WASHINGTON, D.C., October 8, 1998 -- The International Finance Corporation has met with top Czech authorities to renew IFC's commitment to making its largest ever equity investment in banking, a stake of up to US$75 million in the state-owned Ceskoslovenska Obchodni Banka a.s. (CSOB), on condition that the bank privatizes, as planned.
Deputy Prime Minister Pavel Mertlik and Finance Minister Ivo Svoboda agreed with IFC Vice President Jemal-ud-din Kassum that it was critical to maintain momentum on privatizing the bank. The Czech authorities made a commitment to send the privatization prospectus, including reference to IFC's involvement, to potential strategic investors in November.
IFC's investment in CSOB is intended to support the bank through the process of restructuring and privatization. CSOB is one of three major state-owned banks in the Czech Republic slated for fast-track privatization. The Czech government’s bank privatization program is considered essential for economic growth in the Czech Republic and to support its aspirations to join the European Union.
After privatization, CSOB forecasts more mobilization of savings and a better ability to serve its traditional niche in the Czech corporate and foreign trade sectors as well as to expand into the retail sector, according to Mr. Pavel Kavanek, chairman and CEO of CSOB. The transaction will bring new technology and skills to the Czech banking sector. And it should spur the privatization of the remaining state-owned banks.
"Restructuring the financial sector is the government's highest priority and the privatization of CSOB is a key part of that process," Mr. Mertlik said in reconfirming the government's plans for the bank. Mr. Kassum added that the successful privatization of CSOB would send the international community an important signal of the Czech government’s commitment to economic reform, and become a model for other state-owned banks to emulate.
IFC, part of the World Bank Group, fosters economic growth in the emerging markets by financing private sector investments, mobilizing capital in the international financial markets and providing technical assistance and advice to governments and businesses
