18/3/2011
To our stakeholders:
I am pleased to confirm that Ceskoslovenska obchodna banka (CSOB – Slovak banking legal entity and member of Belgian Financial Group KBC) reaffirms its support of the Ten Principles of the United Nations Global Compact in the areas of Human Rights, Labor, Environment and Anti-Corruption.
In this annual Communication on Progress, we describe our actions to continually improve the integration of the Global Compact and its principles into our business strategy, culture and daily operations. We also commit to share this information with our stakeholders using our primary channels of communication.
Sincerely yours,
Andrea Gajdosova, Specialist for CSR and Sponsorship
(beacuse of a business trip of Daniel Kollar, CEO of Ceskoslovenska obchodna banka, his statement cannot be provided today and will be confirmed as soon as possible)

Ceskoslovenska obchodna banka (CSOB) fully respects, supports and has implemented the principles underlying universal human rights, including the right to equal opportunity and non-discrimination, the right to the security of persons, the right of employees (including opposition to any forms of compulsory of child labor, the right to a safe and healthy working place, the right to freedom of association and collective bargaining), respect for national sovereignty and obligations with regard to consumer protection and environmental protection. In this respect CSOB proclaims a spirit of the United Nations Universal Declaration of Human Rights, the Fundamental International Labor Organization Conventions, the European Convention for the Protection of Human Rights and Fundamental freedoms and other international and regional human rights treaties containing internationally recognizes standards that the business sector must respect, and complies with the law, rules and regulations of the Slovak Republic. The issue was adopted by the official KBC Group´s statement on human rights. CSOB has defined respecting of human rights in written policies such as Code of Conduct (generalized document) and Collective Contract (special document concluded between the company as an employer and Trade Union of the company).

Clear and explicit reference on respecting human rights is included also in the Code of Conduct, generalized document adopted from KBC Group. The Group´s managers monitor compliance with the Code of Conduct and regularly evaluate the individual conduct of staff against group values. Failure to comply with the Code of Conduct can lead to the imposition of sanctions foreseen in the applicable rules, on the basis of which the local working relationship is regulated and will be applied after impartial, sensitive and fair examination. This Code of Conduct is based on the values of the group, and as such forms the basis for the development of specialized codes for specific target groups, Group Compliance Rules, Group Standards, etc.

Among other important issues the Collective Contract defines elimination or interdiction of discrimination. CSOB is obliged to ensure equal treatment of all employees regarding their working conditions, including remuneration and other monetary transactions and monetary value, training and opportunity to achieve post or other promotion. The unequal treatment is not a distinction to be determined by the Labor Code or by special legislation or if it is the real reason inherent in the nature of work the employee performs and which is necessary for this exercise. In the labor relation is prohibited direct and indirect discrimination on grounds of sex, sexual orientation, race or ethnic origin, nationality, national or social origin, gender, language, disability, age, religion or belief, property, marital and family status or responsibilities the family, political or other opinion, membership and activity in political parties or political movements, trade union or employer organizations; discrimination because of pregnancy or maternity is considered sex discrimination. Discrimination is also considered deal involving incitement, inducement or coercion leading to the induction of discrimination.

As far as the rules of recruitment and employment are concerned, all CSOB´s internal regulations respect or are based on the Labor Code, effective and valid in the Slovak Republic, that covers respecting human rights and preventing potential abuses.

Respecting human rights CSOB demands also from its suppliers. In 2009 with respect the KBC rules the company implemented it to the Request for Proposal rules (RFP). Since that all suppliers, who have been contacted with respect the RFP have to submit together with proposal also the declaration with such information.

Ceskoslovenska obchodna banka (CSOB) respect the written policies respecting human rights and provides equal opportunities for employment. As far as the rules of recruitment and employment are concerned, all CSOB´s internal regulations respect or are based on the Labor Code effective and valid in the Slovak Republic that covers respecting human rights and preventing potential abuses. CSOB follows all these regulations in every communication with employees or candidates. CSOB communicate all new work positions publicly, in both genders (he/she manager) as well.

In connection to a Slovak legislation the company has a duty to employ certain percentage of handicapped or disabled persons. The high of percentage depends on the number of employees of a particular company. If it is not able to follow this law the company should either pay a penalty in to the state or have a possibility to use services or goods from some sheltered workshops employing handicapped people. CSOB also uses this possibility because it also haven’t been able to employ the exact number of handicapped people, but the company order the guard services from the sheltered workshop.

