Štátna banka československá, headquarters for the Slovak Republic, Bratislava

Štátna banka československá (State Bank of Czechoslovakia) was established under Act No 31/1950 Coll. of 9 March 1950. It commenced its operation on 3 July 1950 and within the meaning of Article 2 of the above Act it assumed all the rights and obligations of Národná banka Československá (National Bank of Czechoslovakia), Živnostenská banka (Trade Bank), Slovenská Tatra banka (Slovak Tatra Bank) and Poštová sporiteľňa (Postal Savings Bank). The process of concentration and centralization of Czechoslovak banking was completed by its establishment. The bank’s main competencies were to issue banknotes as the only issuing bank and to manage currency circulation in line with the national economy development plan, to prepare proposals of credit and treasury plans, to take deposits for current accounts and cheque accounts and savings books, to provide short-term loans to economic organizations, to monitor the use of funds throughout the national economy, to manage the cashless payment system, to execute settlement of payments as well as cash processing and settlement services for the state, to provide for payment system interaction with foreign countries, to manage the settlement and payment systems of foreign trade enterprises, to accept and grant loans abroad, to trade in precious metals and foreign currencies and to provide for the printing of banknotes and coins and securities.

The headquarters of Štátna banka československá was in Prague. Its highest representative was the General Director (Otakar Pohl being the first one), who was directly accountable to the Finance Minister and was also a member of the College of the Minister of Finance. He answered for the bank’s activities to the Government and to the Supreme Apparatus of the Communist Party. The Regional Institute of Štátna banka československá for Slovakia was established in Bratislava. Pavel Majling was appointed as the Regional Director on 2 June 1950 by the Finance Minister. The Regional Director had one deputy. As at the starting date of the Institute’s operation there were 2,176 employees in the Slovak division of the bank, 657 of whom were women. The Regional Director managed the bank’s activities throughout the territory of Slovakia according to the instructions and regulations of the General Director of the Prague headquarters. Every administration had its own director and heads of separate departments and units. An important role at the headquarters belonged to the Chief Accountant who provided guidelines for the work of the Chief accountant of the Regional Institute for Slovakia. At the same time, he coordinated, managed and monitored accounting and operating activities as well as reporting in the Slovak division.  The central accounting office managed the accounts of the top Slovak budgetary and economic organizations, representations and other offices located in Slovakia and distributed budgetary loans. Its tasks also included drafting situational reports on the state of the bank’s accounting and operational section. Individual lending and settlement administrations were responsible for the proper organization and execution of short-term loans. They were in charge of implementation of the loan plan and also prepared a breakdown of loan limits.

Despite centralisation efforts, the bank’s management decided for practical reasons to set up regional branches in Slovakia from 1 June 1951 in the following towns: Banská Bystrica, Košice, Nitra, Prešov and Žilina. The regional branch in Bratislava was established on 21 November 1951. Its establishment was related to reorganization of the Regional Institute of Štátna banka československá for Slovakia in Bratislava. The regional branches took over from the countrywide administration the agenda of cross-border payment systems, the regional accounting office and facility management except for construction and technical matters. All operational activities together with provision of facility management were excluded from the Regional Institute’s scope of activities. The establishment of a regional branch in Bratislava enabled more efficient and transparent functioning of the Regional Institute as the management body of Štátna banka československá for Slovakia as a whole.
The first years of activity of Štátna banka československá were marked by a lack of professional staff, which was caused by the fact that banking officers from banking institutions that were active before the period of nationalization were made redundant and sent to manufacturing plants. They were replaced by officials who had excellent political backgrounds but no professional qualifications. Backed by the Finance Ministry, the bank’s management turned to the State Bank of the USSR (Gosbank) for help with expert issues that had to be solved. External advisers were sent to the headquarters of Štátna banka československá and based on their proposal, as of 1 January 1953, the Bank Administration of Štátna banka československá, the bank’s highest statutory body, was established. The Chairman of the Bank Administration was the General Director of Štátna banka československá (later the President). The Slovak representative was Ľudovít Kováčik. Slovakia’s Regional Director Pavol Majling, alternatively Ján Zervan or Ľudovít Vaškovič, also participated in the meetings. Until 1965, the members of the Bank Administration were appointed and dismissed by the Finance Minister and approved by the government, later solely by the latter.

