The Czech government voted on Wednesday to sell a majority of the country_s second largest bank, Ceska Sporitelna a.s., to Erste Bank AG, giving the Austrian savings house a major foothold in emerging Europe.

Finance Minister Pavel Mertlik told a news conference that Erste Bank Der oesterreichischen Sparkassen AG will pay Kc 19 billion ($514.6 million) in the loss-making bank where most Czechs keep their household savings. Erste Bank said buying Sporitelna was a major step in its strategy to become the dominant retail bank in Central Europe. "Ceska Sporitelna is the ideal strategic partner for our expansion in the region," Erste Bank Chairman Andreas Treichl said in a statement. "Erste Bank acquires the leading position on the Czech market, allows (Sporitelna) to better serve its clients, and provides our shareholders higher revenue." Sporitelna, with assets of Kc 352 billion, lost Kc 9.5 billion in the first nine months of 1999, to international accounting standards. The sale is still contingent on a full-year 1999 audit, and regulatory approval. The deal also calls for Sporitelna, under Erste management, to provide about Kc 22 billion in credits for Czech housing development, medium-sized Czech companies and agricultural concerns, as well as venture capital and cultural projects. Erste has also agreed to boost Sporitelna_s basic capital by Kc 4 billion within 24 months of the deal being closed.