Contents. Letter from the CEO 01. Key Figures 04. Corporate Profile 07. The Executive Committee 10. Macroeconomic Outlook 12. Business Overview 16

Transcription

1 Annual Report

2 Contents Letter from the CEO 01 Key Figures 04 Corporate Profile 07 The Executive Committee 10 Macroeconomic Outlook 12 Business Overview 16 Corporate Banking Retail Banking 26 SME Sector 33 Branch Network 35 Treasury 37 Human Resources 41 Outlook for the Future 47 Subsidiaires 49 Financial Statement 53

3 Letter from the CEO 01

4 02 Dear Shareholders, Dear Clients, Dear Partners, Dear Employees, Challenge is definitely the word to define 2010, not only from a banker s point of view, but also from that of the entire macroeconomic environment. Since October 2008 adaptation to new economic realities became mandatory and 2010 proved to all of us that the present business environment is undergoing continuous change. We had a tough year with governmental cuts in the public sector for the budget deficit control leading to negative effects in the consumption. The end of year inflation rate climbed to 8% YoY, directly affected by the price increases of food, fuel and VAT. The country has completed with success the IMF lead loan and a new EUR 5.4 bn precautionary Stand-by Agreement was approved for Romania. Some of the big macroeconomic imbalances have been rectified and a more stable outlook emerged. These are only few aspects that can characterize 2010, but the most important remains the general perspective: we were able to pass through this period which prepared us for the future. Piraeus Bank Romania remained stable and reliable throughout this period, its policy being guided by clients needs and adaption to the general economic environment.

5 once again gave us the opportunity to adjust to the market conditions, which were changing a lot for all of us by conducting our business with our usual professionalism. We have realized that each action has an impact in our development, so moving in the new, company owned, headquarters, was a good move, indicating that we are a solid financial institution. We have concentrated on improving the efficiency of our activities, by reviewing the flows and all processes. In 2010 we celebrated the 10th anniversary of our presence in Romania, defining a part of the continuing history of the Group which counts 100 years. Keeping the balance of our business marked our strategy and the results are a clear proof of that. In 2010 we have registered a % solvency ratio, 7.23 % above the level required by the National Bank of Romania, which shows a very good capital base. The deposits slightly increased by 2 %, a proof of our commitment to maintain a positive business level despite the unfavorable market conditions will bring us many challenges, encountered by our continuous will to perform better, to take decisions involving wise risk, all these along with our good products and of course well trained and dedicated employees. This is the attitude of a powerful partner, the biggest subsidiary of the Piraeus Bank Group. We will keep setting our targets higher, to remain one of the most important players in the market and we will continue the hard work to further enforce our presence. Being a large and powerful bank, supported by a strong and reliable financial group, we will be able to continue our policy: to offer value to our clients and shareholders. On behalf of our institution I would like to thank you all for your contribution, confidence and support! Catalin Parvu Executive General Manager

6 Key Figures 04

7 05 Income Statement 1 Net interest income Net fee and commission income Net trading income Other net operating income Operating income Loan loss provisions Operating Expenses Profit before tax Income tax Net profit for the year 2010 EUR mn EUR mn Balance Sheet 2 Total assets Total assets, including the assigned loans 3 Total loans Assigned loans Total loans, including the assigned loans 3 Due to customers Shareholders Equity 2010 EUR mn 2, , , , , , EUR mn 2, , , , , , Ratios Cost-income ratio 4 Loan provision ratio 5 Return onaverage equity Return on averageassets Capital adequacy ratio, Tier II % 42.93% 14.34% 4.78% 0.71% 17.23% 2009 % 45.87% 8.60% 6.46% 0.89% 19.24% Staff & Network Employees 7 Branch Offices , ,

8 06 1 The EUR equivalent of income statement figures has been calculated using the RON/EUR average exchange rates published by the National Bank of Romania for 2010 and 2009 (i.e. 2009: RON/1EUR; 2010: RON/1EUR). 2 The EUR equivalent of balance sheet figures has been calculated using the RON/EUR year end exchange rates published by the National Bank of Romania (i.e. Dec.31, 2009: RON/1EUR; Dec.31, 2010: RON/1EUR). 3 Assigned loans are loans originated in Piraeus Bank Romania and assigned to Piraeus Bank- London Branch; Piraeus Bank Romania continues to administrate those loans, being remunerated for the services provided. 4 Cost-income ratio as a percentage of operating expenses (staff, administrative and depreciation expenses); there were no exceptional expenses which might influence the level of this efficiency ratio. 5 Loan loss ratio as a percentage of the loan provisions in total loans (excluding the assigned loans); for the assigned loans also the risk has been transferred. 6 Statutory figures. 7 Full-time employees

9 Corporate Profile 01 07

10 08 Piraeus Bank Group is one of the most dynamic and active financial organisations in Greece today. Founded in 1916, Piraeus Bank went through a period of state-ownership and management ( ) before it was privatised in December Since then, it has continuously grown in size and activities. Along with its organic growth, Piraeus Bank made a series of strategic moves with the goal of establishing a strong presence in the domestic market. Thus, in 1998, the Bank absorbed the activities of Chase Manhattan in Greece, took over controlling interest in Macedonia-Thrace Bank and acquired the specialised bank Credit Lyonnais Hellas. At the beginning of 1999, the Bank acquired Xiosbank and absorbed the activities of National Westminster Bank Plc in Greece. In June 2000, the Bank unified its three commercial banks in Greece (Piraeus Bank, Macedonia-Thrace Bank and Xiosbank), creating one of the three largest private sector banks in Greece. In early 2002, Piraeus Bank acquired the Hellenic Industrial Development Bank (ETBAbank). ETBAbank was absorbed by Piraeus Bank in December Also, at the beginning of 2002, a strategic alliance agreement for the Greek market was signed between Piraeus Bank Group and ING Group, focused in the field of bancassurance, which was renewed for 10 more years in October At the beginning of July 2009, Piraeus Bank and BNP Wealth Management agreed to a strategic partnership in Wealth Management. Finally, at the beginning of October 2009, Piraeus Bank and Victoria General Insurance Company S.A. - subsidiary of Ergo International in Greece and member of the German insurance Group Munich Re - commenced a 10-year exclusive cooperation in the general insurance field. In early 2005, Piraeus Bank Group, implementing its strategy for expansion in South-Eastern Europe and Eastern Mediterranean markets, acquired the Bulgarian Eurobank (renamed into Piraeus Βank Bulgaria), strengthening its presence in Bulgaria, while the merger of Piraeus Bank branches in Bulgaria with Eurobank was completed in March Furthermore, in 2005, it entered the Serbian market by acquiring Atlas Bank (renamed into Piraeus Bank Beograd), and the Egyptian market by acquiring Egyptian Commercial Bank (renamed into Piraeus Bank Egypt). Finally, in 2007, Piraeus Group expanded its international presence to Ukraine by acquiring the International Commerce Bank (renamed into Piraeus Bank ICB) and to Cyprus (Piraeus Bank Cyprus) by getting the approval to operate a banking institution and by the acquisition of the Arab Bank Cypriot network. Today, Piraeus Bank leads a group of companies covering all financial and banking activities in the Greek market (universal bank). Piraeus Bank possesses particular know-how in the areas of retail banking, small and medium-sized enterprises (SMEs), capital markets and investment banking, leasing. These services are offered through the Bank's nation-wide network and also through the electronic banking network of Winbank. The latter was launched in the beginning

