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Representative-offices wait their turn for NBS license

Since the 1989 Velvet Revolution and later after the split of Czechoslovakia, many foreign banks sought to enter the financial market in Slovakia. They could set up a representative-office (rep-office) and then wait to receive a banking license from the National Bank of Slovakia (NBS). Or they could set up a joint venture with locally-owned commercial banks in Slovakia and try to channel foreign capital to Slovakia that way. The path most foreign banks have taken is to set up a rep-office. There are thirteen foreign banks that have set up this way in Slovakia and are waiting for a license to be a universal bank.

Since the 1989 Velvet Revolution and later after the split of Czechoslovakia, many foreign banks sought to enter the financial market in Slovakia. They could set up a representative-office (rep-office) and then wait to receive a banking license from the National Bank of Slovakia (NBS). Or they could set up a joint venture with locally-owned commercial banks in Slovakia and try to channel foreign capital to Slovakia that way.

The path most foreign banks have taken is to set up a rep-office. There are thirteen foreign banks that have set up this way in Slovakia and are waiting for a license to be a universal bank.

As a rep-bank, it is not necessary to declare capital, (a universal bank must declare a minimum 50 million Sk). They are not allowed to give loans or accept deposits. What they do is provide information for their customers in their home countries on the Slovak economy, and make contacts with the NBS on their way to becoming a universal bank.

The time it takes to become a universal bank varies. Citibank Slovakia requested a universal license in April 1995 and was granted it by the NBS four months later in August. Other banks have different stories. Here are three different examples of how rep-offices operate as they wait for the NBS to grant them a license.

Investiční a Poštovní banka, a.s., Rep-office in Bratislava

The rep-office, headed by its mother bank in Prague, monitors the banking sector, watches and analyzes the progression of economic indicators, the political and business environment, and legislation in the banking sector in Slovakia. It also aims to build and develops relations between IPB and the other banks in Slovakia, mainly in the system of payments, but its importance lies in the development of direct cooperation with Czech companies - IPB clients and their Slovak partners. IPB established the first Czech-Russian bank with majority shares in Moscow - the opening ceremony will be held in Moscow on September 24.

Union banka, a. s., Rep-office in Bratislava

The rep-office makes contacts with Slovak banks, and between small and medium-sized firms in Slovakia and companies from North Moravia as well as with Poland and Bulgaria, where only Union banka from the Czech banks has direct rep-offices.

Union banka is a wholesale bank in the Czech Republic owning 100 percent of Ekoagrobanka and 96 percent of Evrobanka - added to an earlier purchase this year of Bankovní Dúm Skala. UB's network of investment companies are: Union Invest Capital and Investiční společnost Union, Investiční společnost Premium, the leasing company Enimat and insurance company Pojišťovna Union headed by Union Group, a. s..

Commerzbank AG, Rep-office in Bratislava

Commerzbank provides, arranges or participates in syndicated loans and investment projects. One of them was given to the Slovak Gas Company (SPP) to build pipe lines in the amount of 54 million DEM in August 1995 with ING Bank as the arranger. "One year later, we provided the Slovnaft oil company with a credit in the amount of 75 million DEM in order to modernize the refinery," said Francois Brochard from CB's rep-office.

CB's rep-office provides assistance in Slovak-German trade such as foreign payment transactions, documentary business and financing. It arranges business contacts for local companies with German and multinational investors among Commerzbank's clients as well as helping foreign clients contact local banks and companies.

Commerzbank, as a universal bank, has its own branch in Prague, a daughter company in Budapest and holds 20 percent in Bank Rozwoju Eksportu, SA in Poland and has six offices in the former Soviet Union.

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