CSOB demands to respect human rights also from its suppliers. With respect to the KBC rules the company implemented it to the Request for Proposal rules (RFP). Since that all suppliers, who have been contacted with respect the RFP have to submit (to the CSOB´s Procurement Unit), also the declaration with such information. If anyone of these suppliers does not provide us this declaration, he/she will be eliminated from the RFP. The suppliers by their signature of the document confirm non-acceptance of child and forced labor, respect to the Collective Contract, elimination race and any discrimination, respect to an anti-corruption policy and reduction of negative environmental impacts.

All the employees have a possibility to raise an objection or make a complaint about incidents of human rights violations towards any of their colleagues. Respecting special, delicate cases or non-specifies requests the company created a separate mail box my@csob.sk, where all the requests and questions can be addressed. The mail box is checked by the CSOB´s Internal Communication and CSR Unit that afterwards deals with the requests or distributes them to the relevant units of the company.

CSOB is also aware of importance of awareness raising or training of employees on human rights. All the above mentioned documents are available on the intranet (accessed by all the employees) and irregularly presented in other tools of internal communications (weekly newsletter, quarterly magazine).

During the reporting period CSOB put the area of the protection of human rights in the special trainings, e.g. introduction days for new comers cover this topic in presentation of Human Resources Unit´s representative and Trade Union´s representative. As well as every new employee gets the short basic information on this topic signing the entrance contract and receiving all the entrance formalities.

Respecting human rights in the CSOB´s activities has been also reflected in developing CSR approach of the company. Following social requirements and benefits of implementation of CSR principles CSOB has started intensifying its CSR strategy, applicable for its needs and priorities. Since May 2010 a CSR agenda has been managed under the Internal Communication and CSR Unit. Respecting human rights and equal opportunities the company has been implementing philanthropic projects supporting education, community involvement, healthcare, environment and voluntarism of employees.

During the reporting period Ceskoslovenska obchodna banka (CSOB) did not have to treat any case of human rights violations. The company evaluated its community investment very positively.

In 2010 the CSOB´s employees were involved into voluntary activities, e.g. 138 employees provided 581 working hours. The most important activities were:
• Volunteering program Our Bratislava – supporting of corporate volunteering; organized by the Pontis Foundation and the Engage Group. Within two-days-happening it provided 54 different projects in four categories – health care, environmental revitalization, social work, education and development. It meant the opportunity for corporate volunteers to lend a hand and help the community. ČSOB employees used an opportunity to show the general public that private businesses are good neighbors and participated in environmental and community activities in three times higher number that they did last year. The program was intensively communicated via internal media as well as the social media (Facebook). (Amount of 333 EUR)
• Employees grant program – organized in long-term cooperation with the Pontis Foundation for four years. CSOB FS´s employees, who were cooperating with the NGOs can recommend them to receive grant from the program. The projects will be oriented towards specific domains and should have somehow contributed to support of a city or community. The successful implementation of the chosen projects are monitored and documented in the final report worked out by the Pontis Foundation. (Amount of 33 193,92 EUR)
• ČSOB HlavaPäta (Project for creative students and innovative ideas) – implemented with NGO Junior Achievement Slovakia; three competitions where the students will solve the actual problem designed by ČSOB – interconnected employees actively (mid-level and TOP management as supervisors and members of committee); outcomes available for ČSOB´s own use. The first competition organized in October 28, 2010 for the University of Economy´s students. Other competitions will be organized in April and October 2011. (Amount of 50 000 EUR)

Protection on human rights, including the right for life, is in the spirit of CSOB donation activities:
• Neonatology Center – donation of 40 000 EUR (provided in May 2010) was used for purchase of the specialized ventilator to regulate breathing and health care of the most risk group of newborns (supported by internal and external communication)
• Children’s Cardio Center Foundation – donation of 36 562 EUR (provided in May 2010) is being used for purchase of the specialized technical equipment.

During the reporting period the company implemented also the program Good Families supporting projects targeted to systematic work with families which are in a crisis, prevention programs for endangered families and program oriented to the development of family’s form of custody for children from orphanages. The program was supported in the amount of 29 210 EUR and implemented in cooperation with the Pontis Foundation.
The program More beautiful schools aimed to create spaces in primary schools which would motivate children to creative activities (eco classrooms, sport playgrounds, etc.). Grant program was announced in October 2009, results in January 2010, followed by the contract signing. Starting in February 2010 the project was implemented in cooperation with Association of Community Foundations in the amount of 26 555,14 EUR.