11 09 of 2000, as the first complete electronic banking service in Greece, offering a full set of services through four different channels of distribution (Internet, mobile phone, call centre and ATMs). Piraeus Bank Group has an international presence focused in South-Eastern Europe and Eastern Mediterranean, but also in the financial centres of London and New York. In particular, the Group is present in the USA through Marathon Bank, based in New York with 13 branches, in London with a branch of Piraeus Bank, in Albania through Tirana Bank with 56 branches, in Romania through Piraeus Bank Romania with 187 branches, in Bulgaria with 101 branches of Piraeus Bank Bulgaria, in Serbia with 47 branches of Piraeus Bank Beograd, in Ukraine with 54 branches of Piraeus Bank ICB, in Cyprus with 15 branches of Piraeus Bank Cyprus and in Egypt with 48 branches of Piraeus Bank Egypt. The main medium term goals of Piraeus Bank Group are to maintain a balanced growth in terms of loans and deposits, achieve high efficiency and sustain superior asset quality and satisfactory capital adequacy. Piraeus will continue to focus on SMEs and retail banking segments, where it holds strong expertise, while capitalizing on its young branch network, both in Greece and abroad. The Group's fundamental policy direction for human resources development is based on the efficient management of human resources, leading to the creation of skilful and dedicated personnel able to function within the framework of the competitive EU banking market. At the end of December 2010, the Group employed 13,320 people. Combining business development and social responsibility, Piraeus Bank Group systematically endorses its relationship with its social partners through specific actions, while special emphasis is placed on the protection of the natural environment. Piraeus Bank acknowledges that energy sources are not inexhaustible and should be used in a responsible manner. The Bank's contribution to the protection of the environment has two dimensions. The internal dimension, which refers to the Bank's efforts to mitigate its operational environmental impacts, and the external dimension, which reflects the Bank's efforts to increase environmental awareness of its customers, and to promote environmentally friendly investments. Piraeus Bank has built significant presence in the field of Green Banking with a dedicated GREEN BANKING Branch and products that support lending for RES, saving energy, waste management, "green" transportation, organic farming, ecotourism-agritourism and "green" chemistry products. At the end of December 2010, Piraeus Bank Group had a network of 882 branches (360 in Greece and 522 abroad). The Group's total equity amounted to EUR 4.0 bn (pro-forma for the EUR 0.8 bn capital increase in January 2011), customer deposits to EUR 30.0 bn, net loans EUR 37.6 bn and total assets to EUR 57.7 bn.

12 The Executive Committee 10

13 11 PIRAEUS BANK ROMANIA S.A. Members of the Board of Directors Stavros Lekkakos Catalin Parvu Emanuel Odobescu Michail Lachanas Alexandros Manos Ilias Milis George Papaioannou Spyros Papaspyrou Chairman of the Board of Directors Member & Executive General Manager Member & Deputy General Manager Member & Deputy General Manager Member Member Member Member Members of The Executive Committee Catalin Parvu Michail Lachanas Nikolaos Cheinoporos Emanuel Odobescu Executive General Manager Deputy General Manager Deputy General Manager Deputy General Manager

14 Macroeconomic Outlook 12

15 13 Romania looked poised to resume economic growth in 2010, following a difficult 2009 year when GDP collapsed by 7.1%, unemployment rate climbed to 7.7% and the 4.7% inflation came again outside the fluctuation band set around Central Bank s inflation target of 3.5%. The political disarray was over and the new cabinet succeeded to pass the 2010 budget in line with milestones set together with the international institutions aiding Romania. On May, when market players were expecting the release of the GDP flash data for the first quarter looking for hints that economy is back on track and country was ready to join its neighbours in quest for growth, the Romanian President announced a plan based on cuts in public sector spending for keeping the budget deficit under control. The plan aimed to cut wages in public sector by 25% and to slash pensions and unemployment benefits by 15%. Following Constitutional Court s opposition to diminishing pensions the government had to improve its financial position by boosting revenues through a hike of VAT to 25% from 19% starting with July 1st. The measures succeeded to narrow the budget gap to 6.5% in 2010 but hindered the economy. In 2010 the driving force behind the economic growth in the region was the export to Western countries. Unfortunately, unlike its peers, Romania s economy relayed less on exports and more on internal demand that was hurt by the fiscal adjustment; as a result economy contracted during the year by 1.3%. The industrial sector helped by the foreign demand registered a 5.1% advance in 2010, but constructions dipped by 10.7% as lower disposable income and higher uncertainties over own jobs outlook hampered residential sector, the dismal demand discouraged investments in commercial sector while public expenditures cut hurt civil sector. Services contracted also during 2010: trade, leisure activities, transports and telecommunications curved by 4.0% while public services dipped by 2.8%; only financial services inched up by 0.8%. Agriculture declined by 0.8% and net taxes on product contracted by 2.5%. As regards the supply side final consumption dropped by 2.1% in 2010 with private consumption dented by the cut in public sector wages and by the slow recovery of salary in private sector while government spending declined to keep budget deficit under control. Investment plunged by 13.1% in 2010 as dismal demand and higher taxes discouraged businesses to expand or improve technologies. Net exports gap narrowed as foreign demand prompted exports at a higher pace than imports. After peaking in March at 8.4%, unemployment rate entered a downward trend, Romania ending 2010 with 629,960 unemployed persons by 11.20% less than in the previous year. Unemployment rate as reported by the National Labour Agency declined to 6.9% at the end of December but as job creation remained subdued market suspected that the evolution was triggered by the fact that unemployed who were no more entitled to receive benefits ceased to register with the Agency.

