 0 1999 2000 2001 2002 2003 2004 H1/05 Total income Operating profit 16 7 September 2005
Slide 45: Going forward
Going forward z New general manager z Increased investments in branch network – 4 new branches 2006 z Investments in call-centre z Mutual funds 2006 z New Internet bank 17 7 September 2005
Slide 46: Contact us:
Contact us: IN ESTONIA: IN LATVIA: IN LITHUANIA: IN POLAND: Contact person: Contact person: Contact person: Contact person: Christer Valdis Siksnis Steen Nielsen Wlodzimierz Rosenström Kicinski Address: Address: Address: Address: Hobujaama 4 15 Kalku Str., Didzioji str. 18/2 2 Kielecka St. 15068 Tal
Slide 47: Macroeconomics in Estonia
Macroeconomics in Estonia Vahur Kraft 7 September 2005
Slide 48: Main issues
Main issues z Recent economic developments and BoE forecast (spring 2005) z Reasons for quick EMU accession and Maastricht criteria z Practical preparations 2 7 September 2005
Slide 49: Features of the Monetary Regime
Features of the Monetary Regime z Currency Board Arrangement, introduced in 1992. z Fixed exchange rate: 1 EUR = 15,6466 EEK z Full convertibility i.e. no restrictions on current and capital account convertibility (since 1994) z Base money is fully covered with foreign reserves and it is issued only
Slide 50: Inflation came down sharply
Inflation came down sharply 100,0% 90% 80,0% 1991 CPI was 257% 1992 CPI was 1077% 60,0% 40,0% 20,0% 0,0% 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 4 7 September 2005
Slide 51: Outlook for 2005: the peak is over
5 -1 0 1 2 3 4 5 6 Jan 2003 March 7 September 2005 May July September November Jan 2004 March CPI (m-o-m) May July Outlook for 2005: the peak is over CPI (y-o-y) September November Jan 2005 March May
Slide 52: Core inflation has remained broadly stable
Core inflation has remained broadly stable (HICP - All items excluding energy, food, alcohol and tobacco - Percentage change t/t-12) euro area Estonia 4,0 3,5 3,0 2,5 2,0 1,5 1,0 0,5 2002 2003 2004 2005 6 7 September 2005
Slide 53: Annual GDP growth rates in Estonia and euro area
Annual GDP growth rates in Estonia and euro area euro area (the left scale) 7 years average Estonia (the right scale) 4,5% 16% 4,0% 14% 3,5% 12% 3,0% 10% 2,5% 8% 2,0% 6% 1,5% 4% 1,0% 2% 0,5% 0% 0,0% -2% -0,5% -4% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 7 7 September 2005
Slide 54: Merchandise export growth
Merchandise export growth (current prices) Export f.o.b. Exports of manufacturing 35% 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% I kv 2001 I kv 2002 I kv 2003 I kv 2004 I kv 2005 (2) 8 7 September 2005
Slide 55: Export competitiveness
Export competitiveness Growth of main export Growth of Estonian markets (in %) direct exports (in %) 2001 3,7 11,7 2002 2,1 11,8 2003 5,9 12,0 2004 6,8 14,8 9 7 September 2005
Slide 56: Trade deficit developments at the beginning of 2005 are promising
Trade deficit developments at the beginning of 2005 are promising 2003 2004 2005 0 -1000 -2000 -3000 -4000 -5000 -6000 November August May April Septem ber October July Ma rch June December Februa ry January 10 7 September 2005
Slide 57: Developments of the CAD
-20 -18 -16 -14 -12 -10 -8 -6 -4 -2 0 2 11 I kv 1997 III kv 1997 7 September 2005 I kv 1998 III kv 1998 % SKPst I kv 1999 III kv 1999 quarterly of GDP- -kvartaalne I kv 2000 III kv 2000 I kv 2001 Developments of the CAD III kv 2001 I kv 2002 III kv 2002 I kv 2003 % SKPst III kv 2003 of GDP- 4– 4kvar
Slide 58: CA developments are related to FDI profitability
CA developments are related to FDI profitability 2005 1998 1999 2000 2001 2002 2003 2004 Q1 0 -2 -4 % to GDP -6 -8 -10 Current Account Deficit -12 Reinvested earnings -14 12 7 September 2005
