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Ministry hopeful VÚB to match SLSP

Head of the Finance Ministry's Bank Privatisation Unit Juraj Renčko has said that he believes the government can achieve a successful sale of Slovakia's second largest bank - Všeobecná úverová banka (VÚB) - on a par with last December's 18 billion crown privatisation of the state's 87% stake in Slovenská sporiteľňa (SLSP).
"We are very optimistic that VÚB's sale can be a success, and as good as that of SLSP," he told The Slovak Spectator April 3. "The bank is a very different one to what it was just two or three years ago. It has great potential for growth."
The statement comes as two banks - Italian Banca Commerciale Italiana and French Societe Generale - carry out due diligence at VÚB as the state looks to off-load a 69% share in the finance house. But while VÚB saw the majority of a 100 billion crown state extraction of non-performing and classified loans in the sector come out of its own portfolio, many analysts have said that the bank lacks the potential of the deposit account-oriented SLSP.

Head of the Finance Ministry's Bank Privatisation Unit Juraj Renčko has said that he believes the government can achieve a successful sale of Slovakia's second largest bank - Všeobecná úverová banka (VÚB) - on a par with last December's 18 billion crown privatisation of the state's 87% stake in Slovenská sporiteľňa (SLSP).

"We are very optimistic that VÚB's sale can be a success, and as good as that of SLSP," he told The Slovak Spectator April 3. "The bank is a very different one to what it was just two or three years ago. It has great potential for growth."

The statement comes as two banks - Italian Banca Commerciale Italiana and French Societe Generale - carry out due diligence at VÚB as the state looks to off-load a 69% share in the finance house. But while VÚB saw the majority of a 100 billion crown state extraction of non-performing and classified loans in the sector come out of its own portfolio, many analysts have said that the bank lacks the potential of the deposit account-oriented SLSP.

"It is true that VÚB has seen its loans cleared up very well by the state, but the fact that it has any interest at all is a positive thing," said Tomáš Kmeť, sector analyst at SLSP.

Všeobecná, while leading SLSP in lending - it holds almost 30% of the loans market - is seen as a much less attractive proposition, having a smaller retail network and a liability structure of much smaller volumes of deposit accounts, which analysts say is less appealing to a potential investor.

However, Renčko dismissed any arguments that VÚB would necessarily command a significantly lower price than Austria's Erste Bank paid for sporiteľňa, Slovakia's largest bank.

"VÚB has worked hard in developing a much larger, and now very good, retail network. And while straight after the sale of SLSP there were some doubts that the bank would attract a lot of interest, as soon as we got the EBRD (European Bank for Reconstruction and Development) and IFC (International Finance Corporation) involved all those doubts just disappeared," he said.

The sale of two 12.5% stakes in the bank to the EBRD and IFC at the start of this year has been widely praised by banking sector experts as a shrewd move bringing stability and eventually a higher price to the bank prior to a sale to a foreign investor expected in June this year.

"The first step of VÚB's privatisation was done well - getting the EBRD and IFC to buy stakes. Just taking into account this step, the bank's value will have increased," said Mário Blaščak, analyst at Ľudová banka. Share prices in VÚB were traded at 350 crowns per piece in June 2000. The latest share price (as of April 3) stood at 769 per share, having jumped 147% year-on-year since the privatisation process in the banking sector was started in summer last year.

Blaščak added that the Bank Privatisation Unit's assessment of the potential success of the sale was reasonably accurate.

"VÚB privatisation will be a profitable affair for the state, and it could fetch a similar price to SLSP. I would say something at around 16 billion crowns."

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