16 14 Current Account deficit widened in 2010 by 5.0% to EUR 5.1bn driven by the 17.9% plunge in current transfers to EUR 3.4bn as a result of decreasing remittances from Romanians working abroad and by the deterioration of services balance to a deficit of EUR 0.7bn. Trade gap continued to contract in 2010 by 14.7% to EUR 5.9bn exports growth by 28.1% YoY prompted by the recovery of the West European economies outpacing imports 19.9% yearly advance. Foreign direct investments declined further by 25.6% to EUR 2.6bn covering only 50.3% of the current account deficit. Romania s inflation climbed at the end of 2010 to 8.0% YoY on the heels of VAT rate hike effective since the middle of the year. Although the weak domestic demand dampened the transfer of tax growth to prices the monthly inflation surged in July to 2.56% pushing the YoY figure up to 7.1% from 4.38% at the end of June. Inflation rate continued to rise until the end of the year pressed by supply-side shocks on international oil market and on food prices. Starting the year with a rather high key interest rate of 8.00%, the central bank entered an alert easing cycle until the beginning of May and managed to cut 175 bps to the record low of 6.25%. The cycle was halted when fiscal policy measures unleashed inflationary pressures. Rates in the market remained at quite high levels mainly in the first three quarters of the year, declining to lower levels in the last three months of 2010 helped by the good liquidity. On fixed income primary market government self imposed a 7.0% cap to securities yields issued until November when after some failed auctions decided to leave the market build a yield curve. The longer maturities reached 7.17% % while the short end slid in 6.70% % range. Budget deficit narrowed to 6.5% of GDP, the painful measures enforced by government securing 8.6% cutback YoY in personnel expenses, 11.7% curving of capital expenditures and a boost of VAT revenues by 14.3% while social assistance costs grew by 7.3%. National Bank of Romania (NBR) s foreign reserves totalized EUR 32.4 billions at the end of 2010, covering almost eight months of imports. Country Rating Profile Moody s: Baa3 Standard & Poor s: BB+ Fitch: BB+ Banking System Domestic banking system proved to remain stable in 2010 despite a severe deterioration of assets quality, high provisioning and an overall aggregate net loss

17 of around EUR 70mn compared to a profit of EUR 193mn posted in The number of profitable banks narrowed to 20 in 2010, while the loss posted by the other 22 banks operating in the system exceeded the previous year loss. Banking system s capitalization advanced in 2010 by 9.1% to RON 16.9bn due to capital hikes performed for keeping capital adequacy above safety levels. Sector s net aggregated assets declined in real terms by 4.1% YoY to RON 341.8bn as lending activity continued to slow down and non-performing loans grew. Meanwhile, saving curved in real terms, banks substituting this financing source by capital inflows.total loans portfolio contracted in 2010 by 3% YoY in real terms as economic recovery failed to resume hampering both businesses and households. Loans to households declined by 5.6% YoY while corporate loans were more resilient dipping by 0.4%. The share of foreign currency denominated loans continued to expand reaching 63% of total non-government credit. Financial stability of the banking sector remained strong, solvency ratio staying above 14% along the year well above the required 10%. The liquidity ratio remained almost flat at 1.4, above the 1% requirement. The decline in profitability of the Romanian banking system is assessed also by the plunge of ROA ratio to -0.09% from the 0.25% in 2009 and by the negative ROE of -1.02% down from 2.89% in

18 Business Overview 16

19 17 The economy of Romania continues to display the characteristics of an emerging market, highly dependent on the international context, especially EU, for both exports and funding. Retail purchasing power has been declining due to income reductions (unemployment, salary cuts, tax increases, currency depreciation and inflation). Rolling over the existing debt and a new precautionary agreement with IMF/World Bank, pose the question of how the continuously growing external debt will be repaid as the currency depreciates. The adverse currency fluctuations and economic conditions could negatively impact the financial capacity of any borrower as companies try to aggressively reduce expenses and employees refrain from any but the most basic consumption needs, in a positive feedback loop. As asset quality has been gradually declining, loan portfolios are being closely monitored while new preemptive restructuring and collection measures are being planned. In 2010, the Bank recorded a gross profit of EUR million (decrease of 19% compared with previous year), total assets volume of EUR 2,245 million (decrease of 2%) and extension of the Branch Offices network with one office till 187 units. The following comments should be read in conjunction with the IFRS financial statements and the related notes. The financial statements of the Bank for the years 2010 and 2009 have been audited by PricewaterhouseCoopers Audit SRL. Balance Sheet Developments Assets In terms of assets volumes - Piraeus Bank Romania finished the year 2010 with total assets under direct administration amounting EUR 2,245.0 million against EUR 2,299.5 million by 31 December Assets Under PBR s Administration EUR milion Assets - Currency Structure EUR milion Dec 2009 Dec 2010 Dec 2009 Dec 2010 PBR Assets Assigned Loans, under PBR s administration LCY Assets FCY Assets

20 18 In addition to the above, assets in amount of EUR 1,840.5 million have been committed on behalf of Piraeus Bank-London Branch following the policy of active cost management and distribution of assets. During the whole year Piraeus Bank Romania acted as an agent, managing the external portfolio while the risk and related income laying with London Branch. It should be emphasized that the managed loans are associated with Piraeus Bank Romania s efforts in terms of customer relationships, portfolio build-up, and initial risk assessment. Furthermore, in 2010 reliable credit risk measurement is of top priority within the Bank s risk management framework.the continuous development of infrastructure, systems, and methodologies aimed at quantifying and evaluating credit risk is an essential condition in order to timely and efficiently supports management and business units in relation to decision making, policy formulation and the fulfilment of supervisory requirements. Thus, at year-end 2010 Piraeus Bank Romania had under its administration assets amounting EUR 4,085.5 million (-2.8% decrease), by combining its own loans with those belonging to Piraeus Bank-London Branch. The currency structure of the assets shows a decrease in local currency -13.4% (EUR million in 2010 against EUR million in 2009) compared with a slight increase of +4.5% (EUR 1,479.3 millions in 2010 against EUR 1,415.5 millions in 2009) of foreign currency portfolio. Loans In 2010 the bank focused its strategy on limiting the volume of loans under its direct administration in order to manage and control its credit risk exposure and concentration. Aligned on present market conditions, the total loan portfolio of the Bank, reached EUR 3,331.6 million (2009, EUR 3,528.0 million) considering also the loans assigned to London Branch. The Bank continues to be focused on strong actions towards maintaining the non-performing portfolio within manageable and reasonable limits, mainly through restructuring process. In the light of a steep decrease in loans demand, for both retails and companies, the Bank continues to have a stable structure of loan portfolio with a 62.3% loans for Companies (63.6% in 2009) and 37.7% (36.4% in 2009) for Individuals. Beyond the IFRS figures, the lending evolution for the whole year 2010 should be completely understood by taking into consideration as well the amounts of the loans committed by Piraeus Bank-London Branch which decreased with 3.4% until EUR 1,840.5 millions compared with EUR 1,905.1 millions in 2009.

