The state is withdrawing money from Prva banka, the auditor is worried

Since the beginning of the year, state-owned companies have withdrawn 13,1 million euros of deposits from Prva banka, and if this trend continues, it may cause doubts about the bank's ability to continue operating according to the principle of continuity, it was stated under "distraction" in the report of the auditor "Crowe MNE" which was published on the website of the Central Bank.

The largest single shareholder of the bank is Aco Djukanovic, brother of the President of the State and former ruling party (DPS) Milo Đukanović, who owns 41,5 percent of the shares, and through several related and friendly companies controls another 15 percent of the shares. State Elektroprivreda has 19,8 percent of shares in this bank. The current Government, while previously in the opposition, often criticized the attitude of the former Government towards this bank. State aid in the form of a loan of 44 million euros was also disputed, after the crisis of 2009, when the bank returned the first installment of 11 million euros by the Ministry of Finance paying one and the same million 11 times to the account of the Regional Waterworks in Prva banka , and the bank paid the same millions into the treasury account as debt repayment.

As it was explained, from the beginning of this year until the preparation of this auditor's report, time deposits of state companies in the amount of 13,1 million euros were due, but those companies did not reschedule them, but the money was transferred to the current accounts of those companies. The auditor states that another 19,5 million euros of time deposits from state-owned companies are due by the end of the year, so their withdrawal could further worsen the liquidity indicators of this bank.

"The bank does not have specific information about the intention of the depositors regarding these deposits, but it does not expect an outflow of complete deposits. The above-mentioned circumstances could potentially indicate the existence of uncertainty that may cause doubts about the bank's ability to continue its business as a going concern. The management of the bank has considered various scenarios of the outflow of the mentioned time and demand deposits and based on them, believes that the liquidity position of the bank would not be threatened", stated in the auditor's report.

Because of this situation, the bank created a scenario of what would happen if all deposits of state-owned companies whose term expires this year were withdrawn. If that were to happen, the daily liquidity ratio would drop to 0,93, which would be slightly above the legal minimum of 0,90.

According to data from the Central Bank, the average daily liquidity indicator last year at the level of the banking system was 1,4 and was higher than in 2019, when it was 1,35.

The auditor's data show that since last year there have been trends of decreasing deposits in this bank and among other categories of clients. At the end of last year, total deposits in this bank amounted to 299 million euros and were 40 million less compared to the end of 2019. At the level of the entire banking system, i.e. all 12 banks, in the same period deposits were reduced by 100 million from 3,47 at the end of 2019, to 3,37 billion at the end of last year, to improve to 3,67 billion in recent months.

Demand deposits in Prva banka during 2020 decreased from 194 to 169 million, and the largest was with private companies, which decreased deposits from 52 to 38 million euros, domestic individuals from 45 to 42 million, foreigners from 17 to 15 million, the Government from 27 to 25,6 million,...

Short-term deposits in this bank during the last year decreased from 92 to 84 million, and the largest decrease was among domestic natural persons from 41,8 to 35,6 million, foreign citizens from 11,4 to ten million, state companies 35,4 to 34,4 million,...

In the same period, long-term deposits in Prva banka decreased from 51,8 million to 45,6 million. State enterprises reduced long-term deposits from 7,5 to four million euros, domestic citizens from 18,4 to 16,8 million, foreigners from 15 to 13,7 million,...

Of the state-owned companies, EPCG and its affiliated companies have the most deposits in Prva banka. According to the data from this report, at the end of last year they had 35 million euros in time deposits, as well as another nine million in open-ended and six million in subordinated debt. EPCG recently distributed a dividend of EUR 30 million to its shareholders, and most of that money was withdrawn from the account in Prva banka. Management changes in EPCG and its companies took place from March to May of this year.

Can factoring receivables and acquired assets be collected?

In the auditor's report, under "attention diversion", it was stated that the bank claims EUR 16,3 million based on factoring, and EUR 42 million based on acquired assets.

"The recoverability of the portfolio of acquired assets and receivables based on factoring and restructured loans in the future period will depend on the ability of the bank, that is, the factoring debtor, to realize the assets in their portfolio, as well as the security funds based on factoring and restructured loans in amounts that cover the minimum amounts of exposure according to these debtors. Accordingly, there may be uncertainty regarding the bank's ability to realize the funds provided in the required amounts, as well as the time required for such realization", stated the auditor.