In what could be the biggest transaction in Czech banking since its privatization, Česká spořitelna looks set to take over the Sberbank debts.
The news, announced by Sberbank insolvency administrator Jiřina Lužová recently, signals an end to uncertainty for thousands of mortgage holders throughout the Czech Republic.
Former Sberbank clients have been waiting for over eight months for the information regarding which bank will take over their mortgages and loans and while it was possible to keep repaying loans, other banking operations within Sberbank were massively limited.
This caused morale amongst its clients to drop and therefore encouraged the insolvency administrator to aim for a relatively fast sale. However, the transaction still has to be approved by the regulators, the Czech National Bank and The Office for the Protection of Competition.
From the banks that were originally interested, the most advantageous offer was submitted by Česká spořitelna. According to Sberbankcz.cz the bank will pay 41,05 billion CZK for the total nominal value of assets of 47,1 billion CZK.
One could say that Česká spořitelna got a bargain with a discount of 12,7%! With these numbers, we are speaking of the biggest transaction in the banking sector in the Czech Republic ever.
“The signing of the contract on the future contract with Česká spořitelna is great news for all loan clients and creditors of Sberbank CZ. The insolvency of Sberbank CZ is one of the largest in the history of the Czech Republic, both in terms of financial volume and the number of creditors, which is why I am very happy that we managed to achieve this extraordinary result in a very short time,” commented administrator Jiřina Lužová.
How many clients are we speaking about? There are 43 thousand loans distributed amongst:
- 659 companies
- 3184 entrepreneurs
- 31 588 retail clients
There is also total of 13.322 mortgages and 20.277 personal loans, which would be transferred to the new bank.
Although we are aware of the new bank’s name, customers will likely have to wait until the first half of 2023 for the deal to be finalised. Česká Spořitelna requests that former Sberbank customers not get in touch with them until there are further instructions from the banks, as the specifics and next measures have not yet been finalized.
So what do you do if you have a loan with Sberbank?
At the moment, nothing. Just keep repaying it and make sure the bank has your up-to-date contact details and await further instructions.
Word with a mortgage advisor:
“Back in February, we had a mortgage approved with what seemed to be the best conditions on the market with Sberbank. Until the last minute, everything went relatively well, but on the day of signing, 24.2.2022, the banker called me and said not to come for the meeting. The bank is going to be closed, he said, and there is no point in signing this contract, as the bank will not be able the fulfill it. The next day, the bank closed officially.
I am glad we didn’t sign it in the end. If we would, the bank would not send the money anyway to pay the purchase price. So we looked for an another bank and the purchase was of course finalised using some other bank.
Another, unfortunately, sadder story was with clients who already had a mortgage signed for a development project under construction, but the bank didn’t release the money by the time of default. The signed rate was 1,89% fixed for 10 years.
When we found out that the bank was not going to be able to fulfill their contracts, the clients realised they are not able to get a rate anywhere close to that 1.89% in March 2022. Their choices were to either find a new bank with higher rates, or pull out of the purchase.
They decided for the latter option, all contracts were cancelled, and the loss was minimized. Luckily (or by bad luck), clients planned to leave the Czech Republic anyway, later this year.”