21 19 Structure of Loans in Administration EUR milion Loans Under PBR s Administration EUR milion Individuals Loans Structure EUR milion Dec 2009 Dec 2010 Dec 2009 Dec 2010 Dec 2009 Dec 2010 Corporate SMEs Individuals PBR Loans Assigned Loans, under PBR s administration Mortgage Other (Personal & Consumer) Loan loss provisions ratio increased from 8.60% as of 2009 to 14.34% of total loans as reported in IFRS figures as a result of deterioration of general macroeconomic environment. In the Retails Loan structure, the mortgage loan product keep the balance in face of the decreasing trend generated by the market and record an increase of 23.4% comparing the previews year level. In the same line the loans disbursements were tightly monitored. The opportunity offered by the cross-selling products strategy and smart marketing actions gives Bank the chance to be a real choice for more than clients. The currency structure of loan portfolio shifted between foreign currency (69.3% as of 2009 to 72.5% as of 2010) and local currency (30.7%as of 2009 to 27.5% as of 2010). PBR s Own Loans for Dec % PBR s Own Loans Analysis by Sector as of Dec % 9% 1%2%3% 0% 9% 73% 74% LCY Loans 73% FCY Loans 27% Manufactoring & Trade 9% Financial Sector 2% Public Sector 0% Consumer 74% Hotels & Transport & Logistics 1% Construction 3% Mortagage 9% Other 2%

22 20 Liquid assets Consistent with its liquidity policy and compliant with both internal and external requirements the Bank continued to secure an adequate management of its liquidity. The Cash and balances with Central Bank position decrease from EUR millions as of December 2009 to EUR millions as of December 2010 (-30.2%). Significant decrease of the Balances with Central Bank was generated by the relaxation of minimum reserves regime. Having the constraints derived from the agreement with IMF regarding the Group exposure towards Romania, the excess liquidity generated problematic challenges in finding the optimum placement solutions. The Bank is exposed to daily calls on its available cash resources from overnight deposits, current accounts, maturing deposits, loan draw-downs and guarantees. The Bank does not maintain cash resources to meet all of these needs, as experience shows that a minimum level of reinvestment of maturing funds can be predicted with a high level of certainty. The Bank sets limits on the minimum proportion of maturing funds available to meet such calls and on the minimum level of inter-bank and other borrowing facilities that should be in place to cover withdrawals at unexpected levels of demand. The excess liquidity derived from the relaxation of the NBR s minimum reserves requirements was absorbed in the increased volumes placed in T-bills and Government Bonds. Tangible and Intangible Assets By the end of 2010 the properties and the equipments of the Bank reached EUR70 million from EUR million with 49.2% higher mainly due to acquisition under finance lease of the HQ building. During 2010 the intangible assets followed a gentle decrease amounting EUR 4.91 million (showing a reduction of 2.6% vs. previous year). Liabilities & Equity The overall evolution of liabilities reflects the efforts of the Bank to diversify its financing resources in order to sustain the business development needs and also to maintain the strategically objective that target a low dependency of the abroad funding offered in favourable conditions by the mother company. During 2010 the Bank aligned its deposits interest policy with the market trends, by positioning itself within the medium to top range and within reasonable limits.

23 Equity Other Liabilities economic perspectives. The new market demands of the 2010 raised the competitions in retaining and increasing the volume of deposits on the local market. The customer deposits as of December 2010 reached the level of EUR managing the same level compared with December 2009 (EUR million). The economical perspectives impose a new strategic approach in term of liquidity both for customers and for banks. The retails customers become more oriented for saving products and banks intent to increase the liquidity indicators. Deposits from banks decrease in 2010 by 16%, from EUR million in December 2009 to EUR million by the end of Consistent to its business philosophy according to which the Bank leads its operations within a prudential framework, focusing the optimum convergence of profitability criteria with banking processes associated risks, the Bank constantly acted for maintaining an adequate capital base. The total equity figure increased with 3% from EUR millions (December 2009) to EUR millions (December 2010). Income Statement Liabilities Structures Dec 2009 EUR milion Subordinated Loans Due to Banks Dec 2010 Due to Customers During 2010, Piraeus Bank continued to find solutions for the customers needs in terms of individuals savings by launching new products: Depozitul de 10, a ten weeks term deposit with increasing interest, Depozitul de 3xCastig awarded as the best banking product by Finmedia in its 15th Gala. In addition to the attractive interest rates and tailored saving products, the volumes in customers deposits were maintained due to the At the end of December 2010, the bank s operating profit (i.e. profit before provisions and tax) increased with 9.52%, reaching EUR million from EUR million in the previous year. In the same time, following the steep increase in loan loss provision line, the profit after tax decrease to EUR 15.8 million in 2010 from EUR 19.0 million in Adopting a tight cost control policy, the bank successfully reached a small decrease of 2.8% in operating expense line (EUR 96.4 millions) compared with 2009 s expense (EUR 99.1 millions).

24 22 Operating Income Operating Expenses 300 EUR milion 100 EUR milion Dec 2009 Dec 2010 Dec 2009 Dec 2010 Net Interest Income Net Trading Income Net Free and Commission Income Staff Expenses Depreciation Administrative Expenses The accelerate declines in both loans demands and offer led the Bank to attentively manage the interest rates, matching both its profitability requirements as well as the clients needs. In the same time the liquidity concerns in the market push all the players from banking sector to adopt continuous measures to adjust the interest rate margins. Even with these actions the net interest income line (i.e. EUR 89.9million) rose by EUR 26.4 million from the previous year (i.e. EUR 63.5 millions, an increase of 41.6%), holding a share of 40% in the 2010 operating income. The bank s trading activity generated a decrease in the net trading income of 33.4%, with EUR 29.8 millions more than previews year s balance (i.e. EUR 89.2 millions). The net trading income consists in the revenues of the Bank from foreign currency exchange operations with customers, currency swaps, as well as from the inter-bank transactions. In line with the funds structural changes (i.e. a shift from inter-bank funds to customers deposits resources) in 2010 the share of customers deposits in total interest expenses grew up to 71.9% from 67% in Subsequent to the business consolidation measures, the net fee and commission income grew to EUR 74.9 million from EUR 62.9 million in 2009 (i.e. an increase of 19.1%). The increase in fee and commission income was mainly driven by the management fees charged for the administration of the loans belonging to Piraeus Bank-London Branch, which reach to EUR 65.6 million comparing with EUR 56.2 million at the end of Due to the continuous effort of the Bank to enhance the efficiency, the cost to income ratio improved from 45.9% in 2009 to 42.9% in 2010.