Further examples of CSR approach towards community respecting human rights and equal opportunities
• Donations of discarded PCs to non-governmental organizations
• Employees´ collection of cloth for homeless people
• Donation of old furniture for socially weak families touched by floods
• Revitalization of public spaces – grant program PrieStory (7 years in cooperation with the Ekopolis Foundation)
• Free of charge for NGOs´ accounts
• Due to enormous consequences caused by huge flood and land-slip CSOB has been providing a set of benefits for its employees and clients

Charity activities are involved also ins company sponsorship projects, e.g. in cooperation with the partner Be Cool agency the amount of 3 205,65 € from ČSOB BRATISLAVA MARATHON 2010 was donated to oncology ward for children. Within the event the company also paid the registration fee for participants from children´s homes.

Ceskoslovenska obchodna banka (CSOB) fully respects, supports and has implemented the principles underlying universal labor rights, including opposition to any forms of compulsory of child labor, the right to a safe and healthy working place, the right to freedom of association and collective bargaining. In this respect CSOB proclaims a spirit of the Fundamental International Labor Organization Conventions, and other standards that the business sector must respect, and complies with the law, rules and regulations of the Slovak Republic.

Respecting of labor rights in CSOB is defined by the fundamental document Collective Contract concluded between the company and Trade Union. The company is obliged to ensure equal treatment of all employees regarding their working conditions, including remuneration and other monetary transactions and monetary value, training and opportunity to achieve post or other promotion. The unequal treatment is not a distinction to be determined by the Labor Code or by special legislation or if it is the real reason inherent in the nature of work the employee performs and which is necessary for this exercise. In the labor relation is prohibited direct and indirect discrimination on grounds of sex, sexual orientation, race or ethnic origin, nationality, national or social origin, gender, language, disability, age, religion or belief, property, marital and family status or responsibilities the family, political or other opinion, membership and activity in political parties or political movements, trade union or employer organizations; discrimination because of pregnancy or maternity is considered sex discrimination. Discrimination is also considered deal involving incitement, inducement or coercion leading to the induction of discrimination.
As far as rules of recruitment and employment are concerned, all our internal regulations respect or are based on the Labor Code effective and valid in the Slovak Republic.

Ceskoslovenska obchodna banka (CSOB) is aware of a need of awareness raising or training for employees on labor rights and policies. The company has a plan of employment, training system, career development with transparent criteria. The company has internal regulations defining working hours, breaks, etc. Cooperation with Trade Union is concluded by the Collective Contract. The relevant information is available on the Trade Union´s website, CSOB´s intranet, irregularly in a weekly newsletter or a quarterly magazine.

Each new employee of the company receives the document defining his/her social benefits. Some of the benefits are based on Labor Code, some are benefits provided by CSOB itself, e.g. allowance for meal tickets; contribution for teambuilding; contributions within Cafeteria system; social support based on social situation of an employee; life insurance contribution based on employee´s insurance premium; contribution for supplementary pensions or targeted saving based on employee´s paid; health care program above standard health services; free working days beyond labor code; advantageous bank products.

CSOB defines all its internal regulations of recruitment and employment with respect to the Labor Code effective and valid in the Slovak Republic that covers respecting labor rights and preventing potential abuses. The company respects all this regulations in every communication with employees or candidates. CSOB communicate all new work positions publicly, in male and female gender as well on www.csob.sk and specialized portal www. profesia.sk.

All the documents, plan of trainings and relevant policies are available on the intranet, with an access of all employees. Internal trainings for employees are communicated also in weekly newsletter and internal quarterly magazine. In 2010 CSOB started a new education project for managers Top Leadership that provided specialized soft skills training for mid-level and top management. The information was spread by direct mailing and on the intranet were online registration was available as well.

All the employees have a possibility to raise an objection or make a complaint about incidents of human rights violations towards any of their colleagues. Respecting special, delicate cases or non-specifies requests the company created a separate mail box (my@csob.sk), where all the requests and questions can be addressed. The mail box is under the agenda of Internal Communication and CSR Unit that afterwards deals with the requests or distributes them to relevant units of the company.

One of outcomes of respecting of the labor right in the reporting period was Continuity in Consensus Program – the aim of the program was to soften a social impact on employees released in 2010 – during the fusion of CSOB and former Istrobanka (CSOB became a new owner of the Istrobanka Bank). In 4Q 2009 CSOB´s HR Unit prepared the program, passed negotiations with representatives of the CSOB´s Trade Union and Istrobanka´s. Program was successfully prepared, approved by our Trade Unions and entered into effect in January 2010.
The main areas of the support were following:
• employees’ accounts for free during 6 months after being released
• extra compensation money for the released employees who are in difficult social situation
• help how to assert on a job market
• outplacement program
• payout of the bonuses according to precisely defined conditions
• provision of Cafeteria vouchers according to precisely defined conditions
• provision of food vouchers according to precisely defined conditions.

