The third biggest country's bank - IPB - is on a verge of collapse as it is apparently unable to cook its books once more to pass an audit. The Cabinet will address the bank's precarious situation this week and the central bank is busy negotiating with the shareholders. Meanwhile, depositors took notice and have begun withdrawing deposits. The IPB's main shareholder, Japanese Nomura, sits comfortably and tries to get as much as it can from apparently unavoidable sale of its share back to the state. Reportedly, Nomura asked for CZK 7 bil. while the government was willing to give in a symbolic price. The longer both sides negotiate, the bigger damage to the bank.
The ministry of finance has finally decided to go ahead with its plan to hike excise taxes next year, disregarding current high oil prices. It may be an act of consistence, but it will cost the Minister dear in terms of his (un)popularity. In an absurd move, the (new) minister of transport suggested that telecom networks of country's utilities should be cut off their respective companies and then merged so the state "may cash on them." How long it takes before we wish the late, often-lethargic minister Peltram is back?
All remained quiet on the forex front on Monday: the koruna moved sideways around 36 CZK/EUR and 37.8 CZK/USD. (It did gain, though, this morning to 37.6 CZK/USD as the euro jumped to 95.8 cents.)
After rather bullish Friday Czech bonds had another fall on Monday. Whole yiled curve has lost, including 3-year bonds (though those short ones recovered quickly to opening positions). Most losing bond of the day was corporate KB12, which fell down some 80 bps, through the day there was another rally on IPB4, falling as low as 89,90-90,10 from opening 92,80-93,80, after a client purchases the bond recovered to 93,20-94,20.
In the late afternoon also the long term maturities recovered slightly but did not reach the opening prices.
Current benchmark prices: MoF 6.75/05 101.10-40 (-30 bps), MoF 6.30/07 98.70-00 (-25 bps), MoF 6.40/10 98.85-15 (-25 bps).
(Ondrej Schneider and Dalimil Vyskovsky)