CSOB Privatisation (portage equity)

Location:

Czech Republic

Project number:

5426

Business sector:

Financial institutions

Notice type:

Private

Environmental category:

FI

Target board date:

30 Nov 1999

Status:

Complete

PSD disclosed:

20 Jan 2000

Project Description

The project finalises the privatisation of Ceskoslovensko obchodna banka a.s. (CSOB), under which the EBRD and KBC Bank (Belgium) acquire a 24.1 per cent share of CSOB held by the National Bank of Slovakia. Following the sale, the Czech and Slovak governments will have sold all of their shares to KBC Bank, the EBRD, the International Finance Corporation and domestic shareholders.

The project finalises the privatisation of CSOB, which until 1999 was owned primarily by the Czech and Slovak governments. Following the investment, the EBRD will participate actively through its presence on the Supervisory Board of CSOB. The Bank will work to ensure a listing of CSOB within the next three to five years, and will ensure that KBC implements an appropriate business strategy.

Transition Impact

The Czech and Slovak banking sectors are undergoing significant changes: privatisation of remaining banks, recent erosion of capital of local banks due to the need to address asset quality/provisioning requirements, increasing competition (particularly for retail activities). In this context, the EBRD's acquisition will have an important impact on the transition:

  • Completion of privatisation helps to normalise the governance structure and removes concerns of an ongoing government participation. As a condition of the purchase, CSOB’s licence to operate in the Slovak Republic was renewed.
  • Through its presence on the Supervisory Board, the EBRD will ensure effective and transparent governance and move the bank towards flotation on the stock exchange as early as possible, thereby strengthening investor confidence in the Czech and Slovak Republics.
  • The EBRD will contribute to the development of banking services to the corporate and retail communities in both the Czech and Slovak Republics.

The Client

Ceskoslovensko obchodna banka, a.s. (CSOB) is a joint-stock, universal bank operating in both the Czech and Slovak Republics. As of June 1999, CSOB was the largest Czech bank in terms of equity and the fourth-largest in terms of assets (11per cent market share), loan portfolio and deposit base. CSOB has a particular expertise in international financial transactions and the Czech blue-chip corporate sector.

Following the dissolution of Czechoslovakia, CSOB was owned by the two governments – 65.7 per cent by the Czech Government and its agents and 24.1 per cent by the National Bank of Slovakia (NBS). In mid-1999 the Czech Government sold its shares in CSOB to KBC Bank (Belgium), leaving the largest remaining shareholding with the NBS. In late 1999 the NBS requested that KBC Bank and EBRD purchase its shareholding on terms equal to those provided to the Czech Government.

EBRD Finance

EBRD finance consists of an EUR 125 million investment in CSOB shares owned by the NBS. The EBRD acquisition represents 7.47 per cent of the capital of CSOB. At the same time, KBC Bank purchased the remaining portion of the NBS shares.

Project Cost

EUR 125 million (EBRD portion only).

Environmental Impact

CSOB will carry out its operations in accordance with the EBRD's Environmental Procedures for Local Banks. In implementing these procedures, CSOB will require its borrowers to comply, at a minimum, with national and local health, safety, environmental and public consultation requirements.

Technical Cooperation

None.

 

Business opportunities

For business opportunities or procurement, contact the client company.

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Email: procurement@ebrd.com

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