WASHINGTON, D.C., February 12, 2001 --- The International Finance Corporation (IFC) and The European Bank for Reconstruction and Development (EBRD) have agreed to purchase up to 25 percent of the shares in Vseobecná úverová banka (VUB), the second-largest bank in the Slovak Republic.  The joint investment is designed to support the Slovak government’s privatization of VUB, which is expected to be completed by the end of the year.

IFC and EBRD will each purchase a 12.5 percent stake in the bank.

Roy Karaoglan, IFC’s nominee to VUB’s Supervisory Board, said the investment reflects IFC’s goal of supporting the Slovak Republic’s efforts at banking sector reform.  He added that IFC is pleased to be a VUB shareholder and looks forward to seeing privatization of the bank reach a successful conclusion.

EBRD, which is the largest institutional investor in central and eastern Europe, also expects to provide a 20 million euros credit line to VUB under a joint European Union/EBRD Finance Facility for small and medium-sized enterprises (SMEs).  Supporting SMEs through local banks is at the heart of the EBRD’s strategy to promote the country’s economic transition to a market economy.

Kurt Geiger, the EBRD’s Business Group Director for Financial Institutions, said that the privatization of VUB is part of the government’s broader restructuring and privatization plan for the country’s banking sector. He added that EBRD’s investment and proposed SME credit line aim to underpin VUB’s restructuring in the run-up to full privatization, and to demonstrate the EBRD’s commitment to the bank privatization program in the Slovak Republic.


IFC and EBRD are arranging technical assistance support for organizational changes initiated by VUB’s management.  The two institutions will also help to consolidate improvements achieved following the bank’s financial restructuring.  

VUB was established in 1990 as a state bank comprising part of the corporate banking business and assets of the former State Bank of Czechoslovakia.  It is the leading corporate bank in the Slovak Republic, with 28 percent and 20 percent market shares in loans and deposits respectively.  It has developed a strong retail banking franchise and commands a 21 percent share of retail deposits.  At the end of September 2000, VUB’s total assets were US$3.8 billion (3.9 billion euros) and equity amounting to $315 million (334 million euros).  The bank has 230 branches and sub-branches and 6,050 employees.

The mission of IFC, part of the World Bank Group, is to promote sustainable private sector investment in developing countries as a way to reduce poverty and improve people's lives.  IFC finances private sector investments in emerging markets, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses.

The EBRD aims to foster the transition from centrally planned to market economies in central and eastern Europe and the Commonwealth of Independent States.  It is owned by 60 countries, the European Investment Bank and the European Community.