The collapse of Austria's coalition government has scuppered the latest attempt by the state to offload its controlling interest in Creditanstalt. The new government will face the same problems in maximizing the sale value of a bank trapped in a quagmire of jingoism and vested political interests.
How long does it take to privatize a bank? This may seem like a rather facile question to most of us, but not to the Austrians. In April 1991, the Austrian parliament passed a law permitting the privatization of Creditanstalt-Bankverein. The manner of the sale was not to be fixed by parliament but was to be left to the discretion of the government. But after almost five years of quibbling over the minutiae of enabling legislation and the merits of a flotation or a tender sale, people began to wonder if the government really wanted to privatize the bank at all.
In September 1995, however, the government took the plunge and opted for a competitive tender. The state owns 68% of voting shares and 48% of total shares in the bank, and these were both put up for sale to the highest bidder. If maximizing the sale proceeds is the primary goal then a trade sale rather than a flotation is the obvious choice.