25 Corporate Banking

26 24 Conducts Romanian wholesale banking activities addressed to local companies as well as to Greek owned businesses present on local market. Corporate Banking Division provides comprehensive financial solutions to large sized companies, multinational corporations, financial sponsors and institutional investors. The primary focus is to prudently develop profitable relationships across stable businesses in which the Bank has developed industry expertise over the years. PBR s Own Loans Analysis by Sector as of Dec % 2.04% 18.23% 6.42% 33.30% 0.17% 5.24% 2.88% 10.03% 0.14% 12.59% Real Estate 33.03% Construction 8.97% Agriculture 2.04% Financial Sector 18.23% Tourism 6.42% Public Sector 0.17% Trade 12.59% Handicraft 0.14% Manufacturing 10.03% Transport 2.88% Other 5.24% Corporate banking achieved very good results in 2010, with value added businesses, the department having a strong contribution towards Bank s good results. The main highlights of the Department s activity are summarized as follows: managed to maintain the Corporate portfolio at an aggregate level in spite of tough competition and adverse economic environment. focus on developing parallel business such as: installing POS and ATM machines, issuing payroll cards, attracting deposits, issuance of insurance policies. new deals were also concluded, through developing business with existing customers as well as starting bank relationships with new ones.

27 25 Piraeus Bank Romania s (PBR) Corporate Banking adapted its policy to a continuously changing environment, capitalizing on changes in the regulatory practice, to help ensure that it applies the highest standards across all our businesses and is up to the excellent reputation. On account of the economic crisis which continued to affect the Romanian economy in 2010, the department focused a large part of its personnel on coming in the aide of those customers which have been affected by the existing financial crisis and offered them support through various financial solutions / restructurings of part of the loans. This was done with a constant focus on the bank s profitability. The Corporate Department is also pro-actively involved in the development of the Bank s product portfolio by creating new value added products which would increase the profitability of the department and would keep the Bank in line with the market s evolution. At this moment several new products are under development such as: Cooperation with Eximbank for conclusion of a risk sharing agreement (i.e. Eximbank to guarantee up to 80% of a certain exposure approved by PBR, based on a certain eligibility criteria and conditions); Treasury Direct: a product designed in order to permit the Bank have a control over the transfers of the funds cashed in the State Treasury accounts by various PBR customers; Discounting APIA certificates (which attest subsidies to be received from the State) agreements to be concluded with APIA (Agency for Payments and Intervention in Agriculture) and FGCR (Guarantee Fund for Rural Credit).

28 Retail Banking 26

29 27 Individuals sector In 2010, the retail customers tempered their appetite for savings and refocused on loans, but mainly for acquiring new properties or for consolidating their current debts. This evolution was favoured by two modifications of the regulatory environment implemented mid-year: the new regulation regarding the loans granted to individuals and the introduction of taxation for the incomes from interest. As always, Piraeus Bank Romania offer provided retail products tailored for giving the best solution with regards to the new priorities of its customers. Thus, the bank continued the involvement in Prima Casa governmental program, granting to hundreds of young families the financing needed for their home. Also, in order to help its customers to reduce the burden of the instalments in their monthly budget, Piraeus Bank has launched a special debt consolidation loan. Due to this the new product, the bank gave the customers the possibility to diminish the costs for their existing loans, refinancing them without paying any new analysis fees. Further more, for all the applicants, the bank paid a life insurance all through the loan period. These two actions contributed to the increase of the retail secured loans portfolio with 16.1% during In terms of savings products, Piraeus Bank tried to smooth for its customers the introduction of the tax on interest income and, during a promotional period, for Piraeus 100% deposit the bank refunded the tax to the loyal customers. Continuously interested in finding the best solutions for customers needs, Piraeus Bank created Depozitul de 3xcastig, a 3 months term deposit offering to the customers the possibility to withdraw a part of the accumulated savings (30%) without any penalties and also guaranteeing to the customer an increase of the interest rate versus the standard one at each of the deposit rollover. Depozitul de 3xCastig was awarded as the best banking product by Finmedia in its 15th Gala. Also, Piraeus Bank celebrated its 10 years presence on the Romanian market, by launching an anniversary product: Depozitul de 10, a ten weeks term deposit with increasing interest. With all these actions, Piraeus Bank managed to outgrow again the market in terms of individuals savings (+13.3% increase during 2010). The focus of Cards Business in 2010 was to increase customer satisfaction and loyalty as well as to reduce attrition. This goal was achieved by constantly improving

30 28 card products and by adding new services/benefits and usage & activation campaigns for credit and debit cardholders. Piraeus Bank card products are fully compliant with EMV security standard by completing CHIP issuance project with both Visa and MasterCard in the first semester of the year. Credit card products were enriched with insurance services that meet consumer s needs: travel medical insurance abroad and purchase protection for shopping abroad insurance for unforeseen unpleasant events (unemployment and death). Credit card sales & spending was encouraged by a campaign promoting purchase transactions and offering a grace period of up to 90 days for all purchases performed in the first 3 months of the card issuance. We actively participated in usage campaigns organized in cooperation with Visa in order to increase POS spending and card payments awareness. Debit card sales registered an increase of 16% in 2010 compared to 2009, the main driver of the increase being the focus on payroll conventions, students and pensioners segment. Merchant acquiring activity was enriched by adding to the network valuable and meaningful merchants for the issuing activity, the strategy being to create synergies between issuing and acquiring business. Piraeus Bank was awarded by Visa the Innovation of the Year for First Unattended Terminal for local taxes payment, for the cooperation with Bucharest District 6 regarding the tax payment terminals. Piraeus is the first bank in Romania to offer this service to cardholders in order to encourage and simplify tax payment with a card. The ATM network was enriched with more bill payment providers, continuing the trend started in 2009 to transform ATMs from cash dispensing machines to service providers and cheap promotional channels, by enhancing customers satisfaction level. Internet Banking / Direct Debit/ Fast Money Transfer Services During 2010 Piraeus Bank continued to diversify the range of utility providers to which the clients may pay their invoices through Piraeus Online Banking by adding energy and telecommunication companies. Also starting 2010, among the other facilities offered to the internet banking users, the bank introduced the possibility for the customers to credit their investment accounts opened with the bank, and the assignment of receivable accounts of other customers. The number of internet banking users continued to increase so that around 4,000 new individuals and 1,700 new corporate users were enrolled.

