Press Release of the Association of Czech Building and Loan Societies regarding Debates on Amendment to Act on Saving with Building and Loan Societies in the House of Representatives of the Czech Parliament

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Representatives of the Association of Czech Building and Loan Societies (AČSS) presented their opinions during the expert seminar focused on saving with building and loan societies held in the House of Representatives of the Czech Parliament on September 15, 2003. The seminar was organized by the committee for public administration, regional development and environment as a preparation for the debates on an amendment to the act on saving with building and loan societies to be held on the meeting of the committee and during the second and third readings on the October meeting of the House of Representatives.

Mag. Kurt Matouschek, the Chairman of AČSS and Chairman of the Board of Directors of Raiffeisen stavební spořitelna, a.s., shared his experience related to the system of saving with building and loan societies in Austria and Germany in his speech. He pointed out some moments of development of the system in the neighboring countries, from which we can learn. Too radical changes in Slovakia and in Austria lead to a threat to the stability of the system, and the previous parameters of the system were recovered during a period of several months. However, the public's belief in the entire system has weakened in the long-term.

In his speech, Dr. Petr Kielar, a member of the Board of Directors of Českomoravská stavební spořitelna, a.s., pointed out some risks connected with the development of the system of saving with building and loan societies, which might arise after the planned changes are implemented. He emphasized the basic principals of functions of the system and dangers that could arise if the principals are not respected. Such dangers include, for example, introduction of different state support for different types of clients. AČSS strongly warns against this solution, considering it a dangerous experiment. Moreover, any similar measure would lead to an inadequate increase in technical and administrative demands on the part of the Finance Ministry, building and loan societies, but also on the part of clients.

It was proven by presenting specific figures that saving with building and loan associations is more and more important upon financing construction of new apartments and houses, purchases of old apartments, and – to a significant extent – also upon reconstruction and modernization of the housing fund. This fact can be documented by an increase in the volume of loans provided in the first half of 2003, which amounted to 50% compared to the same period of the previous year. This trend is expected to continue also in the future.

The age limit of 15 years applying upon entry to the system of the state support was presented as non-systematic with respect to the housing situation in the Czech Republic. This measure would have a discriminating effect, and would result in lower interest of parents to start saving for their children's housing in time, by which it would make the children's chance to get their own apartments or houses more distant, to say the least.

During the discussion that followed, the proposal of AČSS regarding the determination of the amount of the state support to 18% from CZK 25,000 was presented, and it was pointed out that AČSS considered the originally proposed reduction to 15% a limit level. Any potential step below the level of 15% could threaten the stability of the system in the future.

Further, the issue of simplification of the clients´ access to loans was presented. The respective modification of law would have no impact on the state budget and would extend the possibility to use accumulated finance within the system of saving with building and loan societies to finance housing needs, thanks to which the housing situation of people in the Czech Republic would improve.

AČSS believes that the expert seminar will contribute to a better understanding of the system of saving with building and loan societies and its functioning and that the discussed conditions will be taken into consideration during further discussions and voting on the respective bill in the Parliament. AČSS hopes that required savings within the public finance will not threaten the well-functioning system of saving with building and loan societies, which forms a stable and sound pillar of the Czech financial sector at present.

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