Fin. Adviser February 2002

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  • 1. Hungary and Poland show promise Poland and Hungary's insistence on an orderly changes in Poland and Hungary (ISPs), investment fund managers, should stimulate the market unit linked products and privatisation has ensured that their financial considerably. The pension intermediaries. Minimum capital markets now function smoothly reforms, passed in 1998 in requirements for ISPs have doubled, Hungary and quickly. followed and minimum qualifications and by Poland in 1999, have made experience has been increased. IBy Anna Bawden the law will only come into force private pension provision ob when Poland joins the EU. And the ligatory for those, the majority, The limits placed on the amount FOREIGN interest in Eastern Europe Hungarian authorities require foreign without occupational schemes. that could be invested have been has generally taken the form of providers to have a local presence. PwC estimates that "in 2002, relaxed and fund of funds, index M&A activity, which has seen large Slbn inflows into Polish funds funds and derivative products are Croatia, Czech Republic and ket. Life insurance and particularly swathes of domestic banks purchased will come from pensions." now permitted. Importantly, the act Slovakia, but not in Poland. unit-linked products are taking off. by foreign providers such as ING, Regulation The reforms have already makes it easier for foreign providers Christian Petter, director says this is With a steadily increasing number of Citibank and the like. In terms of regulation, the story is prompted a number of foreign to sell into Hungary. because the high registration fees are foreign providers such as CGNU, somewhat different. Robert Stone, insurance companies to enter a disincentive to smaller providers. Allianz and Generali in the Polish director of global financial services the Polish and Hungarian Zoltan Dencs, head of the Capital and Hungarian market, brokers and Distribution of foreign domiciled at EME, an emerging markets market, bringing with them a Market Licensing Department at the Citibank has different distribution other intermediary associations axe funds in Eastern Europe is more consultancy, says: "While Poland network of intermediaries. The FSA says: "Foreign providers still channels for its Polish and starting to gain in popularity. The limited. With the exception of and Hungary wanted an orderly, well greater visible presence of need approval from the FSA but the Hungarian business. In Hungary, the industry is clearly still nascent, as Pioneer, most non-domestic regulated market from the beginning, advisers is already stimulating procedure for approval should just be company does not sell its own funds there are currently only 12 providers are German or Austrian. the Czech Republic was the development of the inde a formality" at present but distributes third party brokerages/ intermediary pathologically hostile to regulation." pendent intermediary industry, distribution. associations in Poland and Hungary, The key markets are the Czech which until now has been very most targeting the expatriate market. limited. Hunter & McKensie is one of these Republic, Hungary and Poland. Distribution At present it distributes five third Darius Nowak, a partner at He points out that Poland and Licences are required both to with 20 brokers throughout Eastern Mutual fund distribution is still party funds; the Credit Suisse PricewaterhouseCoopers responsible Hungary set up securities act as an intermediary, broker Europe, operating as independent largely dominated by banks. In Hungarian bond fund and Aegon for investment management in commissions immediately after the or agent, and to sell funds or advisers. Over half of these are in Hungary, funds cannot be sold asset management's four funds. Eastern Europe, says that the easiest fall of the Communist regime, and insurance products in Poland Hungary and Poland. directly by the provider; a local Bence Marosi, country head, access to the market is in the Czech did not rush into mass privatisation. and Hungary. The industry is broker/dealer or retail bank must be Citibank says: "Citibank Hungary Republic. He says: "It's the only The Czech Republic, on the other regulated by the SEC in used. Third party distribution and has a three pillar distribution country in the region where you can hand went down the messy path of Poland and the Financial Ser joint ventures/ acquisitions of local channel: our own branches, distribute foreign funds. In mid 2002 voucher privatisation. vices Authority (FSA) in Hun banks are therefore highly popular. transactional phone banking and our they want to pass legislation which gary. Intermediaries and prod Hungary and Poland, along with direct sales network." will be fully compatible with the uct providers also need a local the Czech Republic, are leading the The length of time it took to custodian bank. Raiffeisen International Fund way in Eastern Europe. Martin Gisa, ITcir': r1;r-t;ves." privatise and list companies in Hungary has just introduced Advisory is sixth largest in Hungary, In Poland, Citibank distributes head of Central & Eastern European Poland and Hungary meant that the the Capital Markets Act which with 3 per cent of the market. It five of its own funds and offers a financial institutions at stock exchanges and regulations came into force in December. provides advisory mandate, fund of discretionary portfolio service to Hvpovereinsbank says: "Hungary is In coriparison, Poland and were functioning smoothly when this It draws together and expands funds and fund distribution services institutions and HNWIs. It currently one our most successful markets. We Hungary are not quite so open. Mr did eventually happen. previous legislation under one through its 40 branches. The fund has about $200m under see Hungary and Poland as being Nowak points out that although single act. A wide ranging management is done out of its management, split equally between normal markets. We view them as we Poland has also passed legislation piece of law, the act regulates Austrian headquarters. the two business areas. would allowing the promotion of foreign Stimulation funds, More recently, a number of investment service providers Raiffeisen is also present in Insurance is a growing mar France or Italy, for example."