Ceskoslovenska obchodna banka (CSOB) covers the area of environmental protection according to the environmental strategy of KBC Group, applicable for the CSOB´s need and options.

For upcoming year CSOB plan to make more discussion of managers of relevant departments and CSR specialist to evaluate current state of environmental protection activities, searching for new challenges and planning of further steps. The company plans:
• Further usage of energy savings lamp in CSOB´s buildings
• Implementation of cost-saving proposals from our employees (many of them are considering environment)
• Change of ordinary air-conditioners containing R22 for modern environmentally friendly ones
• To modernize 3 boiler rooms using natural gas in CSOB´s buildings
• Tender on supplier providing liquidation of separated waste (PET bottles)

The strategy in the area of environmental protection is managed by the Internal Communication and CSR Unit and Facilities Unit of CSOB. The proposal is approved by the Country Team. During the reporting period CSOB oriented for natural energy saving and managed a usage of fluorescent lamps in the company´s building.

One of the most extensive processes towards energy savings was an installation of 14 regulators on chimneys for savings of gas in boiler house in cca 10%.

During the reported period CSOB also implemented the motivational Cost-saving Program for its employees focusing on cost-saving bottom-up approach. The aim of this motivational program was the collection of saving ideas from individual employees and it was in fact a competition approved by Country Team in February 2010. In parallel, the aim was also to change the “culture” of employees’ behavior in the area of cost spending.

Based on a principle to encourage the development and diffusion of environmentally friendly technologies CSOB started the campaign for electronic bank statement at the end of 2010. The campaign was prepared for all the clients including employees.

The company has implemented the environment protection activities also in cooperation with NGO partners. One of the most effective and long-term cooperation is Public Spaces Program called PrieStory in Slovak, that was launched in 2005 as a brand new concept in Slovakia. It is based on the US program – Project for Public Spaces that has been adjusted to Slovak conditions. CSOB has implemented it with Ekopolis Foundation. Program endeavors to reach two main goals. The first, more visible one is to revitalize neglected public spaces and transform them into vital meeting places. The second goal, less visible but very important from our point of view, is to involve people living in the neighborhood, surrounding blocks of flats or streets in the planning of this reconstruction. In other words – people assist not just corporeally in reconstruction of the place itself, but also (and foremost) they come up with the idea of how the place should look, what kind of functions it should serve etc. The program methodology is subordinated to these two goals and strong planning and communication components (e.g. public meetings, planning weekends, campaigns, presentation of proposals etc.) have to be incorporated into the supported projects. Through the active participation of the citizens in planning and the revitalization of public spaces we increase their interest in public affairs and help local leaders to activate other citizens in the locality.

CSOB tries to protect environment also by effective usage of discarded PCs and donates them to non-governmental organizations and by the involvement to the voluntary activities.

Based on a principle to encourage the development and diffusion of environmentally friendly technologies CSOB started the campaign for electronic bank statement at the end of 2010. The campaign was prepared for all the clients including employees. 52% employees used the possibility and receive electronic statements. Monthly amount of savings by replacing the paper statements by electronic/retail clients: 200 000 EUR (cost for 1 statement sent by post – 0,57 EUR). The campaign was followed by internal competition for all employees who changed paper statements to electronic statements (price: netbook).

During the reported period the company also implemented the Cost-saving Program for its employees focusing on cost-saving bottom-up approach. 17 selected ideas how to save or reduce single-shot or permanent costs within the company were awarded and has been implementing nowadays. In parallel, the aim was also to change the “culture” of employees’ behavior in the area of cost spending.

The company has implemented the environment protection activities also in cooperation with NGO partners. One of the most effective and long-term cooperation is Public Spaces Program. CSOB has implemented it with Ekopolis Foundation. Since the beginning the company has supported seven years of the program by the amount of 270 200 EUR and helped to revitalize 28 various places in the whole Slovakia.

Ceskoslovenska obchodna banka (CSOB) attaches a great importance to the transparency of relationship between staff and third parties, in particular, to the integrity of its staff. Bribes may not be accepted of solicited or mediated for a third party. Save for exceptions set out in the company internal regulations in conformity with the Group Standard for Gifts to Employees of KBC Group, gifts may not be accepted or given in connection with the performance of work. With the Anti-Corruption Policy, adopted from KBC Group, CSOB rejects all forms of bribery and corruption.

