The sell-off of the country's biggest banks has closed with the sale of Investičná a rozvojová banka to Hungary's OTP bank.
Approval of the sale of a 92.5% stake in the finance house by cabinet is expected November 7.
The Privatisation Ministry had already agreed to a Sk700 million ($14 million) offer for the bank which only two years ago was under forced administration.
But IRB's future remains uncertain, with many analysts predicting OTP may change its direction and market focus or take the IRB name off the market completely.
"New management are bound to bring changes, and what I see them doing is reducing staff and branch numbers. Restructuring will take place over time.
"The new foreign owners of other state banks have already said there is over-employment at former state banks, and the burden of its large branch network is also quite heavy for IRB," said Mario Blaščák, an analyst at Ľudová banka.
"The Hungarian bank will also want to bring in its own knowhow and management, although it is questionable how much better this may be than at present, and they will probably eventually change the name to OTP after a few years," he added.
OTP managers have not commented on their plans for the bank but have publicly promised to raise IRB's basic capital. The Hungarian bank's bid is the second it submitted. An earlier Sk333 million offer was rejected by the state as too low.
The sixth largest bank in Slovakia, but with a market share of just 2%, IRB's sale comes amid a sharp turnaround in the bank's financial health.
In 1997 the bank was put under forced administration by the National Bank of Slovakia after running into serious liquidity problems.
It had just been taken over by east Slovak steel giant VSŽ when the National Bank of Slovakia intervened to save IRB from crashing.
Released from forced administration in 1999, IRB was one of three state banks which the government prepared for privatisation in 2000.
Some Sk6 billion in bad loans from the bank were transferred out as part of a wider Sk100 billion ($2 billion) clearance from IRB, Slovenská sporiteľňa and VÚB; nevertheless, IRB was still recording heavy losses as its privatisation was announced in summer last year.
But this finished with the company's most recent results. Having posted a loss of Sk148.9 million at the close of 2000, IRB made a profit of Sk33 million in the first six months of this year.
The sale agreement approved by Privatisation Minister Mária Machová should also guarantee that OTP will not be saddled with any claims over past bad loans or financial mismanagement.
Under the sale contract, the National Property Fund (FNM) will transfer Sk259 million to IRB in compensation for tax arrears for the years 1994 and 1995.
The government will also pledge to compensate OTP bank in case of future tax arrears and penalties related to IRB's past operations.
"The government has managed to sell off this bank after such a long time, and taking into account its forced management in the past, that it is a success in itself," said Blaščák.
The successful close of the IRB sale comes as Slovenská sporiteľňa, now owned by Austria's Erste Bank, announced a Sk2.9 billion profit for the first nine months of this year. The figure was a year-on-year rise of Sk2.2 billion.
5. Nov 2001 at 0:00 | Ed Holt