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ECONOMIC BRIEFS

World bank's Aide Moire after its mission in Slovakia

Aide Moire released by the World Bank after its December mission to the Slovak Republic: Loan activities of the state-controlled commercial banks should be restricted in the short- and mid-term. In the short-term, VÚB should create a sufficient amount of reserves to bad loans. This would affect its capital adequacy, which will most likely not meet strict NBS ctiteria Consequently, VÚB will submit its restructuring plan. In the mid-term perspective, VÚB should be privatized with the participation of a selected investment bank. Potential buyers of the bank may ask for prior restructuring, so that bad loans will be removed, te bank will be re-capitalized, and excess labor will be removed. The impact of the restructuring and privatization processes on the shareholders, who will bear most of the restructuring on the current shareholders, who will bear most of the restructuring costs, should be carefully evaluated. The privatization of IRB bank should be completed by the sale of the bank's shares from the FNM's portfolio. The loan provided by the IRB for the Mochovce's completion exceeds the banks's limits and should be backed by a governmental guarantee so that the bank can classify it as a standard loan. The Slovak Savings Bank (SLSP) should be restricted to provide loans to the commercial sector, but allowed to provide loans for citizens. KonsolidaŹná banka should have its bank license withdrawn, since it is not planned that it will function as a commercial bank. The liabilities that it owes to the National Bank of Slovakia (NBS) should be restructured and provided with a guarantee from the Ministry of Finance.

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