Foreign capital participation
Within the low amounts of foreign direct investment inflow to Slovakia, the banking sector (including the financial sector) shared the highest portion in 1993-1994; in 1995 the share of banking sector fell to third place (behind the industry and trade sectors).
As regards the foreign capital participation in the subscribed banking capital in Slovakia, it developed rapidly compared with the very low starting amounts. While the participation of foreign investors in the Slovak banking sector represented 13.6 per cent of the total banking equity in Slovakia as of June 30, 1993, their share amounted to 32.7 per cent as of March 31, 1995. The prevailing part of this increase occurred during 1995; in 1994, the growth in equity capital as a whole was rather moderate.
Foreign capital participation was reported in 13 domestic commercial banks operating as of June 30, 1996. During the first half of 1996, in accordance with the amended Banking Act, the NBS granted a licence to one bank with foreign capital participation to perform banking activities.
At the end of the first half of 1996, there were recorded eight branches of foreign banks in the Slovak banking sector. In this period, two branches of foreign banks were deprived of their licence to operate as a bank.
Banks with foreign capital participation (banks with foreign capital participation under 10 per cent are classified as banks with no foreign participation) are mainly medium-sized entities with equity capital between 0.3 billion SKK to 1 billion SKK. The equity participation ranges from 13.5 per cent to 100 per cent.
For the equity subscribed capital of Banks by country see chart 2.
Apart from the amounts invested, the participation of foreign capital in Slovak banks plays an important role in extending the required know-how in emerging specialised banking activities such as building savings or mortgage banking. Both the Slovak building savings banks (Stavebna sporitelna VUB-Wustenrot as, Bratislava, and Prva stavebna sporiterna as, Bratislava) were established with the aid of Austrian and German capital participation, and the licensed mortgage bank Hypo-bank Slovakia as, Bratislava, which began operations on 1 July 1996, is fully controlled by German capital.
The amounts and shares of foreign capital participation in the Slovak banking sector by the weight of equity capital are given in table 9.
Paper elaborated on behalf of Ms. Karen S. Vorst, PhD, Associate Professor, University of Missouri-Kansas City, College of Art and Sciences, Department of Economics to be included in a book on the developments in transitional countries of Central Europe Bratislava, May 1997
Viktoria Muckova, PhD, Director of the Department for Banking and Financial Products, IMFS