Abstract
This article deals with the ‘old bad loans’ problem in the Czech Republic. The issue with classified loans provided by the socialist monobank State Bank of Czechoslovakia before 1989 had been solved through special consolidation institutions operated by the government in the 1990s and 2000s. The topic seems to be quite historical but infact the opposite is true – the state's involvement in the process of consolidation of bad loans created good conditions for rent seekers, whose efforts led to out-of-court remuneration, i.e. additional costs of consolidation for Czech public finances in 2013. The article consists of a broad analysis of the Czech way of bad loan consolidation using information from financial statements and reports of consolidation institutions, and a calculation of returns from individual and block sales of receivables. The calculations show individual sales had higher return ratios than block sales, while the average return to nominal value was under 20%. A comparison with the different Slovak approach to the problem is also included.
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