Parliamentary commission critical of sale of IPB
A parliamentary commission set up last year to investigate the government's sale of IPB bank released a report on Tuesday, which is critical of the government's handling of the deal. According to the report, CSOB, the bank that bought IPB, made a vast profit out of the deal, but cost Czech taxpayers tens of billions of Czech crowns. The commission also claims that responsibility for this bad deal lies firmly with former Finance Minister Pavel Mertlik. Nick Carey has this report.
When allegations surfaced in the Czech press last June that IPB bank had billions of Czech crowns in bad debts, and that it risked going under, this started a run on the bank. In mid-June, the government introduced forced administration in IPB, and within a few days sold the bank to CSOB, one of the country's largest banks.
In the political storm that followed the sale of IPB, the Lower House of Parliament set up a commission to investigate the deal. On Tuesday, the commission released its report, in which it says that the sale of IPB was not transparent, and cost the state tens of billions of crowns, while CSOB made a large profit from the deal. Finance Minister Jiri Rusnok has estimated the cost of paying off IPB's bad loans at up to 95 billion Czech crowns, or roughly 2.7 billion US dollars. His predecessor, Pavel Mertlik, the man the commission blames for what it calls a bad deal, says that the only other alternative to selling IPB would have been far more costly:
According to economic analyst Jan Sykora of Wood & Company, the Social Democrat government indeed had little choice at the time, and that letting IPB collapse would have had dire consequences for the Czech financial sector as a whole:
"If I look at what the other option could have been, and that would be to let IPB go bankrupt. I think this would have had a tremendously negative impact on the overall financial sector and it would clearly have put a lot of depositors in jeopardy. So in that particular sense, the government didn't have much of an option."
After the report was released on Tuesday, the main opposition Civic Democrats called for a criminal investigation into how the sale of IPB was handled. But economic analyst Jan Sykora believes that more should have been done much earlier to prevent IPB accumulating bad loans in the first place:
"What I regret is that the government didn't move much earlier, as early as the mid-1990s, when it was clear that something was going on the bank. What I think could have happened then was that there was a possibility to sell the bank to perhaps another buyer, or receive a higher price. Or, prevent the bank from accumulating more bad loans, or make sure that the losses on the balance sheet, or the disappearance of the balance sheet would be lower."