By Simon Zekaria - 5th March 2004
European regulators are requesting more information from the Czech government on aid given to facilitate the privatisation of large bank CSOB.
EU competition authorities have already cleared financing to 13 Czech Republic banks under state aid rules – but outstanding cases remain, including Ceskoslovenska Obchodni Banka (CSOB).
But the European Commission on Friday refrained from giving a definitive timetable on decisions.
“They are the most complex and fact-intensive cases,” said a spokesman for EU competition commissioner Mario Monti.
“We don’t have all the information on the state measures. There is no indication where this investigation is going [as we] do not have the requisite information,” he added.
The commission only this week concluded cases on a series of ten banks – Ekoagrobanka, Union banka, Foresbanka, Bankovni dum Skala, Banka Hana, Coopbanka, Banka Moravia, Evrobanka, Pragobanka and Universal banka; all cleared on a simple procedural rule for state funding prior to the Czech Republic’s imminent EU membership.
And it is widely expected the decision on CSOB, notwithstanding its greater complexity, will follow suit.
EU laws allow leeway for financial measures set up within a specific time-period and for a specific purpose – under a special competition ‘amnesty’ made for accession countries.
State aid is only deemed to be ‘applicable’ after accession when it is spread across multiple ventures and when there is an unfixed time period and amount for the aid.
The sticking point for CSOB centres on the provision of unlimited state guarantees to the bank, offered during its takeover of ailing rival IPB, which could bypass the commission’s cut-off point on the date of accession.
Late in January, commission regulators also did not challenge aid given to former state-owned bank Ceska Sporitelna.
A multitude of Czech banks received government aid, valued up to €18 billion, during a four-year period between 1994 and 1998 to combat the structural effects of economic restructuring and privatisation.
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