The bank crashed in 1998. Former bank leaders are accused of artificially inflating the bank's capital in April 1998 by issuing bonds worth 6 billion Kč ($387 million).

Those shares were bought by Japanese investment bank Nomura in exchange for a 36 percent stake in the bank, making it the majority stakeholder of IPB.

However, it was IPB itself that financed the sale through subordinated loans. IPB passed on information to the Czech Central Bank showing that it had more capital than it actually possessed.

In 2000, the government put the asset-stripped bank into protective custody, guaranteed its outstanding debts and eventually sold it to ČSOB bank.

Nomura sued the Czech Republic for 40 billion Kč for failing to protect its investment. The Czechs counter-sued Nomura for 111 billion Kč for mismanaging the bank.

The Czech side lost, and both sides are now negotiating a settlement.

The court found the bank's managers innocent, based on the testimonies of "renowned professors of economic universities" presented by the defense, said Judge Jaroslava Lišková, adding that criminal activity had not been proved.

The accused included Jan Klacek, the former bank director; Libor Procházka and Aladár Blaas, his deputies; Jiří Fabián, Jiří Fárek and Alfréd Šebek, members of the board of directors; and Eduard Onderka, a Nomura representative. They all claimed that the bond emission did not cause damage to anyone.

Darja Dunajová, the state’s attorney, said she is still weighing whether to appeal the verdict to the Prague Supreme Court.