On 11 July 1960, the National Assembly adopted the Constitution of the Czechoslovak Socialist Republic (CSSR). In constitutional terms it enshrined a unitary, centralised state with a formal recognition of Slovakia’s autonomous status, which put Slovakia and the Slovak national authorities in an unequal position. Centralization was also reflected in the arrangement and management of Štátna banka československá as well as in the relationships and competences of the Regional Institute. Since 1961, Štátna banka československá operated through these organizational units: the headquarters, regional institute for Slovakia, regional or town branches and other specified units. The regional branches became dependant on the headquarters and were directly subordinated to the General Director of the bank’s headquarters. The Regional Institute for Slovakia carried out mainly control activities. Branches together with regional branches notified the Institute of their activities in a secondary line of authority. The Institute performed its activities according to the instructions of the General Director at headquarters. This legal status lasted until the adoption of Act No 117/1965 Coll. on Štátna banka československá, which, with effect from 10 November 1965, strengthened the role of the bank as the central issuing bank as well as the leading body of the entire banking system. In the main financial and monetary issues, the General Director proceeded in agreement with the Ministry of Finance.

Attempts were made to revive the Czechoslovak banking sector at the end of the 1960s. On 19 August 1968, the Bank Administration discussed documents related to the principles of the new organization of the Czechoslovak banking sector. They envisaged the creation of one issuing bank plus credit institutions operating on commercial principles. The issuing bank was supposed to be independent from the other banking institutions and from the executive power of the state. The aim was to create a commercial banking sector.

Slovak economists spoke against the proposal of one issuing bank and demanded that the principle of national sovereignty be reflected also in the economic sphere, including the right to decide on their own currency. The Slovak proposal perceived the use of currency as a tool for specific national development and development of the national economy and demanded that the national issuing banks be left with separate legal status. At the same time, their proposal comprised creation of Československá federálna banka (Czechoslovak Federal Bank) and they also suggested naming the national issuing banks as Česká národná banka (Czech National Bank) and Slovenská národná banka (Slovak National Bank). At the end of December 1968, the Regional Institute of Štátna banka československá prepared a timetable for work on the new organization of the banking system in Slovakia. The starting date for commencing the activities of Slovenská národná banka and Slovenská všeobecná banka (Slovak General Bank, as a commercial bank) was set to 1 January 1969 and the Institute even specified the number of employees in both banks. At the same time, a working group from the employees of the Regional Institute was set up to discuss the organization and tasks of Slovenská národná banka. On 13 February 1969, the Regional Director of Štátna banka československá issued order No 3 – Measures taken at Štátna banka československá for implementation of a new organizational and functional arrangement of the Czechoslovak banking sector. To create the conditions for further progress of the institutional reconstruction of the Czechoslovak banking sector, the order was used to establish branches of Štátna banka československá with monetary and commercial activities, which involved terminating the operation of trade union chapters, regional branches as well as branches within the current structure and management. Therefore, on 1 March 1969, the regional branches and trade union chapters were abolished in the territory of Slovakia. A working delimitation committee was set up, consisting of employees of both the headquarters and the Regional Institute. Its task was to prepare concrete proposals for the division of movable and immovable property as well as other assets of Štátna banka československá between the Slovak Socialist Republic (SSR) and the Czech Socialist Republic (CSR).

