Finance Minister Brigita Schmögnerová said on September 29 that she was considering putting the Košice-based Priemyselná Banka under a caretaker administration to ensure the security of deposits at the bank. Schmögnerová, who was embarrassed two weeks ago by a snap privatisation at Priemyselná that cost the state its majority share in the bank, said that the bank's new owners had now offered the state a chance to recover its lost influence.
"We'll talk about it," Schmögnerová said of a September 29 offer by Priemyselna's four new owners to strengthen the state's share in the bank either by increasing the volume of share assets or by allowing the entry of new state entities into Priemyselná.
Schmögnerová said that one of her principal objectives was to pursure a state goal interrupted by the snap privatisation - calling a special shareholders's meeting [EGM] to force a change in the bank's management. "We are seriously interested in stabilising the situation [at the bank], because it has 2.4 billion Slovak crowns in citizens' deposits as well as 4.5 billion crowns in deposits from financial institutions," Schmögnerová said.
The Finance Ministry's distrust of Priemyselna's management stems from the latter's ill-fated decision in 1997 to guarantee a $60 million investment made by Slovak state bank SLSP in three Russian banks. The ensuing Russian crisis forced Priemyselná to create huge reserves to cover the guarantee, and brought its capital adequacy ratio down to 5.7% in 1998, far below the 8% required by the National Bank of Slovakia.
To meet the required ratio, a September 8 EGM at Priemyselná Banka decided to raise the bank's basic capital by 598 million crowns to just over two billion. A group of state firms which together held over 51% of shares in Priemyselná - principal among them state gas utility SPP - apparently approved the capital increase, but then inexplicably failed to participate in it, allowing the state's share to fall to 37.2%.
The result was the de facto privatisation of the bank, as four private firms bought into Priemyselná: Tatra Reiffeisen Capital, Prvá Penzijná Investičná Spoločnosť, Capital Invest and Capitalue. Each new investor secured a 9.98% stake in Priemyselná, bringing the overall private stake in the bank to 62.8%.
The privatisation caused a political uproar, with Schmögnerová, Economy Minister Ľudovít Černák and SPP Director Pavol Kinčeš trading accusations of blame for the outcome of the capital increase.
Kinčeš said that SPP had told the government at the beginning of the year that SPP did not have enough money to participate in activities not related to the gas industry. "Everybody thinks that if he doesn't have money, SPP will provide it," he said for the daily paper Sme. SPP had acted under instruction from the Finance Ministry, he said, and had expected the EBRD to subscribe the increase in Priemyselná's basic capital.
The EBRD, which used to own an almost 20% stake in the bank, decided not to pay for its shares because it had lost confidence in Priemyselná's management.
But Deputy Finance Minister Vladimil Podstranský replied that "I said a long time before the EGM... that state firms should participate in the capital increase in order to safeguard the state's majority stake." Podstranský said that the SPP, which is under the jurisdiction of the Economy Ministry, had quite simply refused to comply with an order from Economy Minister Černák that it subscribe the capital increase, making Podstranský's own role irrelevant. "Why would they listen to me, the deputy of another ministry, when they don't listen to the boss of their own ministry?" he asked. "It's nonsense."
