The Slovak central bank said on May 26 it may approach the International Center for Settlement of Investment Disputes (ICSID) about the forthcoming privatisation of the majority Czech owned Československá Obchodní Banka (CSOB).
Czech shareholders - mainly Czech state institutions - have refused to allow the Slovak central bank (NBS) to sell its 24% stake in ČSOB, citing a 17.1 billion Czech crown debt allegedly owed to ČSOB by a Slovak state debt collection agency, Slovenská Inkasná.
"From a legal standpoint, the sale of shares of ČSOB owned by the NBS is not connected at all with the relationship between ČSOB and Slovenská Inkasná... the NBS is considering whether to ask the ICSID to also deal with our ČSOB privatisation demands," Slovak central bank spokesman Ján Onda said.
ČSOB claimed partial victory on May 26 when the Washington-based ICSID ruled that it had jurisdiction to hear ČSOB's lawsuit, which aims to recover the receivable.
A spokesman for the soon-to-be privatised ČSOB said that the bank's chances of getting the money back have increased now that the ICSID will hear the case. "The bank [ČSOB] is confident that the tribunal will recognise the validity of the bank's claims against the Slovak Republic, as the Slovak Republic clearly has failed to honour its obligations," the ČSOB said in a subsequent statement.
The ICSID decision comes as the Czech government is due to decide by May 31 on its sale of a 66% stake in ČSOB to bidding banks KBC of Belgium, Deutsche Bank or HypoVereinsbank of Germany.
Slovakia stopped repaying the debt in 1995, saying the liability is not properly documented, and the sum demanded by ČSOB keeps swelling with interest. ČSOB said the debt stood at 17.1 billion crowns at the end of the first quarter this year.
The previous Czech government, which issued a guarantee for the debt, said it could grow to more than 30 billion crowns by 2003 when the guarantee is due.
ČSOB spokesman Jan Stolár said on May 26 that the bank believed the ICSID would make a final decision in its favour, comfortably before the potential execution of the guarantee.