The ratings on Ceska Sporitelna a.s. (CS) reflect its majority ownership by Austria-based Erste Bank der oesterreichischen Sparkassen AG's (Erste Bank; --/--/A-2); its strong position in Czech retail banking, which provides it with outstanding liquidity; and the stabilization of its balance sheet by the Czech government. The difficult operating environment for banks in the Czech Republic, together with the challenge to implement a wide scale transformation process, to improve the operational risks and competitiveness of CS are constraining factors on the ratings. In July 2000, Erste Bank acquired a 52.07% stake in CS (now 53.1%) from the Czech government for Czech koruna (Ckr) 19 billion ($544 million). Erste Bank is the second-largest bank in Austria, with total assets of €71
