The Czech financing market is buzzing, with deal activity picking up over the past months, according to Eversheds Sutherland Head of Banking & Finance Vojtech Laga.
“Transactional activity in the Czech market remains strong,” Laga says. “Over the past couple of months, we’ve seen a number of deals moving forward, supported by some of the country’s leading banks. Activity has been taking place both on a syndicated and bilateral basis. While direct foreign financing isn’t particularly common, there have been some cases of Czech companies securing funding from lenders abroad. All in all, it has been a busy period, and we expect the pace to pick up further towards the end of the year, which is traditionally the busiest season of the year for transactions.”
“What we see, both locally and throughout the CEE region, is that speed in closing transactions has become a key theme,” Laga adds. “Broader issues like sanctions regimes form the backdrop, and while they don’t always directly affect Czech deals, they do shape the cautious approach parties take during the negotiations. In the pre-deal phase, lenders are carefully assessing risks, considering the investment environment, and factoring in geopolitical uncertainties. But once that groundwork is done and a decision is made to move forward, there’s usually a strong push to finalize the deal quickly. It may sometimes take longer than expected, but overall, there’s a noticeable drive toward efficiency in getting transactions closed.”
From a legal perspective, Laga says that the Supreme Court has played an important role in strengthening the framework for secured financing. “Since most financing in the CEE region is usually secured rather than unsecured, clarity on issues like security in relation to the provided debt is crucial,” he notes. “Over the past decade, following the adoption of the Czech Civil Code, the courts have addressed many of the uncertainties that initially surrounded secured lending. Today, the legal foundation for these types of transactions is much stronger. Nowadays, market participants can rely on a stable framework that supports lending and repayment, as well as the related security when the borrower gets in trouble with repayment and the lenders need to realize the provided security.”
On the legislative side, Laga says that there hasn’t been much movement in the financial regulation agenda. “We have observed recent regulatory updates; however, the implementation of certain EU legislation, such as AIMFD 2, is still lagging behind expectations. AIMFD 2 is a EU directive that primarily addresses delegation arrangements, liquidity risk management, supervisory reporting, the provision of depositary and custody services, and loan origination by alternative investment funds. It appears that the original deadline for incorporating this legislation into Czech law will likely be delayed. For now, developments are mainly coming through regulatory interpretation,” he notes.
Finally, while at the moment, a new government is being formed after the parliamentary elections held at the beginning of October, no tectonic changes are expected in the overall business environment,” Laga says. “The Czech Republic is firmly anchored in international institutions such as the EU and NATO, and that won’t change with a new government. The key institutions are well established, and no major changes are expected that would disrupt the market.”
