How the banking system was destroyed: Risky assets of Banka Srpske amount to 150 million marks

The control of the Republika Srpska Banking Agency as early as 2013 revealed what would only be discovered two and a half years later by the RS Ministry of Interior and reported to the RS Special Prosecutor's Office regarding the granting of risky loans, which damaged the bank by more than 56 million KM, reported the portal Capital.ba, as carried by the Patria news agency.

It was determined that Balkan Investment Bank (BIB) at the end of 2012 had a net capital of 6.7 million KM and a capital adequacy ratio of 3.18 percent, which is significantly below the minimum prescribed by the RS Law on Banks.

It was discovered that the bank invested 17.3 million KM in business premises, or as much as 62 percent of its core capital, which is 12 percent above the prescribed maximum.

The Bank Control Record, which was in the hands of the Agency's director Slavica Injac, states that the Bank did not calculate adequate reserves, and that the missing reserves for the bank's credit losses after the control amounted to 9.8 million KM.

"Potential credit losses amount to 149.8 million KM or 59 percent of risky assets, while invalid assets (categories C, D and E) amount to 123.6 million KM or 40 percent of total assets," is an alarming piece of data from the Record.

Loans to offshore companies

It is stated that the credit risk officer did not give an opinion in any case, although it is mandatory and serves as a basis for making the final decision on loan approval at higher levels.

The Bank did not monitor the assets taken as collateral for approved loans.

The Bank approved 19.8 million KM in loans to foreign companies "Exclusiva General Roda Town" British Virgin Islands, "Milson Capital Corporation" Tortola, British Virgin Islands, "Forsite Benefiters" Panama City, "Superstone Corporation" Charlestown, "Norhlink" Juneau USA, for the purchase of shares in companies that were owned by the Bank.

The Record states that the Bank also lent a total of 27.4 million KM to domestic legal entities owned by foreign companies, such as "Alumine" Zvornik and "Energolinija", as well as "Balkanika" Banja Luka and "Farmland" Nova Topola.

The Banjsko Rekreativni Centar Šeher Banja Luka was a real source for extracting millions.

Money laundering through consultants

The Bank obtained Banja Šeher through the collection of receivables from "Invent stan" Banja Luka and recorded it as fixed assets for sale in the amount of 4.6 million KM. However, what is interesting is that this amount included 403,000 KM for consulting services paid to an individual. For the amount of consulting services, the Agency's control was presented with a Director's Decision and a Service Contract, concluded between the Bank and an individual, which is general and based on which it is not entirely clear what consulting services the Bank used," the Record states.

Banja Šeher also served for new combinations.

The Bank granted a loan of 3.3 million KM to "Inergi" Bihać, with Banja Šeher as collateral, which at the time of concluding the contract had already been sold to the company "Balkanika" Banja Luka.

The Bank paid dearly for consulting services also in the case of the takeover of the business building of the company "Velepromet", which was a guarantee for the receivables from the company "Janjoš" Prijedor. An individual was paid 309,000 KM for consulting services, based on a service contract, which is also general and based on which it is not clear what consulting services the Bank used, writes Capital.ba.

In addition to paying more than 700,000 KM for consulting services in just these two cases, the Bank increased the value of the acquired tangible assets by this amount, which is contrary to the Decision on Minimum Standards for Credit Risk Management.