The property and debts of Agrobanka were transferred to another state-owned bank this week as a financial scandal widens.
By Igor Jovanovic for Southeast European Times in Belgrade -- 02/11/12
Agrobanka depositors’ funds are now in the Postal Savings Bank. [File]
A law passed by parliament allows Agrobanka depositors to transfer their money into the state-owned Postal Savings Bank, providing some measure of security during an embezzlement scandal that has broadened to 19 suspects.
The law went into effect Monday (October 29th), and enables the transfer of property and obligations from the problematic bank to a financially stable institution. The law's duration is limited to two years and pertains only to state-owned banks.
"Now my money is definitely more secure. Although I generally always had it at my disposal, there were a few times when Agrobanka was unable to pay me out. That didn't happen often, but now I have an account in a big, stable bank and it's normal for me to feel more secure," Zoran Vukovic, one of Agrobanka's clients, told SETimes.
Finance and Economy Minister Mladjan Dinkic said 250 million euros from the Deposit Insurance Agency would also be transferred to the Postal Savings Bank to insure deposits.
Postal Savings Bank Executive Board Chairman Srdjan Cekic said the takeover passed smoothly and that after the completion of bureaucratic procedure everyone would be able to fully access their funds.
When it was announced in May that Agrobanka, which was majority state-owned, lost its working license and had a debt of 300 million euros, economists warned that the state's banking system was in jeopardy.
In order to avoid collapse, given that the bank had about 250,000 depositors, the state immediately founded Nova Agrobanka, but that was not sustainable in the long term.
However, not everyone was satisfied with the situation. Minority shareholders of Argrobanka from the EU said that in the process of shutting down the bank, Serbia had turned private into state property.
"The whole process of destroying Agrobanka was thoroughly planned and carried out with the intention of forming Nova Agrobanka with the shareholders' expropriated property and thereby turning private capital into state property," said Aleks Skoberne, representative of Agrobanka's EU shareholders. He added that about 70 million euros had been seized that way, contrary to international bilateral agreements.
Representative of the opposition Democratic Party of Serbia Rade Obradovic also presented objections. He told SETimes that there was no guarantee that the monies transferred from Nova Agrobanka to the Postal Savings Bank would be collectible.
However, Association of Serbian Banks Secretary General Veroljub Dugalic said the merging of Nova Agrobanka with the Postal Savings Bank had been a timely move by the state aimed at lifting the uncertainty of clients of a bank that had gone bankrupt.
"That restored the trust and security Agrobanka clients and depositors may have partly lost," Dugalic said. "It was uncertain what would happen to their deposits, their bankbooks and claims, hence this is a timely reaction and a good way to remove fear and uncertainty."
Meanwhile, the Agrobanka case turned into a major corruption scandal, with 19 suspects apprehended and announcements by government officials that the investigation will expand to reveal how top-level corruption worked during the previous government led by the Democratic Party.