Slide 59: During last years FDI flows have been higher than CAD
During last 10 years FDI flows have been higher than CAD Coverage of cumulative CAD with FDI flows into Estonia Coverage of cumulative CAD with net FDI flows Coverage of the annual CAD with same year's FDI inflows 160 140 120 100 80 % 60 40 20 0 13 7 September 20051994 1995 1996 1997 1998 1999 2000
Slide 60: Privatization share in foreign investment inflow
Privatization share in foreign investment inflow (% of FDI) 93 94 95 96 97 98 99 00 01 91– 99 Estonia 8.3 8.6 11.5 30.2 50.2 4.3 ∼25 ~1.6 ∼14 16.9 of which: Purchase of 4.2 3.9 3.1 11.5 10.1 2.7 5.3 privatized enterprises Investors 4.1 4.7 8.4 18.7 40.1 1.7 11.7 obligations – – Czech 87.0 99.0 100 9
Slide 61: External debt
External debt (% of GDP) 12.00 12.01 12.02 12.03 12.04 3.05 External debt 54.4% 55.5% 60.1% 68.7% 81.2% 92.1% o/w government 3.5% 2.9% 2.9% 2.9% 2.7% 2.5% monetary institutions 0.1% 0.0% 0.2% 0.4% 0.4% 0.4% banks 19.8% 19.1% 22.2% 29.1% 42.4% 50.9% other sectors 18.4% 19.2% 21.0% 20.2% 19.9% 22.6% N
Slide 62: Short-term net debt is positive
Short-term net debt is positive 12.00 12.01 12.02 12.03 12.04 3.05 Gross external debt 54% 56% 60% 69% 81% 92% o/w long-term capital 36% 38% 41% 46% 58% 58% o/w short-term capital 19% 18% 19% 23% 23% 34% Net external debt -8% -7% -11% -14% -18% -18% o/w long-term capital -19% -18% -20% -25% -30% -27
Slide 63: Stabilizing role of the government is evident
Stabilizing role of the government is evident (net foreign debt, end of period, % of GDP) Goverment (LS) Private sector (RS) 6 0 5 -5 4 -10 3 -15 2 -20 1 -25 0 -1 -30 -2 -35 -3 -40 -4 -45 1998 1999 2000 2001 2002 2003 2004 QI 2005 17 7 September 2005
Slide 64: Bank of Estonia forecast (spring 2005)
Bank of Estonia forecast (spring 2005) 2003 2004 2005* 2006* 2007* GDP, billion kroons 125,8 139,15 152,2 167 182,3 Real GDP growth (% ) 5,1% 6,2% 5,7% 6,2% 6,1% Inflation (HICP) (% ) 1,4% 3,0% 3,4% 2,7% 2,7% Current account balance (% of GDP) -13,2% -12,6% -11,3% -10,9% -10,3% Primary current accou
Slide 65: Bank of Estonia forecast
Bank of Estonia forecast z Growth is expected to remain strong, contribution of export to economic growth is expected to increase z Economic growth is seen more balanced than a year ago: – Current account deficit is expected to decrease – Wage and productivity growths more consistent z Inflation has
Slide 66: Quick EMU accession and Maastricht criteria
Quick EMU accession and Maastricht criteria 20 7 September 2005
Slide 67: Necessary steps
Necessary steps z Estonia joined EU on May 1st and the ERM II on June 28th, 2004 with existing EUR/EEK exchange rate and by maintaining unilaterally the CBA z Estonia seeks to join the euro area as soon as possible: – high degree of integration in goods and financial markets – same macroeconomic adj
Slide 68: Rationale for quick accession – present level of high integration
Rationale for quick accession – present level of high integration z Foreign trade links – share of EU members ~80% – share of EUR in trade relations ~65% z Financial links – FDI stock ~67% Nordic, 18% rest of the EU – banking sector ownership: 97% Nordic (strategic owners) z Economic structure broad
Slide 69: Rationale for quick accession: technical arguments
Rationale for quick accession: “technical arguments” z Technical arguments: – Decrease in transaction costs 0,1-0,2% of GDP (based on other countries’ experience) – Decrease in exchange rate risk premium Interest rate spread (LT) z Foreign investors and rating agencies already assume that we will jo
Slide 70: Estonia's credit rating and EU accession