The spirit of this issue, anti-corruption risk-assessment, as well as, money laundering and terrorist financing, observance of tax laws and regulations and observance of delegated powers and mandates are included in the official written document: KBC Group Anti-Corruption and Bribery Policy, Anti-Money Laundering Policy, as well as the Code of Conduct.

The objectives of this policy are to affirm company’s position in the fight against and the resolution to prevent corruption in its activities and operations and outline the actions taken and foreseen to implement such position. The integrity and ethics values of KBC Group are part of the KBC Code of Conduct, adopted by CSOB as well, as encapsulated in the acronym of PRO stands for – Professional, Respectful and Open, three interdependent qualities which are exemplified in company’s mission statement.
This Code of Conduct is the basis for the issue of specific instructions like Group Compliance Rules and Group Standards and other rules expressing the values of the group.
The company´s values revolve around the importance to maintain professionalism through good reputation, while abiding to competition rules, in the full respect of the working conditions. The direct or indirect offer, the payment, soliciting and acceptance of bribes in any form are unacceptable practices. Employees must avoid conflict of interest which might arise in the course of providing investment services or ancillary services, provided to a client, where there is a material risk of damage to the interest of one or more clients.
All business transactions must reflect the rules and regulation of the company and, as part of our policy, we forbid facilitation payments and we seek to ensure that our employees and suppliers do not make them either.

Further details regarding to policies within the framework of Anti-corruption and Bribery are contained in the Standards and Codes of reference detailed below:
• The KBC Code of Conduct
• Gift policy
• Policy on the protection of whistleblowers
• Group Compliance Rule on Conflicts of interest
• Group Compliance Rule on Mandates
• Group Policy on Suppliers

In accordance with the policy for the protection of whistleblowers, KBC group has created, and CSOB adopted, the opportunity for all employees to report potential fraud or other gross malpractice at the earliest possible stages without fear for any reprisal and where whistleblowers are assured that they will receive fair treatment and that their concerns will be investigated properly.
KBC Whistleblower policy applies to all types of fraud and gross malpractice relating to gross violations or gross infringements of internal rules as well as external rules, or rules on market abuse, insider dealing, breaches of bank secrecy or discretion with regard to insurance matters, money laundering, theft, fraud, corruption, bribery.

CSOB creates and supports corporate culture, based on honesty and openness. All the above-mentioned anti-corruption policies are published on the intranet.

In 2010 CSOB, with respect to the KBC Whistleblower policy, encouraged its employees to report potential fraud or other gross malpractice at the company. The information was also directly send by e-mail to each employee as well as published in the weekly newsletter. The employees can report the potential non-ethical cases to the Compliance Unit of CSOB.

Employees are encouraged to use the normal reporting lines in first place and only rely on this policy if the normal channels cannot be used. Employees must refrain from abusing the reporting procedure and thereby deliberately harming another. If accusations would be made with malicious or slanderous intent, appropriate sanctions may apply. CSOB guarantees that whistleblowers who report fraud or gross malpractice concerns in good faith will suffer no adverse or negative consequences whatsoever of disclosing those concerns, in keeping with the policy. The Group and CSOB´s Compliance Unit are responsible for monitoring the functioning of this policy in all entities of KBC group and reporting lines and guidelines are elaborated.

CSOB and its Compliance Unit has to prevent that the company incurs in a compliance risk or suffers damage, likely to derive from its non complying with applicable laws, regulations and internal rules falling under the scope of the Compliance function or under the domains assigned to it by the Executive Committee. The Board of Directors, as the case may be via the Audit Committee, annually assesses on the basis of reports, the containment of the Compliance risk. The Executive Committee is responsible for ensuring the setting-up of the function, the development and the implementation of the Integrity Policy, to check the appropriateness of and obedience to relevant company policies.
KBC Group Compliance performs testing under the Compliance Monitoring Program (CMP).
Compliance Unit of CSOB is equally mandated to perform CMP testing in the company under the functional steering of Group Compliance.
The development of the CMP was decided in order to better mitigate compliance risks by verifying the existence and soundness of internal controls (first line of defense) and to verify the reliability of assessments in its domains.
The set-up of the CMP consists of an overview of compliance requirements following from existing laws, regulations, policies and an inventory of related controls. Under a risk-based approach tests on the functioning of these controls are performed. The program then results in structural recommendations or concrete action plans. Follow-up and final reporting is also included.