The ratings on Czech Republic-based Ceska Sporitelna a.s. (CS) reflect the bank's strong strategic importance to Austria-based Erste Bank der oesterreichischen Sparkassen AG (Erste Bank; --/--/A-2), which holds 97.9% ownership in the bank; its strong position in the Czech retail banking market, which provides it with outstanding liquidity; and its improved financial profile--including satisfactory profitability and capital, together with good asset quality. Constraining factors include higher-than-average, but improving, economic and industry risks; and the challenge to grow core earnings from increased lending volumes while maintaining strong asset quality. The ratings on CS were placed on CreditWatch with positive implications on June 30, 2005. The ratings may be raised following a review of CS' long-term strategic position and financial contributions with