31 29 The increase is reflected also in the number of transactions, the internal transfers being 40% higher than the previous year. The values of internal transactions increased also with around 65%. Individual clients continued to perform the majority of their external transactions online, reaching around 75% of the total transactions per bank. In case of corporate clients, the weight is lower but still high compared to the total external transactions of the bank (47%). In order to help its customers avoid the visits to utility providers offices or even to the bank for paying their invoices, Piraeus Bank launched in a Direct Debit service. For the future, the Bank intends to extend and diversify the types of beneficiaries by also adding the insurance companies to the list. The Bank also provides the international Western Union fast money transfer service. Western Union enables the public to receive or remit money without opening an account with the Bank, to any Western Union facility located in more than 200 countries. Direct Sales The activity of Direct Sales in 2010 was marked by the increasing range of banking products sold through this sale channel and the increasing emphasis on quality. In 2010 we have maintained a high productivity on individual, and focused on mortgage loans and mainly Prima Casa loan. Due to the market conditions, austerity measures and the general economic climate, identification of high quality customers was a major target for us and had priority in Direct Sales sales process. We have focused on customer s needs, in order to consolidate the portfolio and attract new well prepared customers from accessing banking services and especially credit services. Trying to build a stronger connection with our existing clients was an important target for us. Whether their finances were affected or not by the crisis, our policy was oriented to make our clients loyal and to help them adapt to the changing economic environment. In 2010, a volume of EUR 2,544,304 was disbursed, conducted by the Direct Sales channel. Through sustained activity, Direct Sales department prepared its portfolio in order to cross sell other financial services.

32 30 Retail Partnerships The results of PBR Retail Partnerships department during 2010 were obtained along with the most representative financial brokerage companies operating in Romania and reflects the real performance of our retail lending products. Retail Partenership Disbursements Through Financial Brokers Personal Loans Collateralized Loans mio. EUR 2010 Disbursements Through Financial Brokers 17% 54% 29% Prima Casa 29% Mortgage + Home Equity 17% Personal Loans 54%

33 31 In 2010, the financial brokerage companies directed a total annual volume of 10,07 million EUR to Piraeus Bank. Out of this, approximately 46% (EUR 4,66 mil.) represents collateralized loans, including Prima Casa (29% - EUR 2,95 mil.) and 54% are personal loans. Out of the overall volume disbursed through PBR partners in 2010, 83% represented personal loans and Prima Casa loans, while the equity backed products as well as the housing/ mortgage loans are virtually non-existing, even if they have the potential to generate the highest volumes. The sharp decrease of the amounts disbursed by the financial brokerage companies through Piraeus Bank was generated mainly by our retail products lack of competitiveness, the banks speed and flexibility in credit analysis, and the structure of commissions paid to the financial brokers. Due to a long term and quality relationship developed along with our Partners, they have confirmed the interest to further strengthen our cooperation and direct up to 60% of the generated volumes to Piraeus Bank, not only significant volumes but also quality customers. The amounts involved are estimated to EUR 3,5 million/month. However, such an evolution requests that our lending products, the structure of commissions paid to the financial brokers as well as the workflow are brought to competitive levels. Retail Payroll Packages During 2010 Retail Payroll Packages Department continued to diversify its customer segments by creating special offers addressed to clients categories like students, teenagers and pensioners. The number of payroll conventions increased with around 61.5% in 2010 compared to 2009, the main driver of the increase being the focus on attracting new funds. As a result, the number of the new individual clients rose with direct impact on the number of current acc. Marketing In 2010 Piraeus Bank Romania reached 10 years of banking on the Romanian market and almost 100 years of experience given the belonging to Piraeus Bank Group, founded in In figures this period means the bank continuous development, growing from 2 to 187 branches, exceeding from clients to In 2010 Piraeus Bank Romania moved into a new HQ, which belongs entirely to the institution. The new

34 32 building is located in the center of Bucharest and has 15 floors with total area of 14,320 sqm. The value of the investment exceeds EUR 20 million, being a statement for the bank stability and business increase. In November 2010, Piraeus Bank Romania signed a 2 year partnership with the Romanian Olympic and Sports Committee meant to support our athletes at the 30th edition of Olympic Games in London, In this period, our bank will sustain our National Olympic Team, having the certitude that their hard practice hours will lead to performances. Our 2010 Marketing activity together with this 10th years anniversary gave us the opportunity to launch a dedicated advertising campaign for Depozitul de 10, a 10 week term deposit with increasing interest. The TVC for this product was broadcasted in 2 waves, one in April-May period and the second in October. In December we have launched another important product in our portfolio Debt Consolidation Loan. The campaign broadcasted on television through 3 executions commercials, having as main purpose to attract the audience to gather in one credit all the liabilities.

35 SME Sector 33

36 34 Out of the 183,000 Small and Medium Enterprises (SME) that have suspended their operations in 2010 in Romania, only 26,000 were active, the main cause of activity suspension being considered the introduction of the minimum flat tax. By closing these businesses, 56,000 people were directly affected by job loss. According to a 2010 survey conducted 2010 by CNIPMMR (National Council of Small and Medium Sized Private Enterprises in Romania) in the eight regions, half of SMEs claimed to be severely (25.49%) or very severe (23.53%) affected by the current economic context. A percentage of 36.27% of the SMEs surveyed acknowledged environmental impact of new financial and economic climate on their businesses and 11.76% of them said that their businesses have suffered only slightly negative runs. In general, greatly affected by the crisis are industrial areas whose economy depends on a high extent to large companies that are geared primarily for export, since they also support SMEs in the region, local providers and large local enterprises as well as the construction sector. In this environment, the approach of Piraeus Bank Romania towards the SME segment was to grow the business based on the principle of Know your client through: Increasing the exposures on the existing customer base in the cases where this was permitted from risk point of view. Attracting new clients that were not very exposed in other banks. Developing sales programs focused on targeting specific industries that were not significantly affected by the crisis. Implementing the risks systems that enabled us to be more selective about the kind of risks that we want to take. Attraction of new deposits has remained one of the primary focuses, together with the increase of the operational income through: Increasing the customer base either through loan relation or operationally. Better monitoring of the existing customer base with focus on turnover condition follow-up and cross selling. The third area of equally high importance was the optimization of the existing processes and flows, updating the products and offers of the bank in order to be adjusted to the changing market environment. The bank will keep developing products and solutions, especially in providing support for the SME s to access the non-reimbursable funds for the projects with European funds component.

37 Branch Network 35

38 36 In 2010 the Bank had consolidated the national coverage, despite the decline in market banking activity. The Bank s branch network at the end of December 2010 comprised 187 operational units, one more branch being added to the network during 2010, located in the new premises of the Headquarters of the Bank. At the end of the year the bank has a consolidated presence in all the counties in Romania, besides a strong coverage of Bucharest (60 branches in Bucharest 32% of the total branches and 127 branches outside of Bucharest 68% of the total branches). Out of the total number of units, 32 were opened after the crisis has started (17% of the branch network). Despite difficult economic environment, the Bank s top priority remains the development of a reliable and long term relationship with its clients, both SMEs and households, by having a proactive, flexible and customized approach, and improving the quality of the provided services. The strong presence of the Bank along with the continuous effort of the employees contributed to the increase of the customers base, reaching approximately 324,000 active clients by the year end. By increasing efficiency of operations and optimizing activities, the branch network succeeded to run a profitable business and to have a strong contribution in the overall bank s business.

