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Emerging Markets

A sleight of hand, USExim cans the Kazakhs, Shrinking the discount, The battle for Asia, The communist spectre, Jezek fathers more reform

Edited by Ben Edwards

A sleight of hand

What is Bankers Trust up to in the Czech Republic? In December, the fledgling Czech capital market saw its biggest-ever transaction when the US investment bank agreed to pay Kr6.7 billion ($252 million) for 40% stakes in two big Czech investment funds controlled by Ceska Sporitelna, the country's largest savings bank. Not all, however, is as it seems.

Bankers Trust bought shares in the Cesky SPIF and Vynosovy SPIF funds, which are managed by Ceska Sporitelna's investment subsidiary, SIS. The bank paid for the shares by issuing two sets of zero-coupon koruna-denominated five-year bonds. The bonds' value at the time of the transaction totalled some $200 million.

Under the terms of the deal, Ceska Sporitelna will retain voting rights over all but 10% of the shares sold, and will reap all dividends from the shares while they are held by Bankers Trust. The American bank has an option to sell back its stakes at any time within the next five years for an undisclosed strike price

However, Jane Sommers-Kelly, Bankers Trust's director in Prague, says the strike price is "usually the price originally paid".

Sommers-Kelly says that Bankers Trust "is not in this to become fund managers; it's more of an equity play on our part and a capital injection for Ceska Sporitelna".

The

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