Banja Luka, February 26, 2016/Independent Balkan News Agency
By Mladen Dragojlovic
The International Monetary Fund demands from the RS Government to begin the process of bankruptcy in Bank of Srpska and sets this as main condition for BiH to obtain a new credit agreement, announced on Friday in Banja Luka the business portal “Capital”.
Government representatives are trying to reach an agreement with the IMF to keep this bank running in some form, with the promise to the IMF that it will never deal with classical banking, announced Capital citing unofficial source in Bank. According to the source, the Bank in the future will abandon the traditional banking business. According to the Plan, which the RS Government will put on the table in negotiations with the IMF, the Bank Srpska will only deal in financial intermediation and payment transactions for clients, in cooperation with the RS Post Office. If the IMF accepts this plan, it would result in the loss of large number of jobs in short period of time.
The Bank of Srpska inherited the business of Balkan Investment Bank, a Lithuanian based bank which was established to deal with business of several enterprises in East RS. “Alumina” company and other linked companies were abandoned by the Lithuanian management, leaving them deeply indebted and as a result all of them are under investigation. Despite the fact that RS Government tried to save it, the Bank of Srpska also experienced difficulties in business and all branch offices are closed for last few months. Deposits amounting to 150 million BAM (75 million of Euro) are blocked in the bank.
The IMF demand didn’t surprise the economy analyst from Banja Luka, Zoran Pavlovic. He said for IBNA that IMF is demanding the bankruptcy of Bank of Srpska, first of all because it is a “state bank” and this financial organization doesn’t want to deal with this conception of financial institution. Since this is not the first bank with problems in RS, Pavlovic explained that most of these banks are in private ownership.
“Bobar Bank was the bank that was supposed to serve the financial flow of the Bobar Group -several companies in hands of one man – of the late Gavrilo Bobar. It also served as the internal bank of SNSD party, since the owner was a respected member of that party. Similarly, Pavlovic Bank International is one-man-ownership which served to several companies in Pavlovic Group. The situation was the same with Balkan Investment Bank. All of them were based on the needs of separate group of companies not on the interest of citizens and their deposits”, Pavlovic explained.
He added that Pavlovic and Pavlovic and Bobar were insecure banks because control was in the hands of one man. That is why, Pavlovic said, citizens lost the confidence in private banks. He also said that RS Agency for Banking failed and didn’t do its job properly to prevent these events which brought the banking sector in RS in this situation.
“The profit from this situation will go to the foreign banks which have branches in RS and entire BiH. They are making large profit on citizens deposit but also have no interest for investments in local economy. However, the fact is that RS banks, except the Nova Banka, were not ready to serve to citizens. Nova Bank has a different concept and is based on the investment of small shareholders”, Pavlovic said.
Bank of Srpska announced that RS Agency for Banking accepted the plan for the reorganization of this Bank as a different financial institution. Soon, the RS Government will know what the IMF will say on this plan.