English Translation

4c36 - 36 - of the fact that large bank loans are subject to fairly high interest rates (about 6 1/2 %) and thus affect profitability, but it is also important to draw attention to the risk of this poor financing. I see this danger in the main in the following circumstances: 1) The agricultural bank may at present be exceptionally liquid and therefore be able to provide the "Stoupal Group" with the funds and the necessary operating loans for the purchase of the shares for a long time. However, there may also be times when the agricultural bank will be deprived of the money it has been given, in which case the farm bank would have to cut the loans made available to the farms. However, the fact that the farms could then obtain the high loans, which amount to a multiple of their own resources, in the course of their slid self-financing, must rightly be doubted. In view of the fact that the loans granted to farms may have indirectly benefited their own depositors, the agricultural bank may have been quite generous in lending and taken a strong risk, but any other bank should be concerned about securing the loans through sufficient documentation. Even if the assets still contain abundant reserves, the banks would hardly be able to provide the usual collateral. 2) The compilation of the results over the last 3 years shows that some of the losses are quite considerable - 37 -