A SUPPLEMENT TO EUROMONEY/APRIL 1998: EASTERN EUROPE
The Czech government has belatedly begun privatizing three of its top banks by appointing international consultants to advise on the sale. The government aims to transfer the banks to the private sector by the end of the year, allowing strategic foreign investors to hold large stakes. But the plan could yet be knocked off course by political opposition and disputes over responsibility for the banks' bad debts.
The one certainty is that the government will receive billions of dollars less than it would if the banks had been sold in the mid 1990s when the government's reputation and the economy were in far better shape.
There are some optimistic signs. The much delayed sale of the state's 36% stake in Investicni Postovni Banka (IPB) to Nomura has finally gone ahead, although Prague financial markets are awash with rumours about the scale of the government bail-out required before the sale could take place. Talks are also continuing with GE Capital on the sale of the fifth largest institution, Agrobanka, which is being separated into a good bank, which will be sold, and a bad bank, which will be liquidated by the state.