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Like other transition countries, there were two options for mortgage bond finance in the Czech Republic. In the first option, as in Hungary and Poland, specialist mortgage bank institutions issued mortgage bonds. The other option involved authorized commercial banks that were allowed to issue bonds backed by housing (mortgage) loans. The Czech Republic, Kazakhstan and Bulgaria utilized this option. Hungary's volume of mortgage bonds, in comparison with other aforementioned countries, stands alone when considering its outstanding increase in mortgage bonds from 380 million EUR to 4,600 million EUR between 2002 and 2004. In the same period, the Czech Republic, with its highly developed mortgage bond finance, achieved 800 million EUR (from 900 million to 1,700 million EUR). Mortgage bonds for housing finance were used at quite a moderate level in Slovakia and Poland. These facts demonstrate the rapid development of the housing finance systems in the region. The development of the housing finance system and housing loan products has been a result of the increase in the number of banks operating in the Czech Republic. By the end of 2003, the commercial banks operating in the Czech market reached 35, of which 17 were foreign-owned entities and 9 were branches of foreign banks. The C eskoslovenská obchodní banka (CSOB), the C eská sportitelna and the Komercní banka (KB) are clear market leaders accounting for 64% of total banking assets and 74% of deposits. These three largest Czech banks operate as part of financial services groups, typically including insurance, pension fund, asset/investment management, leasing and other financial services providers. In the Czech Republic, for example, the Bausparkasse contracts became very popular because of the deep subsidy, and as a consequence the government spent 0.5% of GDP supporting contract saving schemes in 2002 (Sunega, 2004). While in Slovakia, in contrast, the government spends only half of that. The 'Big Three' are followed by the HVB Bank (established in 2001), serving predominately major corporations and high net-worth individuals. The Citi bank, which has marketed loans for private entrepreneurs and small to medium enterprises (SMEs) and has also focused on private banking. The Raiffeisen bank (The Austrian bank), has seen rapid expansion of its network of outlets to serve individuals. The GE Capital Bank (originally Agro banka), is currently developing direct banking and targeting mainly SMEs and retail clients. The Živnostenská banka, originally concentrating on high net-worth individuals, has launched marketing campaigns to attract retail clients. In terms of client numbers and volume of total assets, the fastest-growing bank has been e-Banka, the first virtual bank operating in the Czech market, which has recently changed its business concept and has become a universal bank. Owing to the gradual fall of the interest rates and the resultant decline in the net interest margin, Czech banks have had to focus more on fee and commission income-generating activities. Despite the absence of official data regarding the Czech Republic's consumer finance market, non-bank consumer finance companies have demonstrated effective development of consumer lending over the past years by reaching CZK 20 billion. By the end of 2003, there were three major consumer finance companies in the Czech Republic: GE Capital Multi-service, Home Credit and Cetelem.
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