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Large state banks become subject of privatisation moot

In the wake of the August capital increase at Slovakia's largest insurer, the state-owned Slovenská poisťovňa (SP), opposition deputies have charged that the country's largest banks, the state-owned Slovenská sporiteľna (SLSP) and Všeobecna úverová banka (VÚB), are soon to be privatised. Government and bank officials, meanwhile, have neither confirmed nor refuted the allegations.
Brigita Schmögnerová, vice-chairman of the reformed communist Party of the Democratic Left (SDĽ), recently alleged that a planned SLSP privatisation would be achieved by increasing the bank's share capital through a stock subscription in which the state would not participate. Schmögnerová's charge was echoed by Ivan Mikloš, an economic expert for the largest opposition party, the Slovak Democratic Coalition (SDK).

In the wake of the August capital increase at Slovakia's largest insurer, the state-owned Slovenská poisťovňa (SP), opposition deputies have charged that the country's largest banks, the state-owned Slovenská sporiteľna (SLSP) and Všeobecna úverová banka (VÚB), are soon to be privatised. Government and bank officials, meanwhile, have neither confirmed nor refuted the allegations.

Brigita Schmögnerová, vice-chairman of the reformed communist Party of the Democratic Left (SDĽ), recently alleged that a planned SLSP privatisation would be achieved by increasing the bank's share capital through a stock subscription in which the state would not participate. Schmögnerová's charge was echoed by Ivan Mikloš, an economic expert for the largest opposition party, the Slovak Democratic Coalition (SDK).

Stanislav Križan, SLSP's marketing director, did not specifically refute the privatisation rumors, but said that "the SLSP General Meeting makes decisions on the issue of new shares, and calling [the meeting] is currently not being considered."

Meanwhile, Slovak Vice-Premier Sergej Kozlík said that he had "no information" about a capital increase at SLSP, but confirmed that "a series of measures that help raise the basic capitals of financial institutions will be taken in the future."

VÚB is in a somewhat different position. While SLSP is wholly owned by the government, VÚB has been semi-private for several years, with the National Property Fund (FNM) holding only 50.8% of its shares. SLSP privatisation is banned by law, but the sale of VÚB is not. The FNM is legally no longer the majority owner, as it sold 15.9% of shares to state insurer Slovenská poisťovňa in a repurchase operation at the beginning of July. The FNM has a right to buy the shares back at the end of 1998, but the terms of the contract can be changed anytime.

Mikloš said he was worried by the flexibility of the law. "Again, the real issue is not what happens before the elections but afterwards," he explained. After the national vote, a 30-day period separates the closing of polls and the meeting of the new parliament. During this time, neither FNM officials nor government ministers can be recalled. If the current government loses the September 25-26 vote, the opposition is afraid it will use those 30 days to sell off state property.

Kozlík said for the Slovak daily newspaper Pravda that "similar operations concerning an increase in the basic capitals of financial institutions will also be carried out when the situation becomes calm after elections."

Even if a post-election sale does not occur, any new government's ability to control VÚB would be mitigated by the current management structure of the bank. "VÚB is pretty much in their hands," said Schmögnerová. The weekly economic paper Trend recently explained who "they" were. Based on a change passed by the VÚB General Meeting in 1997, VÚB bylaws now require a two thirds shareholder majority to recall and appoint members of the bank's Supervisory Board, which in turn recalls and appoints the Executive Board.

According to Trend, members of both boards, appointed during the current Mečiar government, now own more than a third of VÚB through an array of small companies. Consequently, if they voted together, no government could change the bank's top management against their wishes.

Both Zlacký and an NBS source who requested anonymity agreed that the banks could benefit from a change. "The level of management there is poor," said Zlacký.

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