The Czech Banking Sector: Two Decades with the Shuttle Changes

According to stress-test of the Czech National Bank at the end of 2011, the banking sector in the Czech Republic is able to absorb the scenario of the Czech Republic's GDP hypothetically dropping by 5-6%. This analysis elucidate the question of how is possible that the banking sector remained sound and strongly capitalized, even when the parent companies of the largest banks in the Czech market, which comprise nearly the entire banking sector of the Czech Republic in terms of assets, loans and deposits, struggled with existential problems. It describes the history of the practical disappearance of the small and medium-sized banks during 90th and also the development of large banks using a model of sustainable growth. The analysis also includes circumstances of privatization and post-privatization development, as well. Final part of this article enlightens main reasons why the banking sector of the Czech Republic in the decade 2001-2011 was able to expand with high profitability with a relatively low level of risk.