39 Treasury 37

40 38 Treasury Division 2010 was a challenging year for the Romanian Banking Sector, as significant depreciating pressure threatened RON after the Constitutional Court rejected fiscal measures proposed by the Government and the VAT was increased to 24%, nonperforming loans continued their increasing path, and the global financial crisis continued to make its presence felt in Romania and in the region. However, 2010 was for the Treasury of Piraeus Bank Romania a very successful one, as we managed to sustain the profitability of the Bank by the very good results obtained by managing the Fixed Income Portfolio. The sharp decrease of the RON yields in the market at the beginning of the year, registered after successive decreases of monetary policy interest rates by the Central Bank (from 8% in December 2009 to 6.25% in June 2010) found the Bank with a very good position in fixed income instruments, that contributed to increased profitability and consequently a very good image in the interbank market. The assets of the Bank were maintained mostly constant during the year, the extra liquidity released from decreasing the mandatory reserves with NBR being invested in Romanian Bonds and Treasury Bills, while the Bank was focused on increasing the liabilities in the context of high competition. Most of the Treasury s activities in 2010 were focused on placing the liquidity and taking advantage in the most efficient manner of the market opportunities. The Treasury strategy was oriented in increasing the customer deposits base, while benefiting of the opportunities in creating high yield assets. Treasury Sales The Treasury Sales Desk continued to offer support to all bank s business units through high quality services and competitive pricing for a variety of products (in FX, MM and FI worlds), with increased emphasis on clients liabilities management. In this regard, the Piraeus Electronic Trading System (PETS) was launched as a modern platform for foreign exchange, money market and gold transactions. During this period, Gold product brought realized remarkable volumes, 5 times higher than in the previous year. The Romanian market reacted positively to this new investment vehicle and led Treasury Sales Desk to start the implementation of a new Gold related product: the Gold Account. To support its current activity, the Sales Desk continued to perfect its infrastructure for both Corporate & Retail Sales Desk and Institutional Sales Desk, producing timely reporting and monitoring systems, especially for Forwards, Margin Trading and Fixed Income Products.

41 39 In the effort to identify new products and business opportunities by targeting new segments of clients, a new area has been introduced as Private Banking services was the starting point for the development and implementation of the new department, while the start of the activity was scheduled for the first quarter of In the difficult 2010 international context, with countries from so-called peripheral nations fighting with market tensions, Greece was forced to sign an aid package in order to regain investors confidence. Although the environment was difficult, the Institutional Sales Desk continued to have the same incentive of expanding the customer portfolio and maintaining a good collaboration with the existing one. In the same time, the Desk succeeded to cover a new typology of clients such as: guarantee funds and counter guarantee funds, brokerage companies as well as all the new investment funds which were launched during the year. The volumes carried by institutional customers were significant higher, in terms of amounts and products traded. Due to the unbalanced environment, a high dynamic was registered on repo transactions, for which a Master Agreement was developed in collaboration with Interbank and Legal Department. Starting with 2010, sell buy back transactions were not recorded as liabilities under RAS and IFRS; therefore we switched all the outstanding sell buy back transactions to repo. Lack of EUR RON volatility combined with decreased offshore interest in the local market encouraged looking for new ways to extend the business for the FX Trading Desk. In order to provide improved service for customers needs, we increased our expertise in the CE3 markets and especially on majors, by enlarging the activity and staff handling the FX Desk. Expanding the market presence by obtaining new trading lines with top London banks was also one of the key accomplishments in 2010, almost doubling the traded volumes. New hedging solutions for customer with significant FX exposures were developed together with the Sales Desk. For interested counterparties, sound technical analysis, foreign exchange and precious metals forecasts were available on request. During 2010, the Money Market Desk continued to advocate for a sound Asset and Liability Management of the Bank, by covering all funding aspects of the Bank s activities, finding appropriate solutions to obtain or place liquidity and increasing progressively its market presence. As RON interest rates on the interbank market generally followed a strong decreasing trend, gaining ground after high levels seen in 2009, and liquidity conditions were favorable, activity and volumes in both deposit market and fx swap market increased along with limits related to relevant counterparties. NBR kept a permanent presence in the market, by attracting amounts of extra RON liquidity from the market through deposit auctions, as main tools for sterilization.

42 40 Credit risk and reluctance in working relations were present as always, nevertheless relations with local banks remained solid. During the first part of 2010 RON bond yields decreased significantly from 10% to 6.75%, as a consequence of the decreases of interest rates performed by the National Bank of Romania and optimism in the markets. The trend reversed although in the middle of the year, when negative pressures appeared due to high budget deficits registered by certain European countries and also due to political uncertainty in Romania. In the first three months of the year, the yields for newly issued government debt decreased from above 9% (for 1Y and 3Y maturities) to around 7% and stabilized at this level for the rest of the year (across most of the maturities). Of the total RON 44bio issued in 2010 more than 85% was concentrated in short term papers T-bills with maturities of up to one year. The Ministry of Finance also managed to raise EUR 1.5bio in EUR denominated debt during 2010, most of which after a successful auction for 1Y T-bills. Piraeus Bank Fixed Income Desk continued to sustain the secondary fixed income market by being one of the most active players, maintaining a constant presence and a very good relationship with other banks in the market and institutional players and providing tight spreads and forward looking prices. Piraeus Bank had an active and constant participation in the efforts to develop the RON repo market. The Bank continued to be involved in the ACI Romania project for setting up the repo contract in the format of GMRA.

