Czech Republic loses arbitration case over bank sell-off

The Czech Republic may have to make a huge pay-out after losing an international arbitration case taken by the Japanese bank Nomura over the sale of IPB bank. The Czech government put IPB under forced administration when it collapsed in the year 2000 before selling it to another Czech bank, CSOB. Nomura, which owned almost half of IPB, said the Czech state had failed to protect its investment; it is now demanding over one and a half billion US dollars in compensation. The actual amount it receives will be set by a second arbitration hearing.

But Czech Prime Minister Jiri Paroubek, whose Social Democrats were in power at the time of the sale, said there was no immediate threat of the country having to pay the compensation; he said negotiations would continue and it could take years for the matter to be resolved.