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
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
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
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.