May 20, 2019 / 8:51 AM / a month ago

Talks with banks on fund contributions continue: Czech PM

FILE PHOTO: Czech Republic's Prime Minister Andrej Babis arrives at an extraordinary European Union leaders summit to discuss Brexit, in Brussels, Belgium April 10, 2019. REUTERS/Yves Herman/File Photo

PRAGUE (Reuters) - The Czech government is continuing talks with banks over a national development fund which lenders would pay into to help finance investments, Prime Minister Andrej Babis said on Monday.

Babis said the biggest banks have in principle agreed contributing starting capital of 6 billion crowns ($260 million) into the proposed fund.

He said talks were continuing and a working group had been put in place.

The plan comes as Babis has been opposed to a sector tax on banks, saying it would threaten the economy and banking sector stability. Babis’s junior ruling partner, the Social Democrats, had backed a tax to help raise new budget revenues.

Instead, Babis said on Monday the proposed fund could become an investment vehicle for financing investments into education, healthcare or infrastructure.

He said the fund could start in 2020 with contributions from the country’s four biggest banks. Other banks could then be invited.

“These talks with banks have taken place and it is important the Czech Republic stays a trustworthy country for investment,” he told a news conference. “Talks are continuing and I think it is the right way.”

He had first raised the idea of the fund earlier in May when he said banks should pay up to 20 percent of their dividends into it.

The largest Czech banks are all foreign-owned. CSOB is held by Belgium’s KBC; Ceska Sporitelna is part of Austria’s Erste Group; Komercni Banka BKOM.PR is majority-owned by France’s Societe Generale SOGN.PA>; and Italy’s UniCredit also has a Czech unit.

Reporting by Robert Muller, writing by Jason Hovet

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