Tatra Banka enjoyed a "milestone year" in 1996, according to the bank's general director, Milan Vrškový. The bank's healthy loan portfolio and 50% increase in assets since 1995 are the results of employee retraining and foreign recruitment programs, as well as a decision to avoid the troubled Slovak public sector.
While some Slovak banks are in shaky financial shape, Tatra Banka has been able to stay healthy. Vrškový claims that the bank is the fourth biggest in Slovakia, behind VÚB, IRB and Slovenská Sporiteľňa a.s., despite having been established in 1990. "We started as a real private bank," recalled the director, "on a green field, as it were." The 'green field' to which Vrškový referred to was the untrodden frontier of modern banking technology at the start of their enterprise.
While the state banks were sheltered under a government roof, private ventures such as Tatra Banka concentrated on drumming up business in Slovakia's fledgling private and corporate sector. Citing such technologies as SWIFT, on-line branches and the Reuters monetary system and dealing room, Vrškový reels off a list of innovations that his bank introduced to the country that are now standard practices in all Slovak banks. Particularly important, he said, has been Tatra's "fast and high quality" telebanking system, which accomodated more than 500 corporate customers and carried fully 30% of the bank's corporate transfer traffic.
The keys to success
While no-one really knows what percentage of the state-bank loans are dicey, the Slovak media have estimated that between 30 and 40 percent of the IRB and VÚB loan portfolios are bad. Tatra Banka, on the other hand, reports that less than 1% of its debtors are in trouble. Vrškový attributes this phenomenon to Tatra's canniness in easing into the Slovak market - the bank's customers are "mostly corporate" with a "very small percentage" of public-sector clients.
When asked to comment on Tatra Banka's success, Miroslav Bernát, head of the export financing section at VÚB, noted that Tatra was from the beginning "not exposed to bad debts inherited from the socialist era as VÚB is now." He added that Tatra's "structure of shareholders is very good," and that with Austria's powerful Reiffenbank as the majority shareholder, Tatra had a significant market advantage.
Richard Teichmann, vice-president of the Slovak-Austrian Chamber of Commerce and president of the Sibamac construction firm, agreeed that Tatra's Austrian connection was vital in securing Austrian clients in Slovakia, and thus in winning the business of some of the most important foreign investors. "I know Tatra Banka from a client perspective," said Teichmann, "and as I see it, their advantage was being here in the very beginning...of course, they have had success with their joint venture concept, and I have heard they have a good training program."
Retraining and recruitment
Staff training programs have helped Tatra Banka maintain its steady growth. Vrškový is adamant on the need to invest in people and in their training, to prepare staff properly for international banking technology.
In a country such as Slovakia, he says, where the economic infrastructure that protects banks and their money is still being developed, "one must be more circumspect, more careful" in all walks of financial life. But care in training local staff is not enough. Vrškový declared that one must be ready to pay through the nose for highly qualified foreign experts when the need arises.
"It has always been important in this bank that we are open and ready to employ foreign experts." Foreigners often come at exorbitant prices, he concedes, but maintains that "while they may be initially more expensive, in the end it is the cheapest way to success".
While Tatra Banka has been involved in joint ventures and development programs for small businesses, such as one sponsored by the European Investment Bank, it has elected to stay out of the domestic mortgage market for the time being.
"It is again a question of infrastructure," Vrškový explained. The government "has not yet prepared laws for private mortgage situations," which means that evicting a defaulting mortgage holder from his flat could take ten years instead of one week...it has to be faster".
Tatra Banka now numbers 22 branches in Slovakia, and has increased its start-up capital of 500 million crowns to 2.2 billion, mostly the result of "profits retained from past years," according to its general director. Reflecting on the banking climate in Slovakia, Vrškový observed that caution is the order of the day. When the necessary infrastructure is missing, "it becomes more time-consuming to cover yourself...you have more problems and are facing bigger dangers."
While gently critical of government attempts to remedy the situation - "I imagine it could be faster," Vrškový sees hope for VÚB and IRB in the privatization process, as long as it is transparent and brings fresh capital and restructuring to the troubled institutions. The state banks, he submits, "were probably many times pressed" into making bad loans, but notes with some satisfaction that "our portfolio is much more healthy."