The amendment of Act No 43/1968 Coll. on the Czechoslovak Federation in Constitutional Act No 125/1970 Coll. made a significant change to the legal basis of Štátna banka československá. The amendment specified that the status, obligations and responsibility of Štátna banka československá as well as the way it is administered and its relationship to the republics’ authorities would be stipulated under the law of the Federal Assembly. The whole process of preparing the reform of the Czechoslovak banking sector was concluded by the adoption of Act No 144/1970 Coll. on Štátna banka československá.

The system of Štátna banka československá was framed as a single federal institution with an internal division into the main institutes in both republics. In the interest of the Czechoslovak economy, it was organized as a single issuing, credit and settlement organization. It had the exclusive right to issue banknotes. Together with the Federal Ministry of Finance, it made proposals to the Czechoslovak Government on the regulation and protection of the Czechoslovak currency and principles of legal tender circulation. Under the Act on Štátna banka československá, the following types of organizational units were established: headquarters located in Prague, the main institutes for the CSR and SSR, branches in each district and specialised branches for certain types of banking services in Prague and Bratislava. The headquarters of Štátna banka československá served as the organizational unit for management, planning, methodological and control activities. It was led by a President who was fully represented by a Vice-President in his absence. He was appointed and dismissed by the President of the Czechoslovak Socialist Republic at the proposal of the Government. The main institutes were managed by General Directors and they were also responsible for the performance of tasks. A special type of organizational unit of the main institute was the regional administration with a territorial scope covering Bratislava and Prague and the relevant regions. The branches acted as executive units that carried out tasks for businesses and organizations.

The bank’s statute was approved on 1 March 1973 and the bank gained with it a sovereign significance in its economic function and also the legal and organizational basis for further development of its activities. Štátna banka československá had the character of a socialist organization of a special kind, as on the one hand it had the powers and roles typical for a central state administration authority, but on the other hand, it was seeking economic partnership relations with other socialist organizations in the national economy. As then a socialist and centralist financial institution, in its work, it respected the principles of governance that applied throughout the national economy and socialist society. The principle of the leading role of the Communist Party of Czechoslovakia as the only political force in the state was applied, and this mainly in long-term plans of the bank, which were generally on a five-year basis.

In the period of the Prague Spring, the branches in Slovakia, apart from addressing conceptual issues of Slovak banking, had to deal with the entry of occupation troops to our territory on 21 August 1968. The branches of Štátna banka československá in Trenčín, Nitra, Komárno, Rimavská Sobota and Prešov were occupied. On 21 August 1968 at 8 a.m. the bank’s management called on the branches by a teleprinter to maintain normal operation at the cash registers and inform the headquarters of Štátna banka československá of any extraordinary events. It also instructed them to make an impact analysis of the occupation of Czechoslovakia by foreign troops by 15 September.

The period of normalization in the 1970s and 1980s blocked the implementation of social and economic reforms from 1968 – 1969 but failed to address persisting socio-economic issues. Further attempts to reform the banking system were completed by Government Decree No 29/1988 on a comprehensive reconstruction of the economic mechanism. This government decree also had an impact on banking reform which essentially followed up on the prepared reform from 1968 – 1969, mainly in relation to separation of issuing and commercial activities. Between 1988 and 1989, the pressure for changes in the economic mechanism became so great that action had to be taken. The disintegration of hierarchy and values in the former USSR and the impending break-up of the communist bloc in Central and Eastern Europe probably contributed to the crisis as well. Government Decree No 196/1988 laid down conditions and set measures for separate issuing and commercial lending activities of the banking system and rules on credit issuance. Act No 130/1989 Coll. on Štátna banka československá, Act No 158/1989 Coll. on banks and savings banks and the Foreign Exchange Act No 162/1989 Coll. entered into force on 1 January 1990. This marked the start of banking reform in Czechoslovakia, together with demonopolisation of the banking system. After 1990, commercial banks started to emerge in Slovakia and as of 31 December 1992 Štátna banka československá ceased to exist. Národná banka Slovenska became its legal successor.