Tough Sell for Czech Bank

LONDON - The first bank in Czechoslovakia to be wrested out of official state control is finding U.S. banks full of advice, but tight-fisted.

Zivnostenska Banka, based in the Czech capital of Prague, is scheduled to raise the equivalent of some $40 million in new capital next January as part of its privatization.

Its deputy general manager, Ivan Remsik, has been in the United States and other nations in recent weeks telling his counterpart bankers about the bank's plans. These include fostering new relationships and business accords as Zivnostenska emerges from decades of stifling state control to look more like a conventional Western commercial bank.

Training, American-Style

So far, some of the most valuable help the Czech bank has received from U.S. money-center institutions such as Citicorp and Chase Manhattan is in training, he said in an interview.

"Our American colleagues have been very good in letting our staff take part in their own internal training programs" in areas such as credit control and analysis, Mr. Remsik said. "They've integrated our people in their in-house training, which represents invaluable help."

But American banking is tending to prove "ultracautious" in other areas of cooperation with Zivnostenska Banka, such as trade financing, Mr. Remsik complained.

"Some American banks are insisting, even with confirmed letters of credit, on 100% collateral in cash," he said.

Better Luck in Europe

Banks in Western Europe have mostly not proved so "conservative," the Czech banker said. He added that Czechoslovakia, like other Eastern European economies, needs extensive cooperation and help in introducing market reforms and constructing a modern new economic and financial system.

The banker stressed that his institution is not looking for handouts from the West, but rather initiation of normal correspondent banking relationships, adding: "We're not naive and obviously realize that banking is a commercially driven business."

Zivnostenska itself is confident that its privatization will prove successful, not least because the institution isn't saddled with a legacy of "bad debts" from financing the inefficient old Czech state-run industries, he said.

World Bank Backing

The International Finance Corp., the special financing arm of the Washington-based World Bank, is backing its capital-raising venture, which will include plans to raise some funds from abroad, Mr. Remsik said.

But Zivnostenska is not taking on any of the U.S. investment banking advisers, which are touting for advisory roles in the wide range of privatization programs in Poland, Czechoslovakia, and Hungary, he said.

"Basically, . . . we feel that these banks still do not know Eastern European conditions well enough" Mr. Remsik said. "And, frankly, they charge such fantastically high fees."

Upscale Customers Sought

After next January's privatization, Zivnostenska will concentrate on serving personal customers and a corporate client base, both at home and for international businesses, he said.

"We will be a mixture of commercial, private, and investment banking, concentrating on an upscale customer base," Mr. Remsik said.

In pursuit of this goal, the bank announced Friday the launch of Czechoslovakia's first plastic card for business use. It has tied up with Visa International to market its business card to corporate clients.

About a year ago, Zivnostenka issued the first Visa card in the country for customers with convertible currency deposits.

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