UPDATE 1-Czech govt files $1.3 bln suit against CSOB

...

PRAGUE, July 23 (Reuters) - The Czech government has filed a 26.7 billion-crown ($1.3 billion) claim for compensation from bank CSOB over its takeover in 2000 of failed bank IPB from the state, the finance ministry said on Monday.

The ministry said it filed the suit with the International Arbitration Court in Paris. CSOB is controlled by Belgium's KBC .

The ministry gave no further details. A CSOB spokesman could not be reached for comment.

IPB bank was controlled by Nomura Holdings through an affiliate before it ran into a liquidity crunch in 2000.

A central bank-appointed administrator seized the bank, the country's third largest bank at the time, with the help of armed police units and three days later sold it to rival CSOB, a Czech unit of Belgium's KBC, for 1 crown in a deal involving state guarantees.

The government took over IPB's non-performing debt, which cost it more than 100 billion crowns, or over three percent of the country's annual economic output.

The state and Nomura then began a six-year legal battle over the seizure before reaching an out-of-court settlement in November 2006.

The two sides agreed they would halt multi-billion dollar arbitration cases against each other and end further disputes which arose from the largest-ever bank collapse in the Czech Republic.

The agreement did not include CSOB.