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Selling a bank in eastern Europe has so far been a pretty mundane affair. First clean up the bank's bad debts, then sell it to a foreign investor for an inflated price. In the past, this has worked well, especially with western banks practically falling over themselves to get a foothold in the region. But now the Czechs have come up with a novel way to sell their second largest banking group, Ceska Sporitelna. The Czech government has asked potential suitors of the bank to submit two bids each, one with the bank as it is, bad debts and all, the second with the debts cleaned up.
The purpose, says the Czech ministry of finance, is to ascertain which investors are serious about buying the bank and which are just trying to fish out information on what their rivals will be buying. Others see it differently. "The government does not know what to do," says Jiri Stanik, banking analyst with Raiffeisen Capital & Investment in Prague. "It has to do some price analysis by calculating the costs of cleaning and the potential benefits in terms of increasing the price against selling it as it is."