"The entry of high-quality, credible and transparent investors...will contribute to better interconnection between domestic and European banking and financial markets, which is one of the strategic steps in preparing Slovak banks for accession into the European Union."
Vladimír Hromý, Director of NBS bank supervision dept.
The National Bank of Slovakia (NBS) announced on September 22 it is holding talks with unspecified foreign banks about purchasing strategic stakes in Slovak banks.
"Negotiations with a number of major banks from the European Union about their possible entry into the Slovak banking sector are currently underway," said Vladimír Hromý, director of the NBS's bank supervision department.
"The entry of high-quality, credible and transparent investors...will contribute to better interconnection between domestic and European banking and financial markets, which is one of the strategic steps in preparation of Slovak banks for the European Union (EU) accession," Hromý added.
Hromý explained that the central bank was geared towards attracting strong local and foreign investors to enter existing banks rather than creating entirely new institutions.
"The progressive capital build-up of existing banks is a major tool for improving their stability and the soundness of the entire banking sector," Hromý told a forum of local and foreign investors.
Hromý's statement makes it clear that the NBS does not share the cabinet's opinion that there is already enough foreign capital in the Slovak banking sector. Finance Minister Sergej Kozlík has reiterated that he does not support the idea of foreign entities controlling more than "one third" of the country's banking sector. Foreigners currently control 38.3 percent of the Slovak banking sector, Hromý said.
Through the state privatization agency, the National Property Fund (FNM), the government controls 91.3 percent of Slovenská Sporiteľňa which is the country's largest savings bank. It also controls 51.5 percent in the biggest commercial bank, Všeobecná Úverová Banka (VÚB), and 35 percent of the third largest commercial bank, Investičná a Rozvojová Banka (IRB).
In March, the Slovak Parliament approved a law allowing for the sell-off of the state's stakes in IRB and VÚB, but put on hold Sporiteľňa's privatization until the next general elections, planned for September 1998.
"[EU integration] means that the banks will have to be prepared for mergers and acquisitions," Hromý said. "Commercial banks, in general, will have to look for solutions, whether through mergers, increases in registered capital, or equity investments by strategic partners, as this is crucial for ensuring the Slovak banking sector's competitiveness," he added.
Hromý said that any future Slovak membership in the EU would inevitably open the domestic market to international competition and that Slovak banks must be prepared to match standards of top class international institutions.
Slovakia has not been included in the first wave of countries invited to open accession talks to join the EU, but the government maintains that integration remains a top foreign policy priority.
