IMF Demand Fulfilled: Bank of Srpska to Be Liquidated, Operating License Revoked

The Banking Agency of Republika Srpska has revoked the operating license of Bank of Srpska and initiated liquidation proceedings, the business portal Capital.ba has exclusively learned from the RS Government, Patria reports.

- As of the day the operating license is revoked, Bank of Srpska under temporary administration is prohibited from engaging in banking activities as defined in Article 87 of the RS Law on Banks - stated in the Agency's Decision.

In the explanation of the Decision, which is in Capital's possession, it is stated that the liquidation and revocation of the license for Bank of Srpska were proposed by the bank's temporary administrator Petar Mićić in a report submitted to the Agency on April 5.

In the temporary administrator's report on the financial condition and prospects of Bank of Srpska, it was determined that the bank's financial condition cannot be improved to the extent that it meets and maintains the minimum capital requirements and capital adequacy ratio prescribed by the RS Law on Banks.

The Agency cites Mićić's finding that the shareholders did not meet the deadline set by the Agency for submitting the final action plan for implementing necessary measures to eliminate irregularities in the bank's operations and improve its financial condition, with established deadlines for implementing those activities.

- In his report, the temporary administrator determined that the bank is insolvent and that conditions exist for revoking the operating license and initiating liquidation proceedings - states in the explanation of the Agency's Decision.

The bank's operating license is revoked as of the date this Decision becomes final, which will also be published in the Official Gazette of RS.

Against this Decision, adopted on April 27, the RS Government as the bank's owner may file an objection with the Agency's Management Board by tomorrow, when the eight-day appeal deadline expires.

Public sector to lose tens of millions of KM

Total deposits in Bank of Srpska amount to approximately 150 million marks, of which about 55 million marks are insured. Once liquidation is officially initiated, the 55 million KM of insured deposits will certainly be paid out, as these are deposits of citizens and companies whose individual amounts do not exceed 50,000 KM and whose payment is guaranteed by the Deposit Insurance Agency of BiH.

The remaining 95 million KM that are not insured will be paid out in accordance with available funds from loan collections and the sale of the bank's assets. Among the uninsured deposits, the largest amount belongs to the public sector.

Director of the Deposit Insurance Agency of BiH Josip Nevestić told CAPITAL today that, according to preliminary data, insured deposits amount to about 55 million KM, but that the exact figure would be determined after the operating license is revoked.

- If the Agency officially announces that liquidation is underway, we will come forward with the exact dates and methods of deposit payout. However, we are still waiting for the Agency's official statement. What I can say is that, if the bank goes into liquidation, insured deposits will be paid out in the shortest possible time - Nevestić emphasized.

The RS Banking Agency placed Bank of Srpska under temporary administration on November 16 last year because it was not operating in accordance with the RS Law on Banks and other legal and bylaw regulations. Since then, all deposits in this bank have been frozen.