BELGRADE (Serbia), December 7 (SeeNews) – The Serbian government said it has agreed with the provincial government of Vojvodina to protect the depositors of loss-making Razvojna Banka Vojvodine (RBV) by transferring theit deposits to another bank and its loans to a newly-established fund.
State-controlled Razvojna Banka Vojvodine reported earlier that its nine-month net loss widened sharply to 7.9 billion dinars ($90.3 million/70 million euro) from 163.6 million dinars a year earlier. The bank’s capital totalled 11.3 billion dinars while its assets were at 37.7 billion dinars, according to the bank’s nine month unaudited report.
The agreement envisages the transfer of nearly 110 million euro ($141.8 million) in insured deposits and close to 100 million euro in uninsured deposits, owned by about 80,000 clients of RBV, it was said in a statement published on the government’s website on Thursday.
The uninsured deposits will be secured with 70 million euro worth of five-year bonds, 78.11% of which are to be issued by the provincial government and the remaining 21.89% by the central government, the statement noted. Bonds would later be transferred to the state owned Deposit Insurance Agency and then to one of the commercial banks and will be tradable on the secondary market.
The potential deal already caught the interest of a couple of commercial banks operating on the Serbian market, deputy chairman of the managing board at Raiffeisen Bank Serbia, Zoran Petrovic, said for B92 news on Friday.
The other part of the agreement stipulates the establishment of the Development Fund of Vojvodina in which Vojvodina and Serbia would participate with 78.11% and 21.89% respectively. The fund would then take over RBV’s fixed assets and part of its loan portfolio, the statement said.
Prior to the agreement, a dispute broke up between the two governments about the solution to the bank’s problems. The provincial government insisted on recapitalizing RVB while the central government was of a different opinion. Back then Serbian finance minister called on Vojvodina to reconsider the recapitalization saying that “it is meaningless to do so with the bank which has 75% of non-performing loans”, local media reported.
Razvojna will not be the first bank in Serbia to be transformed in order to save depositors. Earlier this year insolvent Agrobanka was delicensed because its capital did not match the risks it had taken and its assets and liabilities were taken over by a newly established entity.
(1 euro=112.8015 Serbian dinars)