THE FINANCIAL field in Slovakia seems an attractive place for Italian capital. Two previously Slovak-owned banks, VÚB and UniBanka, have been bought by Italian companies. And on the Slovak insurance market, Italian Generali is a player.
The investment trend started in 1996 when the Italian UniCredito bank bought an interest in UniBanka, becoming a majority shareholder in 2000. Insurance house Generali established its daughter company in Slovakia in 1997. In 2001 Intesa became the majority shareholder in the Slovak VÚB bank.
"Interest in developing new markets is the main motivation for the influx of foreign investors and this was also the reason for Intesa's accession into Slovakia, too," Silvia Nosálová, spokeswoman for VÚB told The Slovak Spectator.
In coming to Slovakia, Generali was continuing a tradition that started in the 19th century. The Italian insurance giant first appeared on the Slovak market in 1833 when it established branches in six Slovak towns - Komárno, Jelšava, Prešov, Kežmarok, Banská Bystica and Banská Štiavnica.
At that time the company provided personal and property insurance and was the first company in Slovakia to introduce insurance against accidental death, fire and hailstorms. After nationalization in 1947, the company was absorbed into the state insurance company, Slovan. But Generali returned under its own name in 1997.
"In January 1997 Generali entered the Slovak market based on the decision of the headquarters in Terst," Daniel Vida, a member of the company's communication team, told The Slovak Spectator.
"Currently, our company focusses on life and property insurance. The establishment of a pension fund administration company together with the VÚB bank is another important project," he continued.
Unlike Generali, which from the beginning was an Italian company with a market-oriented structure and working practices, the two banks (UniBanka and VÚB) had to go through a restructuring phase once Italian shareholders acquired them. (Nearly all Slovak banks underwent restructuring after 1989.)
In 2001, Intesa paid €399 million for an initial 68-percent share in VÚB previously in state hands. Gradually, its capital share in VÚB grew to 96 percent.
Right after signing an agreement about the sale of VÚB in 2001, which transferred the organization into Italian hands, Finance Minister Brigita SchmŘgnerová praised the transaction and expressed her hope that an Italian investor would enable VÚB to develop new products and work out a better risk management system.
She appreciated that VÚB would be able to use the experience of Intesa, which already had investments in other countries in Central and Eastern Europe.
From 2001, the integration of VÚB into the Intesa Group began. VÚB introduced a new incentive system for employees and renewed its organizational structure, increasing the number and changing the locations of some of its branches.
Activities for retail and corporate customers have been divided. The bank modernized its IT infrastructure, including its databases.
"So far, the post-privatization restructuring of VÚB has been accomplished, but not the actual transformation. We have significantly increased labour productivity and, as concerns effectiveness, we rank among the three best banks in Slovakia.
However, we would like to progress and we would like to become the most profitable and the fastest growing bank in the Intesa Group," added Nosálová.
VÚB is now considering developing loan products and taking care of small and medium enterprises as its priority.
"In the retail sector we have introduced new loan and mortgage products. We would like to develop them further. Small and medium enterprises are another priority area.
"Last summer we started providing new products in this area as well," she added.
After acquiring the majority stake in UniBanka in 2000 (previously named Poľnobanka), UniCredito presented its goal to strengthen the Slovak bank and make it one of the most modern banks in Slovakia.
UniBanka follows the philosophy that a strong retail business, developing new products as well as providing new services to small- and medium-sized enterprises are the keys to success in the banking market.
In 2002 Poľnobanka changed its name to UniBanka. The main reason was that Poľnobanka (Agriculture bank) suggested a connection to only one sector of the economy, even though it had been trying to present itself as a universal bank since 1995.
Additionally, the name UniBanka suggested the brand of the new main shareholder, UniCredito.
Financial institutions with Italian shareholders feel optimistic about the business environment in Slovakia, although some of them admit that there is space for improvement.
"We see room for improvement in the fees that banks have to pay to the Fund of Deposit Protection. The fees are quite high and it impacts banks' stability and their ability to take risks. Compared with the fees in the neighbouring countries, Slovakia's fees are the highest," Nosálová said.
"From our point of view there are no barriers in the business environment in the field of insurance. Currently we expect some changes connected to the implementation of new European legislation in Slovakia," Vida concluded.