Estonia’s credit rating* and EU accession 7 12 DEM LIBOR A/positive 6 5,9 (later EURIBOR) and EST TALIBOR A-/positive 10 spread 5 8 A-/stable 4,2 4 6 BBB+/positive “Yes” in EU 3 referendum 4 BBB+/stable 2 Commission Most “easier” 2 published 1,6 1,2 chapters were detailed closed 1 1,3 timetable for
Slide 71: Maastricht criteria – Estonia's performance
Maastricht criteria – Estonia’s performance z CBA requires continuation of prudent fiscal policies – budget deficit not problematic: balanced or in surplus (1,8% in 2004) 25 7 September 2005
Slide 72: Budget deficit (in % to GDP)
Budget deficit (in % to GDP) 3 2 1 0 -1 -2 -3 -4 -5 -6 1996 1998 2000 2002 2004 2006* 2008* Estonia Criterion Euro area 26 7 September 2005
Slide 73: Government debt (in % to GDP)
Government debt (in % to GDP) 80 60 40 20 0 1996 1998 2000 2002 2004 2006* 2008* Estonia Criterion Euro area 27 7 September 2005
Slide 74: Inflation (in %)
Inflation (in %) 24 21 18 15 12 9 6 3 0 1996 1998 2000 2002 2004 2006* 2008* Estonia Criterion Euro area 28 7 September 2005
Slide 75: Inflation and wage growth
Inflation and wage growth CPI growth of nominal wages real growth of wages 15% 14% 13% 12% 11% 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 1999 2000 2001 2002 2003 2004 2005 29 7 September 2005
Slide 76: Maastricht criteria – Estonia's performance
Maastricht criteria – Estonia’s performance z CBA requires continuation of prudent fiscal policies – budget deficit not problematic: balanced or in surplus (1,8% in 2004) z Government debt not problematic: 5% of GDP z Inflation with some challenges: 3,0% in 2004 z Interest rate no substantive proble
Slide 77: Practical preparations
Practical preparations 31 7 September 2005
Slide 78: First steps
First steps z In December 2004 by public voting (over the phone) the design of the national side of the euro coin was selected – the winning design has the map of Estonia and the word “Eesti” 32 7 September 2005
Slide 79: Roadmap to euro
Roadmap to euro z Close cooperation between the BoE and Government (mainly Ministry of Finance) z Clear Masterplan for upcoming activities – BoE has its detailed Masterplan – In January 2005 Government decided to establish a Changeover Committee, lead by secretary general of the Ministry of Finance
Slide 80: Key characteristics of changeover
Key characteristics of changeover (preliminary thoughts) z Technical readiness by Summer 2006 z Big bang z Minimum parallel circulation z Eesti Pank will change kroons against euros with fixed exchange rate without time or amount limits 34 7 September 2005
Slide 81: Changeover in Estonia vs. EU in 2002
Changeover in Estonia vs.EU in 2002 z Things easier for us as: – Euro already exists – We can learn from other countries’ experiences, e.g. how to approach some specific target groups: the elderly, the socio-economically disadvantaged, and the blind or visually impaired – We are a small country – le
Slide 82: Perceived and actual inflation in euro area
Perceived and actual inflation in euro area (percentage balances and annual percentage changes) Perceived inflation (lhs) HICP inflation (rhs) 70 6 60 5 50 4 40 30 3 20 2 10 1 0 -10 0 92 01 91 93 94 95 96 97 98 99 00 02 03 n- n- n- n- n- n- n- n- n- n- n- n- n- Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja
Slide 83: Perceived and actual inflation in Estonia
Perceived and actual inflation in Estonia (percentage balances and annual percentage changes) Expectations for upcoming 12 months (lhs) Annual CPI change (rhs) 90 7 EU referendum 80 6 70 1.05.04 5 60 50 4 % 40 3 30 2 20 10 1 0 0 01 02 03 04 05 06 07 08 09 10 11 12 01 02 03 04 05 06 07 08 09 10 11 12
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