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Two down, one to go: Intesa bid wins VÚB

Italy's largest bank, IntesaBci, beat France's Societe Generale in a tender for Všeobecná úverová banka (VÚB) June 15, bidding 550 million euros (23.6 billion crowns) for an eventual 95% share in Slovakia's second biggest finance house.
Under the acquisition deal, IntesaBci will acquire a 25% share in VÚB held by the International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD) on top of the 69% state stake offered in the tender.
After the deal was closed officials at the Italian bank refused to discuss specific future strategy for the bank, but said they would look to secure a sound financial basis for the bank's operations and help boost local business and investment.

Italy's largest bank, IntesaBci, beat France's Societe Generale in a tender for Všeobecná úverová banka (VÚB) June 15, bidding 550 million euros (23.6 billion crowns) for an eventual 95% share in Slovakia's second biggest finance house.

Under the acquisition deal, IntesaBci will acquire a 25% share in VÚB held by the International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD) on top of the 69% state stake offered in the tender.

After the deal was closed officials at the Italian bank refused to discuss specific future strategy for the bank, but said they would look to secure a sound financial basis for the bank's operations and help boost local business and investment.

"IntesaBci will make sure that revenues are generated and do what is necessary to do good, sound business," said Adriano Arietti, head of Intesa's merger and acquisitions department. "We also want to do what we can to support the local economy and investment."

Privatisation Minister Mária Machová described the privatisation as "very positive for the entire banking sector".

The price paid for the stake values VÚB 20% higher than the largest Slovak bank, Slovenská sporiteľňa (SLSP), which was privatised by Austrian Erste Bank in December last year.

Sector experts said Intesa's presence and capital in the bank will see it overtake SLSP as the largest Slovak bank in the next two to three years.

"There is far more potential for banking in the corporate sector. SLSP, as primarily a savings and deposit bank, will play a lesser role in the banking sector in a few years' time," said Mário Blaščák, sector analyst at Ľudová banka.

The biggest corporate lender in Slovakia, VÚB has a 28% share of the total loan market, and 20% of the country's total deposits. Its dominance in business sector lending would give it a sound base to expand as the economy grows, the industrial sector especially having shown rapid expansion in the last 12 months.

"Intesa will go further with its business lending, particularly in industry, and be more aggressive with VÚB's loan strategy," added Blaščák.

VÚB has also said it will push to increase its already 75% share of the mortgage lending market.

Closing transformation

The bank's privatisation leaves only Investičná a rozvojová banka (IRB) of the country's three finance houses still in state hands, and virtually completes the transformation of the Slovak financial sector from one riddled with weak banks and bad loans to one strengthened by consolidation and the presence of foreign managers at top banks.

In 1999 the government launched a 100 billion crown ($2 billion) clean-up of the banking sector, transferring non-performing and bad loans out of IRB, SLSP and VÚB. Their poor credit portfolios had been blamed on past mismanagement and lending based on political links and friendships between loan managers and clients.

Following the transfers, 66 billion crowns of which came out of Všeobecná, all three banks moved into the black, IRB recording a profit for 2000 of 24 million crowns, SLSP 2.4 billion, and VÚB 3.4 billion.

However, while SLSP's sale brought in 18 billion crowns for the state and VÚB an even more impressive figure, the government has found IRB, the sixth largest Slovak bank, a more difficult bank to privatise.

Since the launch of a tender last summer, IRB has attracted only one bidder, Hungarian savings bank OTP. Put under forced administration in 1997, Investična has been viewed as the weakest of the three major banks on offer.

OTP has been in negotiations with the Finance Ministry for the last five months, and has already tabled one offer. However, that was rejected by the government at the start of this month after between 1.5 and 2 billion crowns was bid for the 69% share.

Officials at the Hungarian finance house have said they are reworking the bid.

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