2–7 November 1925
Subscription of shares in the bank of issue
On 24 April 1925, the Banking Committee received authorisation from Finance Minister Bohdan Bečka to establish the bank of issue, and in October a preparatory committee was set up with the main task of organising the issuance of the bank’s shares.
On 28 October 1925 – symbolically on the anniversary of the founding of the Czechoslovak Republic – prospectuses and advertisements were published inviting subscriptions for shares between 2 and 7 November 1925. A total of 80,000 shares were offered to the public, each priced at USD 100 (i.e. at a fixed conversion rate of Kč 3,390). Demand was almost three times higher than supply. The preparatory committee therefore had to implement a repartition process, i.e. determining the allocation of shares.
The allocation was based on criteria that took into account the size of the subscription, the type of subscriber (profession and nationality) and a preference for collective subscriptions over individual ones. Under the first criterion, priority was given to applicants who were interested in 10 to 50 shares, as they were expected to take an active part in the general meeting (only shareholders holding at least 10 shares were entitled to vote). Under the second criterion, preference was given to industrial and agricultural entrepreneurs, people’s financial institutions (savings banks and credit unions of all types) and public banks. The aim was to ensure that the majority of shares were acquired by Czechoslovak, specifically Czech and Slovak, subscribers. Under the third criterion, subscriptions by individuals were limited to a maximum of 50 shares. The aim of these rules was to secure long-term, reliable domestic shareholders, particularly corporations, on which the National Bank of Czechoslovakia could safely rely in the event of monetary turbulence.
The outcome of the share allocation was that the largest proportion of the share capital was acquired by private individuals (43.3%), followed by people’s banking institutions – i.e. savings banks and credit unions of all types (17.9%) – and enterprises in industry, commerce and transport (17.44%). The low interest shown by individual farmers was offset by the strong participation of rural credit unions and cooperatives. Together with other rural stakeholders, they took almost a 10% equity share. The share capital was subscribed almost exclusively from domestic sources, with foreign applicants receiving only 0.99% of the shares.