CSOB acquires IPB´s business
19. 6. 2000
Ceskoslovenska Obchodni Banka a.s. (CSOB) has reached an agreement with the forced administrator of IPB, the Czech National Bank (CNB) and the Ministry of Finance to acquire the operations of Investicni a postovni banka a.s. (IPB) which was placed under forced administration by the CNB last Friday.
Under the terms of the agreement signed early morning (Monday), CSOB receives the assets and liabilities of IPB against a deferred consideration based on an audit by two international accounting firms to be commenced in the next few days. CSOB will benefit from a number of provisions protecting the value of the assets of IPB and limiting any liability which could arise out of the transaction. CSOB has taken effective operational control over IPB as of Monday morning.
The transaction offers CSOB a unique opportunity to take a quantum leap in the development of its retail banking operations which it had set as a strategic priority in the wake of its privatisation last year. The business profile of the two institutions is very complementary, CSOB having particular strengths amongst Czech blue chips whilst IPB's business focuses primarily on the retail and SME segments.
Last night's agreement marks a new milestone for the Czech authorities in their efforts to reform the country's financial services sector, a key requirement for European integration.
The transaction also reinforces KBC's position as the leading Western financial institution in Central Europe.
Commenting on the transaction, CSOB´s Chairman Pavel Kavanek declared "This transaction opens exciting opportunities for CSOB, particularly in terms of the development of our retail banking activities. IPB's franchise is still valuable on the Czech market and I look forward to working constructively with IPB's staff and clients in a stable environment".
Remi Vermeiren, CEO of KBC's, commented "We are very pleased that CSOB was able to close the transaction because two institutions could not be more complementary than they are. This also means that CSOB can forego important investments that were planned in IT, retail systems and branches".
Minister of Finance of the Czech Republic, Pavel Mertlik commented: "It was our firm intention to close a transaction by the end of the weekend. As in the case of ING's acquisition of Barings, speed of execution was key in order to minimise systemic disruptions and costs. I am pleased that despite the complexity of the transaction at hand we were able to meet this challenging deadline".
The Governor of the Czech National Bank said: "I consider the agreement reached as a significant contribution towards the stabilisation of the country´s banking system."
CSOB was advised by Rothschild and Baker & McKenzie.
CSOB: Jan Stolar, tel +420 2 2411 2030
Ministry of Finance: Libor Vacek
CNB: Milan Tomanek, tel +420 2 2441 2012
KBC: Piet Jaspaert, tel +32 2 429 11 11
Rothschild: Maurice Topiol, tel +44 20 7280 5000
David Hejnar, tel +420 2 72 14 38 10
Note to the Editor
CSOB is the fourth largest bank in the Czech banking sector with a balance sheet total of Kc258bn (?7.1bn) and net assets of Kc31bn (?0.9bn) as at 31.12.1999.
In 1999, CSOB reported a net profit of Kc3bn (?78m). CSOB was privatised in 1999 by way of the sale of a 65.7% stake to KBC, the Belgian bancassurance group and a leading Western bank in Central Europe. Since then, KBC has increased its stake in CSOB to 84% by acquiring an additional shareholding from the Slovak Government. Other significant shareholders in CSOB are EBRD 7.5% and IFC 4.4%.
Over the last 6 years, CSOB has moved from a specialist foreign trade bank into a universal bank with a strong wholesale focus. The development of the bank's presence in the retail and SME segments is now a key strategic priority.
IPB is the third largest bank in Czech Republic with a reported balance sheet total of Kc323bn (?8.9bn) as at 30.09.1999. The bank was privatised in 1998 by way of a strategic sale to Nomura who now holds a 46% stake in the bank. Since the time of its privatisation, the bank has built a significant retail banking franchise reaching an estimated 20% market share of primary deposits. As at the end of 1999, the bank reportedly had 3.3 million customers serviced through a network of 179 branches and 3,336 outlets of the post office with which the bank has an exclusive long-term agreement. IPB is also renowned for its innovative retail banking products (e.g. internet banking) and the franchise it has developed in other financial services including insurance through its subsidiary IPB Pojistovna and mortgage banking. Growing rumours about the bank's financial standing over the past months have caused concerns among the bank's depositors which resulted in substantial withdrawals in the last two weeks prompting CNB's intervention.
KBC was formed in 1998 through the merger of two banks, Kredietbank and CERA with ABB-insurance. KBC is the second largest financial services institution in Belgium, with over 30,000 employees and offices in over 25 countries worldwide. KBC's core businesses include retail bancassurance activities, corporate banking services, market activities and asset management.
The KBC Group has a market capitalisation of ?13.4bn. Consolidated Group profit as at 31 December 1999 amounted to ?970m for a balance sheet total of ?156bn.
Through this acquisition, KBC Bank further strengthens its leading position in Central Europe, a key area of its international strategic development. In addition to its shareholding in CSOB, KBC holds stakes in Kredyt Bank (Poland), Kereskedelmi és Hitelbank (Hungary) as well as in several regional insurers: Argosz (Hungary),CSOB Pojistovna (Czech Republic) and Agropolisa (Poland).