After talks with the Finance Ministry, the banking supervision board of the National Bank of Slovakia (NBS) revoked the banking license of AG Banka Nitra on December 1. The decision was taken because of the persisting unfavourable financial and economic situation at the bank, and its violations of NBS criteria on prudent banking practices, NBS spokesman Ján Onda said.
As AB Banka is insolvent and unable to repay debtors or depositors, the state-run Deposit Insurance Fund will now decide within five days of the taking of the bank's license when it will begin compensating depositors. Under Slovak law, the Fund will compensate non-anonymous deposits of physical persons in a maximum amount of thirty times the national salary - in other words, depositors stand to recover a maximum of 310,500 crowns.
In 1998, AG Banka was one of the smallest banks on the Slovak market, in 23rd position out of 25 banks ranked by total assets as of December 31, 1998. According to the daily Sme newspaper, the bank had in the past been managed by business circles close to the HZDS party from Trenčín and Trnava. Financial analysts now expect further crashes to occur in the near future among those of the country's small domestic banks which have no foreign capital.