TWO of the biggest US banks, J.P. Morgan and Citibank, will benefit from the sale of Slovakia’s stake in telecommunications firm Slovak Telekom. The government privatisation agency, the National Property Fund, has signed a contract with the banks for consultancy services, with commissions ranging from €10 million to €22 million.

Slovak Telekom (ST) is co-owned by Deutsche Telekom AG and the Slovak state. The state is expected to get around €1 billion for selling its 49 percent share in ST. The sum of the commission will depend on whether investors are able to purchase the share directly or via an exchange. The commission charged by the banks will hover from 1 to 2.2 percent of the sale, depending on how it is conducted, the Hospodárske Noviny economic daily reported.

“Negotiations were held in order to set the most advantageous conditions for the state,” said National Property Fund (FNM) head Branislav Bačík, as quoted by Hospodárske Noviny.

Director of J.P. Morgan for central Europe Walter Schuster said that their goal is to acquire the highest possible amount, the daily reported.

SUB: FNM plans to use London Stock Exchange

If the state sells the shares via the exchange, advisers will earn 2.2 percent of the total; if the majority shareholder Deutsche Telekom uses its pre-emptive right to buy the shares, the banks will get 1.15 percent; and in the event of a direct sale of shares, the state will pay 1 percent of the sum for consulting services, according to FNM spokesperson Miriam Žiaková, the Pravda daily reported.

Slovakia will probably sell most of its Telekom shares via the London Stock Exchange, while the remaining shares will be sold via the Bratislava Exchange. A final decision will be made after consulting with the aforementioned banks, Žiaková said.

“We will wait for advice on what is the most profitable [method of selling] for the state,” Žiaková said, as quoted by Pravda. “The advisory companies will present specific possibilities and the National Property Fund will choose one of them.”

To allow the sale of ST shares through a public offer on capital markets (IPO), parliament approved an amendment to the law on conditions of transferring state assets to other persons on June 25. The law is effective as of August 1, the TASR newswire wrote.