When in June the Czech government chose Société Générale as the
strategic investor for the country's second-largest bank, the
critics began to scoff. The sceptics - many of them analysts from
the French bank's rivals - slammed SocGen's decision to pay e1.2
billion ($1.1 billion) for 60% of Prague-based Komercni Banka as
overpriced. After all, they said, Komercni had a history of bad
loans on the corporate side and only a limited retail business.
Despite a generous government bailout, SocGen had been stung, they
argued.
Indeed foreign acquirers have every reason to be wary of potential
bad debt problems at banks in emerging markets, even in the more
developed EU accession candidate countries. As well as the legacy
problem assets hanging over from the days of policy lending some
banks in the region have fallen prey to other, more recent bad
investment decisions.
For example, during the recent boom...
