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ECONOMIC BRIEFS

Bank restructuring will take at least one year - Finance Ministry

The restructuring of the banking sector will take at least one year, Deputy Finance Minister Viliam Vaškovič told a press conference on May 9.

Vaškovič added that restructuring includes legislative as well as institutional measures on the part of banks themselves. "We are preparing to carry out part of this process in a decentralized way via banks, so banks must also get prepared for this process [restructuring]," he said. "Banks must create subsidiaries or sign mandatory contracts with foreign companies that will control revitalization programs, processing of bankruptcies and the settlements and claiming of arrears."

The 1999 state budget does not provide financing for bank sector restructuring. Fiscal costs for restructuring could be included in the state budget for next year. "Every bank in which the Finance Ministry controls a stake has prepared a restructuring plan that has been discussed at the ministry. However, these projects did not contain restructuring of the loan portfolio. Nevertheless, we are prepared to take certain steps with the assistance of experts from the World Bank," Vaškovič said.

Vaškovič said he believed state banks such as Slovenská Sporiteľňa (SLSP), Všeobecná Úverová Banka (VÚB) and Investičná a Rozvojová Banka (IRB) could be privatized within one year, but that a revision to the strategic companies' law banning the privatization of state-controlled banking houses would first have to be adopted.

Vaškovič also said that the Slovak government did not want to sell its 91% majority stake in SLSP outright, but that it planned to increase the bank's share assets to enable a foreign investor to hold a 30% stake. For VÚB, the government has decided to sell a majority stake in the bank to an investor.

Finance Minister Brigita Schmögnerová added that a decision on the banks' privatization has not been made at the political level thus far, meaning that Vaškovič's proposal for the privatization of SLSP cannot be regarded as definitive.

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