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Hopes for VÚB sale lifted by profit jump

Less than two months before its anticipated sale to one of two foreign banks, the state's Všeobecná úverová banka (VÚB) announced a first quarter profit of 433 million crowns ($9 million) May 2, up from the 261 million crown profit recorded for the first three months of 2000.
With Italy's Banca Commerciale and French Societe Generale in the process of due diligence at the bank, the figures are further evidence of VÚB's growing health in the run-up to its privatisation, analysts said.
"After years and years of losses, this is a good sign for VÚB's future," said Martin Kabát, head of analyses at Slávia Capital brokerage house.

Less than two months before its anticipated sale to one of two foreign banks, the state's Všeobecná úverová banka (VÚB) announced a first quarter profit of 433 million crowns ($9 million) May 2, up from the 261 million crown profit recorded for the first three months of 2000.

With Italy's Banca Commerciale and French Societe Generale in the process of due diligence at the bank, the figures are further evidence of VÚB's growing health in the run-up to its privatisation, analysts said.

"After years and years of losses, this is a good sign for VÚB's future," said Martin Kabát, head of analyses at Slávia Capital brokerage house.

The bank had moved into the black at the end of last year with a 3.43 billion crown profit following a massive 9.5 billion crown loss for 1999.

While management admits that this is largely a result of the government's 100 billion crown clean-up of state banks VÚB, Slovenská sporiteľňa and Investičná a rozvojová banka (sporiteľňa was privatised to Austria's Erste Bank in December 2000), the news has been seen by market watchers as an encouraging sign for future growth, coming only a day after international ratings agency Moody's pointed to the growing strength of the bank.

Along with SLSP, VÚB saw its financial strength rating raised by Moody's May 1 to E+ on what the group said was an improving financial position.

The bank is due to be sold by the end of June and the deal officially inked in early July. Privatising the 70% stake is likely to add several billion crowns to state coffers, but it is not expected to match the 18 billion crowns which an 87% stake in sporiteľňa pulled in at the end of last year.

While neither Commerciale nor Societe Generale have been willing to comment on their interest or VÚB's performance before completing their due diligences by the beginning of June, the Slovak bank's representatives say that the continuing revival of the bank's financial fortunes is a clear result of the effort management has put into preparing the finance house for privatisation.

"We've worked hard and done everything we can, in co-operation with the state, to prepare this bank for a successful privatisation," said Norbert Lazar, spokesman for VÚB.

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