43 Human Resources 41

44 42 Aiming to consolidate the image of the Bank in the Romanian Banking System as a flexible organization, representing its customers and its employees, Piraeus Bank management kept the focus on a healthy organizational stability. Our main objective is to bring out the potential of people and ensure their commitment to achieve excellent results. In 2010 the main challenge of the Human Resources Development was to maintain a strong team of professionals capable to operate effectively within the competitive environment of the banking market, being, in the same time, an attractive employer. This is achieved by modernizing organizational structures, training systems and rational management of human resources, focused on building a culture among staff members, with the following main features: passion for the customer, team spirit, professionalism, effectiveness, entrepreneurial vision and emphasis on learning change process. Number of people employed to implement business goals At the end of 2010, Piraeus Bank Romania employed 1,901 people, compared to 1,886 in 2009, recording an insignificant increase of 0.99%. The active staff number recorded at December 2010 was 1,728, compared to active staff number at the end of 2009 of 1,783, with a 1.03% decrease. During the year 2010 it has been recorded an increase of 70% of the suspended contracts due to maternity leaves. The recruitment process is based on adequate procedures free of discrimination, utilizing specific candidate selection systems, by using modern appraisal and selection tools. These tools may vary according to the candidate s educational and experience level, and include both competencies and professional tests Staff Number

45 43 Human resources distribution by Gender, Age and Area 65% of total Bank employees are female, while 35% are male; 43% of employees operate within the Headquarter, while 57% are allocated to the branch network Age Distribution YO YO YO YO 4 56 YO Female Male The age distribution of employees represents a major advantage of Piraeus Bank Romania. The age composition favors the introduction and implementation of new technologies, methods and targets, as the average age of our people is 31 years. At the same time, the high rate of graduate and post-graduate degree holders (80%) is another advantage. The Bank managed to hire high quality and education employee, who contribute essentially to the achievement of its business objectives. 55% of total workforce (both Headquarter and branches employees) is located in Bucharest, while 45% is distributed in branches outside Bucharest. 67% of total workforce is represented by branches employees, while the rest of it operates in the Headquarter. 7% 6% Region Distribution Brasov 6% Cluj 6% Craiova 5% Constanta 6% Iasi 7% Ploiesti 7% Timisoara 6% Bucuresti 57% 6% 5% 7% 57% 6% 6%

46 44 People continuous development Following the Group s policy, we consistently invest in the development of our employees, with the main focus to exploit their full potential. The learning programs developed are focusing both on internal workshops held by dedicated internal trainers, and external seminars developed to enrich employees abilities. Main objective for the Training & Development area is to have motivated, committed and proficient employees within the Bank. Total number of training participants/ hours in 2010 was 36,320, recording an increase with respect to the 26 percent in 2009, with a total number of 4,145 participants in any training event (69% increase versus 2009), totalizing an average of 9 training participants/hour/number of employees. 28% of total participants/hours was accomplished by male, while 72% by female. Distribution by hierarchical level showed that 16% of participants were at managerial level, while 84% were at operational level. Out of the total participants/hours, 26% was dedicated to the development of financial and banking knowledge, 68% focused on developing selling skills, service level or to enhance product knowledge, but also on quality customer service or managerial & leadership skills development. The remaining 6% was dedicated to the development of specialized technical training (courses aiming to provide specialized technical knowledge not directly connected to the core activities of the Bank). Allocation man/hours by form of training Training on job E-learning Classroom On the e-learning platform we provide online training for the employees. Through this platform we aim to increase employee s knowledge in Products, Operations, Loans Individuals, SME Loans, Compliance, Anti Money Laundering, and Significant Risks. Another alternative for professional skills development is the online Skillsoft a series of courses developed by professionals and internationally recognized. A total of 16,620 participants/hours were allocated in 2010 for e-learning courses, compared to 6,408 participants/hours allocated in 2009 (61% increase).

47 45 For a better understanding of Bank s Products, Individuals & SME Loans, internal trainers provided On the Job Training to employees from the branches and agencies in Bucharest, continuing the effort invested in Employees accessed as well in class training sessions offered by external providers. In line with this, more than 420 employees participated in workshops regarding operational risk, developing selling skills, specific seminars for cashiers, team consolidation, credit school, trade finance, financial analysis, etc. During 2010 the Bank received non-reimbursable funds for human resources development, a project that consists of implementing a 2-year training program for both managerial and non-managerial positions. Training sessions are available for about 800 participants and are provided by external training providers in the field of management, communication and sales. By the end of 2010 a number of 98 employees benefited of these courses. In order to offer a better informational support for new comers, an induction program is offered to employees on all hierarchical levels, which is also present as an interactive tool on the e-learning platform. Rewarding employees Piraeus Bank Romania acknowledges that it has to attract and retain the appropriate people with the required knowledge and skills in order to achieve its strategic goals. The Bank participates every year in salary and compensation & benefits survey in order to have access to benchmarking indicators. On the basis of the equal opportunities policy, a minimum pay level salary is established for entry-level position, with no distinguish between men and women. It is noted that in all aspects of human resources the Bank 100% respects and follows legal procedures in place. Human Rights in PBR In Piraeus Bank Romania employees acknowledged the Human Rights Policy and an Employee Survey has been conducted on Human Rights. The survey s results revealed positive approach of all the 5 principles: Forced Labor, Child Labor, Equal Opportunities, Health and Safety in the Workplace and Working Conditions. The detailed analysis involving the age, gender, work experience and organizational unit didn t reveal significant correlations.

48 46 Performance Appraisal in PBR Performance Appraisal Process in Piraeus Bank Romania was formally implemented in year 2009 and it is based on two modern on-line systems in which both supervisor and employee interact besides the appraisal meeting. Participation rate was almost 100% of the eligible employees (both managerial and non-managerial positions) involved in the process. Employee Evaluations per Status Completed 98.6% Evaluation by 2nd Supervisor 0.1% Evaluation by Direct Supervisor 0.2% Not Started 0.2% Review of Evaluation (Employee) 0.4% Self Evaluation 0.5% 98.6% Two dimensions were evaluated, overall performance and competencies, main purpose of the process being the continuous development of employees by identifying the strong areas and the aspects that need improvement. General average performance rate was 3.56 (for a scale from 1 to 5), while the 3.62 average for competencies recorded a slight increase versus year 2009 in both dimensions. According to performance scale this result shows that level of performance and efficiency is situated at a good level.

49 Outlook for the Future 47

50 48 By most indications, Romania s macroeconomic fundamentals look encouraging for the year It is supposed that the country s macroeconomic fortunes are materially improving and that the long-term foundations for solid economic growth are in place. Romania endured a painful adjustment in the aftermath of the global financial and economic crisis, first suffering a balance of payments crisis as foreign financing dried up and then a fiscal crisis as tax receipts collapsed against the backdrop of flagging economic activity. The crisis necessitated IMF support and fiscal austerity measures, eventually forcing a sharp re-balancing of the domestic economy, a devaluation of the national currency and a double-dip recession that only ended in Q410. However, it is believed that the country is now well-positioned to reap the benefits of newfound competitiveness. In respect to Piraeus Bank the aim for the next years is to further strengthen its position within the Romanian market in all segments, to maintain a solid and healthy balance sheet, by promoting sound and prudential policies and strategies, superiorly enhancing the efficiency, offering customer-driven solutions, adapting the business models and fully exploiting synergies and cross-selling.

51 Subsidiaires 49