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EBRD and IFC take up to 25% share in Slovak VUB
The European Bank for Reconstruction and Development (EBRD), the largest institutional investor in central and eastern Europe, and the International Finance Corporation (IFC) today agreed to purchase up to 25 per cent of the shares in Všeobecná úverová banka (VUB), the second-largest bank in the Slovak Republic. The joint investment is designed to support the Slovak Government's privatisation of VUB, which is expected by the end of the year.
The EBRD will purchase a 12.5 per cent stake, while the IFC will purchase up to 12.5 per cent. EBRD also expects to provide a €20 million credit line to VUB under a joint EU/EBRD Finance Facility for small and medium-sized enterprises (SMEs). Supporting SMEs through local banks is at the heart of the EBRD's strategy to promote the country's economic transition to a market economy.
"The privatisation of VUB is part of the Government's broader restructuring and privatisation plan for the country's banking sector," said Kurt Geiger, the EBRD's Business Group Director for Financial Institutions. "The EBRD's investment and proposed SME credit line aim to underpin VUB's restructuring in the run-up to the full privatisation, and to demonstrate the EBRD's commitment to the bank privatisation programme in the Slovak Republic."
"This investment complements the World Bank's support to the Slovak Republic to promote banking sector reform," said Roy Karaoglan, IFC's proposed nominee to VUB's Supervisory Board. "We are looking forward to becoming shareholders in VUB and to seeing its privatization through to a successful conclusion."
The EBRD and the IFC are arranging technical assistance to support the organisational changes initiated by the VUB's management and to help consolidate the improvements achieved following the bank's financial restructuring. VUB was established in 1990 as a state bank comprising part of the corporate banking business and assets of the former State Bank of Czechoslovakia. It is the leading corporate bank in the Slovak Republic, with 28 per cent and 20 per cent market shares in loans and deposits, respectively. It has developed a strong retail banking franchise and commands a 21 per cent share of retail deposits. At the end of September 2000, VUB's total assets were US$ 3.6 billion (€3.9 billion) and equity amounted to US$ 315 million (€337 million). The bank has 230 branches and sub-branches and 6,050 employees.
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