The ratings on Ceska Sporitelna a.s. (CS) reflect the bank's core subsidiary status within, and increase in ownership by, Austria-based Erste Bank der oesterreichischen Sparkassen AG (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 ratings also reflect the strong recovery in the bank's profitability, and improving asset quality. Constraining factors include higher-than-average economic and industry risks, the challenge to improve the bank's operational risks, and revenue growth challenges. In August 2002, Erste Bank announced it had increased its stake in CS to 87.9% (or 94.9% of voting rights) from 53.1%. Erste Bank is the second-largest bank in Austria, with total
