Edited by Klaus Liebscher, Josef Christl, Peter Mooslechner and Doris Ritzberger-Grünwald
Chapter 18: Fiscal cost of state-owned banks in selected economies of Central and Eastern Europe
Khaled Sherif 1 The aim of this chapter is to determine the ﬁscal cost of state banks to selected economies in Central and Eastern Europe, as well as to examine some of the most ﬁscally draining banks in the process. For this purpose we examined state banks in 14 countries, ranging from countries on the verge of acceding to the European Union in 2004 (namely the Czech Republic, Hungary, Latvia, Lithuania, Poland, Slovak Republic, Slovenia) to countries that will not accede for many years (namely Albania, Bulgaria, Croatia, Macedonia, Romania, Turkey) or possibly at all (Ukraine). In addition, some data have been included on two CIS countries that have broadly resisted structural reforms to move banking to a more private sector-driven market (Turkmenistan, Uzbekistan), although speciﬁc information on their banks is not included.2 In the process, nearly 50 state banks were examined, of which 29 were reviewed in fairly thorough detail. These banks required signiﬁcant amounts of Government assistance to restore them to ﬁnancial, managerial and operational viability. Among the 29 banks, 10 received at least USD 1 billion in ﬁscal recapitalization, including ﬁve banks that received anywhere from USD 2.4 billion (Bancorex in Romania) to USD 15 billion (Ziraat in Turkey). Among the 29 banks reviewed, only eight received less than USD 250 million in direct ﬁscal recapitalization, with the lowest amount to date recorded being USD 100 million for Oschadny Bank in Ukraine. This assistance has generally been provided in two forms: either in additional capital...
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