The EBRD has taken an 11.8 per cent stake in Ceska Sporitelna, the Czech Republic's second-largest bank in terms of assets.
The project objectives are to: a) stabilise CS's ownership structure, enhancing its attractiveness to potential investors before privatisation; and b) strengthen the bank's liquidity and capital base by raising its Tier 1 capital, as the EBRD will purchase stock now owned by CS itself and deducted from Tier 1 capital for the purpose of calculating CS's capital adequacy ratio, in accordance with BIS rules.
The EBRD is expected to appoint one member to CS's supervisory board, strengthening CS's corporate governance and supervision over its strategic pre-privatisation plan.
The investment should have a major impact on the transition process in the Czech Republic by facilitating the privatisation process of a main bank. This is likely to have an important demonstration effect by helping the local banking sector to regain international credibility while the privatisation process of the large banks is yet to be defined and the restructuring of some other banks is ongoing.
Ceska Sporitelna (CS) is the successor of the former government savings institution, transformed into a joint-stock company in 1991 and partially privatised in 1993. Since 1994, the Czech government has owned 45 per cent of CS's share capital, representing 52.7 per cent of the total voting rights. Since its partial privatisation, CS has developed as a universal bank, offering both retail and corporate banking products. It is now the largest Czech bank in terms of retail deposits and the second-largest in terms of total assets (US$ 11.2 billion). At the end of 1997, CS had 17,522 employees in 1,127 offices.
The EBRD has purchased ordinary voting shares of CS, of par value CZK 100 each, representing up to 13.9 per cent of the company's voting rights. The aggregate purchase price was CZK 2.475 billion (ECU 66.2 million).
CZK 2.475 billion (ECU 66.2 million).
CS will adopt and implement the EBRD's "Environmental Procedures for Intermediated Lending through Local Banks", and will ensure that investee companies are not engaged in activities listed on the EBRD's Environmental Exclusion List. CS already has environmental procedures to limit the environmental risks associated with its lending activities. These procedures will be harmonised with those of the EBRD to provide a comprehensive approach to environmental risk management. CS will report annually to the EBRD on the environmental performance of its investee companies.
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