The top news Monday in the country was undoubtedly the sale of the IPB bank, which had been put under forced administration on Friday, to the Czech bank CSOB, owned by the Belgian KBC Bank. The price of the transaction will be determined in roughly six months after an audit conducted by two independent international auditors. CSOB becomes the country's largest commercial bank, with assets over CZK 600 bil. (25% of GDP) and deposits of almost CZK 400 bil. The Czech central bank (the CNB) has begun the process of rescinding IPB's banking license. A CNB audit revealed that IPB's losses for 1999 far exceed its equity, leaving the bank unable to continue operations on its own.
Some politicians have criticized both the forced administration imposed upon IPB and the rather quick sale of the third-largest Czech bank. Václav Klaus, the chairman of the lower house of Parliament, criticized especially the CNB, a favorite target of his. We, however, believe that the quick action of the CNB and the Cabinet adverted a destabilization of the whole banking sector.
Bond prices closed higher again on Monday, as trading was quite busy that day. Market makers met the morning with prices some 50 bps higher than Friday’s closing levels, but huge selloffs followed. There was increased buying activity in the afternoon, with long-term maturities soaring in particular, and prices closed almost 100 bps higher than on Friday.
Current benchmark prices: MoF 6.75/05 101.70-00 (+30 bps), MoF 6.30/07 98.85-15 (+55 bps), MoF 6.40/10 99.00-30 (+70 bps)
(Monika Procházková and Dalimil Vyškovský)