EPCG withdraws all money from Prva banka

Elektroprivreda is withdrawing all its money from Prva Bank - time deposits of eight million euros and before the expiration of the term, subordinated debt of six million euros, as well as all money from current accounts in this bank due to the bad relationship of the bank's management and non-fulfillment of agreed obligations, he said. To the "News" the Chief Financial Officer of EPCG Miro Vračar.

They have been begging for their money since January

He stated that the management of EPCG has been asking Prva Banka for three months to allow them to withdraw three out of six million euros of their money from the subordinated debt for investment purposes, but that the bank did not implement this procedure despite several emergencies and meetings. Vračar said that the problem is that the bank is delaying the initiation of the procedure for a new valuation of the bank's shares, which affects the balance sheets of EPCG, which owns about 20 percent of the bank's shares.

Prva banka recently published its business reports for last year, which showed a loss in operations of 4,4 million euros, mostly due to the devaluation of financial instruments by 10,9 million. The accumulated loss at the end of last year was 28,2 million euros, and the total capital is 32,3 million, that is, six million less than at the end of 2021.

"Vijesti" therefore sent a question to EPCG whether their Board of Directors is aware of this report and the balance sheets of Prva Banka, whether as shareholders they sought clarifications regarding this report or undertook some other actions in order to be more precisely informed about the operations of this bank. or subsequently checked it, as well as what EPCG intends to do with its shares in this bank.

Vračar said that they are not officially familiar with the report and balance sheets of Prva banka, even though they are its second largest shareholder and most important business partner, which is why its balance sheets also affect the balance sheets of the state energy company.

There is a procedure for the withdrawal of subordinated debt, which is initiated by Prva banka at the Central Bank at the request of EPCG, but the problem is that it was not initiated even three months after EPCG's request. The procedure is like that because the subordinated debt is included in the calculation of the bank's capital adequacy.

Money needed for investments

On January 27 of this year, Vračar informed Prva Banka that EPCG adopted its budget, medium-term plan until 2026 with the structure of operational and capital investments and that they need to withdraw the entire subordinated loan to finance investment projects.

In that letter, which "Vijesti" had access to, he states that he understands the situation in Prva banka, which is why he proposes that half of this debt be paid to the giro account of EPCG as soon as possible, and that for the other part of the money, they jointly agree on the payment dynamics until end of this year. He also asked that the legal procedure for the payment of the subordinated debt be initiated as soon as possible, so that they would have money to finance the planned investments from their own sources as soon as possible.

On February 23, Prva Banka responded that due to the complexity of the problems that the withdrawal of the subordinated debt would cause, they are unable to act on the EPCG's request, as well as that it is necessary to obtain the CBCG's approval beforehand.

On February 25, Vračar sends a new letter in which he says that in the event of the inability to withdraw the subordinated debt, he will initiate an early withdrawal of the term deposits that EPCG has in Prva banka so that they can finance the planned projects. He also states that due to disputing this right, a sequence of moves was imposed on them in the part of the gradual cancellation of collection and regular accounts that EPCG has in Prva banka.

On March 18, EPCG sends a new letter to Prva banka, in which they state that the energy company has two time deposits in this bank of four million euros each from August 2020 and August 2021, as well as that the term contract gives EPCG the option to of six months defers/withdraws part of the deposit. Then they also state that they will start withdrawing deposits next week.

In that letter, Vračar asks the First Bank to inform them at what stage the necessary documentation is being prepared for obtaining the consent of the CBCG and the certainty of withdrawing the subordinated debt.

On March 25, EPCG submits a request for the withdrawal of deposits from August 2021, followed by an invitation from Prva banka for a meeting.

What was agreed at the meeting was not implemented

The meeting took place on March 29, and EPCG postponed the withdrawal of the deposit in the meantime. At that meeting, it was agreed that Prva banka will issue a call for tenders for the preparation of a report on the valuation of its shares, based on market, fair and investment value. Representatives of EPCG stated at the meeting that the preparation of the assessment "is of essential importance for the further status of business relations and cooperation", as well as that this issue should be given priority and the call should be issued as soon as possible.

Prva banka announced at the meeting that they had launched an initiative with the Central Bank for approval of the withdrawal of subordinated debt and that they were taking all measures and actions to obtain the necessary instructions and interpretations. While EPCG replied that they would wait with the withdrawal of deposits and the transfer of money from current accounts in Prva banka to accounts in other banks.

Vračar says that since that meeting, Prva banka has not made progress in fulfilling the agreed, which is why EPCG was forced to withdraw all its money from this bank in order to finance the investments started.

The bank did not respond, previously claiming that they would not be threatened

"Vijesti" yesterday sent a question to Prva banka whether this withdrawal of money will cause problems in the bank's operations and maintaining its liquidity and solvency, but the bank did not receive an answer.

In the report on the financial statements, the auditor of Prva Bank warned that since the beginning of 2021, state-owned companies have withdrawn 13,1 million euros of deposits and that "if this trend continues, it may cast doubt on the bank's ability to continue operations on a permanent basis."

The bank then replied that they had considered various scenarios, including the outflow of all the mentioned deposits, and that Prva banka "based on them believes that the bank's liquidity position would not be threatened, given that the result is a liquidity ratio that is above the legal of the prescribed minimum".

The largest owner of Prva banka is Aco Djukanovic with 41 percent of the shares, but which controls the majority package through several related smaller shareholders.

Based on its share, EPCG was entitled to two members of the board of directors of Prva banka, but the majority elected only one of its representatives Velizar Čolović, while the other candidate Nebojsa Medojevic still waiting for approval from the Central Bank.