Financial shocks continue: After Bobar and Banke Srpske, the Investment and Development Bank is next

Development banking as we know it in both the RS and the Federation of BiH is run by politics and is regularly unsuccessful. It traditionally helps failed friend projects or gives money to bad companies run by obedient party cadres.
The fate of this banking seems to say: Here are your banks, so go ahead and politically lend to each other until you collapse, writes the Bosnian news agency Patria.

The Investment and Development Bank of Republika Srpska (IRB) was first heard of in connection with a nepotistic loan. 

Dozens of politically unsuitable municipalities (where the SDS is in power) sought loans from this entity's development bank. While the decision on granting loans to certain municipalities was delayed for months, the IRB completed all procedures and approved a loan of 3 million KM to the company “Fruit Eco” from Gradiška on the same day the application was submitted.

The money was transferred to the account express. It was then revealed that this company is owned by Igor Dodik, the son of RS Prime Minister Milorad Dodik. 

That's when Dodik's famous sentence was heard: “Better he deals with fruit than with drugs.”

Politics throws state money

Even then, the fate of the IR bank, and indeed the development of the RS, could be assumed.   

Political, crony and nepotistic loans followed. 

The consortium ”Delta-Zekstra” also received assistance from the IRB RS in the amount of 15 million marks, to pay obligations from the contract for the purchase of the Boska department store in Banja Luka. The RS Government, then headed by Dodik, forced the IRB RS to buy bonds of RK Boska worth 15 million KM. The money was to be repaid by the consortium “Delta-Zekstra”, represented by Dragan Đurić, Dodik's friend. However, he never fully settled his obligations under the purchase agreement.

Among Dodik's “affairs”, suspected of draining money from the IRB as well, is Andrićgrad. There, the attitude towards state capital was confirmed as an attitude towards Alajbeg's straw, so the payment of VAT was forgiven, as well as multi-million subsidies from the RS Government to this construction whim of director Emir Kusturica.

There were also some incredible “throwings” of this bank's capital. The IRB RS granted a loan to the company “Energolinija“, of unknown ownership, from a line of funds obtained from the European Bank for Reconstruction and Development (EBRD). That loan amounted to  19.4 million KM. 

The case of the loan for “Energolinija” shows what politics does to state-owned banks.  „Energolinija“ sought a loan of 20 million KM, but the loan request was rejected by the then director of IRB RS Milenko Pavlović, because there was an enormous risk exposure of this placement without an intermediary bank that would largely take over collection and guarantees.

The director was dismissed express, and after his departure „Energolinija“ renewed the loan request, but this time in the amount of 19.4 million KM.

The director of IRB RS, at the IRB credit committee (the so-called small committee), approved 6 million KM, considering that amount appropriate for the risk exposure of this placement.

But the RS Government, which owns the IRB, convened and made a decision to approve a loan of 19.4 million KM to Energolinija. So, politics again decided to throw state money into its bottomless pits. 

Private loan for a villa in Belgrade

A third, private type of loan, like a loan to his son, occurred when Dodik bought a villa in Belgrade. As Prime Minister of the RS, in 2007, he paid 750 thousand euros through Pavlović bank for the purchase of that Belgrade villa. It turned out that he took out the loan only a year later. It is said that his loan was repaid by employees of Pavlović bank, and that in return Dodik approved a loan from the IRB to Pavlović.

So, that was development banking. The consequences of such development will be remedied for years to come. So, the problem of the Investment and Development Bank of the RS will soon open up. The financial dubiosities of this entity bank are enormous.

The Investment and Development Bank of the RS is already in a serious state. There are too many such cases of throwing state money.  Only some unexpected and highly unlikely massive injection of money into the IRB can save this bank from the scenario of Bobar bank and Banke Srpske. The current situation can be hinted at.

Someone seriously miscalculated, believing in the power of the entity bank. 

Even two or three ordinary bad loans, like those mentioned, can be fatally vulnerable for such a bank, which can be shaken and collapse at any moment, writes Patria.