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CONTEXT AND TRENDS
One cannot compare the current conditions in Slovak banking and finance to what was prevalent before the onset of the financial crisis when real estate was booming. The country has a new government and that has contributed to a market that is best described as sober....

CONTEXT AND TRENDS

One cannot compare the current conditions in Slovak banking and finance to what was prevalent before the onset of the financial crisis when real estate was booming. The country has a new government and that has contributed to a market that is best described as sober. "The market is sleeping now because we saw the fall of the rightists and the leftists won," one partner says. Nevertheless, while transactional activity has been staid, there have been a relatively decent number of new money deals and restructurings. "New money has been at about 60% of pre-crisis levels, which is not bad," one partner says. For example, there has been activity in real estate but this has mainly been in the form of refinancing and we have seen some syndicated financing and something of a revival in structured finance. "New money is limited," one partner says. "All the banks are much more stringent and less likely to provide large financing. It's a sign that the crisis is catching up with them here." In fact, in the last 12 months, HSBC and Credit Agricole exited the Slovak Republic. "It shows that the small market has become too small for the big players."

Project finance, on the other hand, has all but stopped. Nevertheless, it is believed that it will need to start again at some point. "On the one hand, they're [the government] anti-privatisation but on the other hand, they need to take care of public services," one partner says. "We expect that it's only a matter of time until they start PPP projects because they need to do something on the motorway." Moreover, with the R1 expressway more or less completed, it is hoped that the D1 motorway can get back on track. In renewable energy, last year was the year of the mini-solar boom. However, while this was prompted by attractive state legislation (which has since expired) incentivising the activity, Slovakia's prudence enabled it to avoid the unfortunate consequences that afflicted its neighbours, the Czech Republic. Nevertheless, it seems that there has now been a shift in the trend from solar to biofuels. Finally, it has been a reasonably strong year in the capital markets. In the sense, at least, that the state made its first bond offering in over a decade.

MAJOR LATERAL HIRES

Jana Pagacova
From: Ruzicka Csekes - CMS
To: Squire Sanders

CONTEXT AND TRENDS
In the last 12 months, there is no doubt that the Slovak M&A market was affected by the latest bout in the ongoing Eurozone crisis. "The Eurozone crisis has given people the hibbie jibbies and there is definitely a trend to exit," one partner says, while another adds: "In Slovakia, we have very few big deals, but not so many middle deals or some small ones....

CONTEXT AND TRENDS

In the last 12 months, there is no doubt that the Slovak M&A market was affected by the latest bout in the ongoing Eurozone crisis. "The Eurozone crisis has given people the hibbie jibbies and there is definitely a trend to exit," one partner says, while another adds: "In Slovakia, we have very few big deals, but not so many middle deals or some small ones." In truth, Slovakia is not a very good market for M&A at all and most activity in the last two to three years has been budget driven and focused on non-core and distressed assets.

Market players had expected a number of privatisations this year in the airports, railway cargo and heating companies sectors. However, it is clear that the new left oriented government is unabashedly anti-privatisation as they see the state owned enterprises as "family silver" and are even considering renationalisation by buying health insurance companies. "This government is formally against privatisation but will find other ways to do it and not call it privatisation," one partner says. "If they increase the budget they will need money and while there may not be a boom in privatisations, they'll use PPP (public-private partnership) projects or some other form."

Finally, private equity may not be completely lost to Slovakia as some private equity houses are sniffing around; nevertheless, there has been no completed deal in the last year. In summary, as one partner says: "Slovakia is the worst I've seen it for many years. It's mostly because of many factors all at the same time. Deals start and then fall apart because people are cautious if not pessimistic."

MAJOR LATERAL HIRES

Vladimír Kordos
From: Squire Sanders
To: bnt attorneys-at-law

Jana Pagacova
From: Ruzicka Csekes - CMS
To: Squire Sanders