While in the Czech Republic, bad loans are evenly spread between the big socialist-era banks and young upstarts privately founded after 1989, Slovak banks' lending performance tends to fluctuate wildly.
On the one hand there is the refined, swift performance of banks like Tatra Banka. Founded in 1991 , the Tatra Banks is now the third largest domestic bank, as ranked by the total of its assets last year, while only 1.4% of its loans are labelled as non-performing. On the other hand, socialist-era behemoths like VÚB, IRB and SLSP are all mired in bad debts.
But these banks' credit troubles are linked to the past as much, if not more, to present activities, some say.
"A large portion of bad loans was inherited from the socialist era and was caused by central planning, not the banks themselves," said Ján Onda, spokesman for the National Bank of Slovakia (NBS). Vladimír Masár, NBS Governor, used the same argument when explaining why the central bank came to a bankrupt IRB's rescue last December. "The [bad loans] are overwhelmingly caused by errors of the previous regime," Masár told the daily Národná obroda. "Who else should pay for them, but all of us?"
Not all agree with this assessment. "All of SLSP's bad loans are from after 1989," countered Brigita Schmögnerová, economic expert for the SDĽ. The bank has not published figures about its non-performing loans for 1997, but its reserves for bad loans are currently over 15 billion Sk, which Schmögnerová said is not enough.
The IRB is burdened mainly by two socialist-era loans - credit for the Mochovce nuclear plant and loans to housing cooperatives, according to Schmögnerová. The repayment of the former depends on the plant being fully operational, which has yet to happen. The latter is a performing loan, Schmögnerová said, but the interest rate is extremely low. The government is legally bound to make up the interest differential, but ignored this legal obligation last year, when it took away 782 million Sk from IRB, she added.
The most complex case is VÚB, the only one of the three to have published its figures. Various types of bad loans make up 32.9% of its portfolio from before 1989. Also retail privatization and large privatization, carried out under Mečiar's and others' administrations, currently amount to 35.3 billion Sk, but the bank so far has only created reserves of 17.6 billion.