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Serbia's Univerzal Banka collapsed due to large debtors' influence, lack of c-bank action - shareholder

February 5, 2014

The true reasons that led to the delicensing of Serb lender Univerzal Banka are the control, which the major debtors had over its management, and the lack of timely and adequate supervision by the central bank, the Univerzal's single biggest shareholder Nebojsa Divljan, said on Feb 4 . He added he is going to launch a lawsuit against the central bank, seeking compensation damages, news agency Tanjug reported. Univerzal's licence was revoked on Jan 31 after its financial condition deteriorated significantly and its critical undercapitalisation became a threat to its liquidity and business continuity. As a result, the commercial court in Belgrade launched a bankruptcy procedure at the bank on Feb 3 . Divljan told a press conference in Belgrade that Univerzal's largest debtors (above all holding firm Farmakom, hygienic products wholesaler Beohemija and trader Intercomerc) have pushed ahead their candidate Dragan Tomic , to the seat of president of the bank's executive board. Thus, the management has been approving significant loans to these companies and other firms connected with them even though it was well-known they have operational problems and have already been too much exposed to debt. Divljan said that even though Univerzal Banka used to have business problems earlier, it did collapse as of the start of 2013 following "the intrusion" of these interested groups in its management structures. He added he informed the central bank back in May 2013 about the indications that Univerzal Banka had been acting against the law and its capital had been melting "with lightning speed", asking the monetary authority to undertake an emergency control check of its operations. However, the central bank sent him no answer, neighter carried out a control check. Divljan also said he owns 12% of the bank's shares, while no other shareholder has a stake larger than 10%. Data from the central securities depository and clearing house showed on Feb 4 , Divljan owned directly 5% of Univerzal Banka and the following seven shareholders had stakes of 4.9% each. The bank is the first privately-held lender in which the central bank intervenes but the fourth in a row to fail since November 2012 after three state-controlled banks - Razvojna Banka Vojvodine, Nova Agrobanka and Privredna Banka Beograd - have been liquidated and their deposits and healthy assets transferred to state-owned Postanska Stedionica. The total cost of state interventions in the banking sector from 2012 until end-2014 will amount to around EUR 800mn , according to the independent fiscal council. Central bank governor Jorgovanka Tabakovic said it in the weekend that the collapse of Univerzal Banka will cost the taxpayer EUR 70mn and RSD 1.8bn ( EUR 15.5mn ), or an overall EUR 85.5mn . Univerzal saw its pre-tax loss widening to RSD 741mn in Jan- Sep 2013 from RSD 450mn a year earlier. The lender turned to a RSD 700mn loss in 2012 from a profit of RSD 159mn in 2011. It was Serbia's 20th largest bank in terms of assets at end-Sep when a total of 31 lenders were active in the country.

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Source: IntelliNews - Weekly Reports

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