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Bidders move for state stake in SP

Privatisation Minister Mária Machová announced September 4 that eight firms had put in bids for the state's 67% share in Slovakia's largest insurer, Slovenská poisťovňa (SP).
The share is expected to be sold by the end of this year, or very early next, and will coincide with the loss of the firm's monopoly on motor vehicle insurance and the liberalisation of the insurance market.
SP's sale would also bring the transformation of the country's once troubled financial sector closer to an end following recent bank privatisations and further planned sales of state finance houses.


Believed to be among the eight bidders for SP are Allianz AG, Poland's PZU and Česká pojišťovna.
photo: Spectator archives

Privatisation Minister Mária Machová announced September 4 that eight firms had put in bids for the state's 67% share in Slovakia's largest insurer, Slovenská poisťovňa (SP).

The share is expected to be sold by the end of this year, or very early next, and will coincide with the loss of the firm's monopoly on motor vehicle insurance and the liberalisation of the insurance market.

SP's sale would also bring the transformation of the country's once troubled financial sector closer to an end following recent bank privatisations and further planned sales of state finance houses.

Machová said that a special steering committee for pois?ovoa's privatisation would meet September 5 to select a short list of bidders; 23 firms had originally expressed an interest in the state's share. Believed to be among the eight bidders are German insurance giant Allianz AG, Poland's PZU and Czech insurer Česká pojišťovna.

It has also been suggested in local media that the Slovak insurance company, Kooperatíva, has put in a bid. Local analysts have said that a company of SP's size would be better off in the hands of a foreign investor.

"SP needs an investor from abroad. No Slovak company is capable of taking on and running a company of poisťovoa's size," said Pavol Ondriska, an analyst at Slávia Capital brokerage house.

Recent financial data from SP suggest that the firm is improving its performance. SP recorded a pre tax profit of 835 million crowns ($16.7 million) in the first six months of this year, a 4.4% annual rise, and collected billed premiums of 9.773 billion crowns, a 17.5% increase on the January-June period last year.

Final parts of the jigsaw

The current coalition government has been moving towards an eventual off-loading of much of its interest in the financial sector since coming to power in October 1998. While its two biggest banks have been successfully privatised, state shares in the sixth-largest bank, Investičná a rozvojová banka (IRB) and smaller banks, Istrobanka and Poštová banka, are also to be sold off. A tender for the sale of the state's shares in Istrobanka was launched simultaneously with SP.

"SP's sale is important for the transformation of the financial sector, but not just the privatisation itself. It must be taken in connection with the liberalisation of the market, and the changing of the laws [on motor vehicle insurance]. It could also be another strong deal for Slovakia in terms of foreign direct investment income," said Slávia's Ondriska. The government has not, as yet, said what price it expects for its holding.

In recent weeks the sale of other SP shares has won attention. Financial arbitrage group Penta Group came under a microscope August 22 after it subscribed the entire 504 million crown ($10.4 million) offer in a second round capital increase at SP, thereby raising its stake in the firm to 20.22%.

It was reported in some local press that the firm had used unfair tactics to ensure that it subscribed the full issue. Management at the firm said that they did not intend to profit "unduly" from later selling their SP stake.

The Finance Ministry and Penta Group should conclude a bargain next month on the joint sale of their stakes in poisťovňa, according to Penta chairman Jaroslav Haščák. He added, however, that he would not sign a contract allowing the state to sell for any price it wants.

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