Serbia is seeking a partner to take over the assets and liabilities of unprofitable Razvojna Banka Vojvodine AD (MTBN) and sell a five-year bond to save deposits after losses eroded 40 percent of its capital.
The bank, 62 percent owned by Serbia’s northern province of Vojvodina, had 7.94 billion dinars ($90.35 million) in accumulated losses at the end of September. Its capital, adjusted for losses, stood at 11.3 billion dinars and assets were at 37.7 billion dinars. Loan-loss provisions were at 11 percent, according to its nine-month unaudited report.
Razvojna Banka is the second bank this year in which the government is trying to save deposits and avoid a run on banks as the Balkan country fights the effect of the European debt crisis. Serbia wants to save almost 110 million euros ($142 million) in insured deposits and almost as much in uninsured deposits at Razvojna, as well as 80,000 depositors, it said.
Assets and liabilities will be transferred to a “bank that offers the best transfer conditions,” the government said in a statement e-mailed last night.
The bank’s shares last traded at 675 dinars, losing 3.57 percent on the day on Nov. 30.
The transfer is in line with an Oct. 26 law designed to merge state controlled banks, averting their bankruptcy and maintaining financial stability.
The effort to save the bank, previously known as Metals Banka AD, is the second in two years. In late April 2010, Vojvodina added capital to bail it out and renamed it Razvojna Banka Vojvodine. Its market share by assets stood at 1.3 percent in September.
Serbia and Vojvodina will jointly sell a five-year bond, equivalent to 70 million euros, to match the size of uninsured deposits for which Razvojna has no “quality collaterals” in its portfolio. The bond, to be tradable in secondary market, will be first transferred to Serbia’s Deposit Insurance Agency and later transferred to the future bank owner.
Part of Razvojna’s corporate credit portfolio and its fixed assets will be transferred to a new Vojvodina Development Fund that will be “urgently established” to minimize bailout costs and maintain financial stability, the government said.
Serbia set aside 300 million euros in its 2013 budget as a reserve financial stability fund to bolster the banking industry if needed. Prime Minister Ivica Dacic’s Cabinet, in office since July, is also seeking an adviser to help it recapitalize or sell Privredna Banka Beograd AD (PRBN), according to a Dec. 5 invitation published in the Belgrade newspaper Politika.
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