A shareholders meeting of Slovakia's second largest commercial bank, Investičná a Rozvojová Banka a.s. (IRB), rejected on April 9 a central bank call to reconsider personnel changes in its supervisory board.
"Today shareholders showed their will by rejecting the dismissal of the current supervisory board," František Orolin, IRB's vice-president, said after the EGM. "Therefore the current status has been confirmed as correct and legal."
Last autumn, the banking supervision department of the National Bank of Slovakia (NBS) called for a reversal of changes to IRB's board due after suspicion arose of collusion among several groups of the bank's shareholders.
But the NBS's request was not legally binding. Last August, steel producer VSŽ asked for NBS permission to increase its stake in IRB to over 20 percent, which the NBS rejected on the grounds that VSŽ had not presented its own project for participation in the bank's restructuring.
The NBS also called for a reversal of changes made to the bank's board which the central bank said gave VSŽ more seats than its holdings warranted.
The state holds a 35 percent stake in IRB through the Slovak state privatization agency the National Property Fund (FNM), while VSŽ is a major client of IRB accounting for an estimated 1.5 percent of the bank's total loan portfolio.
VSŽ officially owns 14.6 percent of IRB but often operates in an alliance with many of the bank's other shareholders on major decisions.
"The suspected collusion is hypothetical, and it is something very hard to prove," Orolin said. Of course, any involved subject may ask the NBS banking supervision board to investigate the issue."
IRB was originally included on a government list of strategic companies and is part of a group of banks that will undergo loan portfolio restructuring. Last month parliament approved an amendment to the law on strategic companies, effectively lifting the ban on privatizing the country's largest commercial bank Všeobecná Úverová Banka (VÚB) and IRB.
IRB posted a 1996 loss of 1.2-1.3 billion Sk, according to preliminary figures, after an after-tax profit of 167.5 million in 1995, while its capital adequacy ratio fell to 2.93 percent at the end of 1996 from 7.25 percent at the end of the previous year.
After covering the loss, IRB reserves and provisions currently total 5.4 billion Sk, compared to 4.58 billion Sk in 1995. The total volume of loans extended by IRB hit 36.5 billion Sk, of which 23 percent are classified.
