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IRB shareholders' meeting approves annual report for 1998

The troubled Investičná a Rozvojová Banka (IRB-Investment and Development Bank) held a shareholders' meeting on July 23, but was unable to approve either a change in the bank's basic capital or the entry of a strategic partner.

IRB, which has been under a caretaker administration imposed by the central bank since December 1997 because of liquidity problems, closed the year 1998 with losses of 4.5 billion Slovak crowns ($105 million). IRB administrator Vladimír Hromý explained after the meeting that shareholders had not dealt with the basic capital issue because it lacked approval from the National Bank of Slovakia.

Local media have reported that a secret government plan for IRB, approved by cabinet in June, calls for IRB's basic capital to be cut from three billion to one billion, and then raised to 6.7 billion, leaving the state in control of IRB.

According to auditor Deloitte &Touche, classified loans accounted for 33% of IRB's loan portfolio at the end of 1998. Another 37% of loans had been extended to a single client on disadvantageous conditions, or had been used to finance the Mochovce nuclear power station. Fully 24% of IRB loans were held by housing associations at an average interest rate of 1.02%.

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