Agrobanka in Serbia to Need Minimum $131 Million in New Capital

Agrobanka AD, a Serbian bank that was placed into receivership, will need at least 100 million euros ($131 million) to put it back in business, Deputy Finance Minister Goran Radosavljevic said.

An assessment from auditors KPMG “indicates the bank is undercapitalized even more than we expected” and around “50 percent of the loan portfolio is non-performing,” Radosavljevic said in a phone interview today.

Serbia’s central bank fired the management of Agrobanka on Dec. 29 and placed it in receivership after inspectors discovered the capital it had didn’t match the risk it has assumed with its business.

The bank, with a market share of less than 3 percent and ranked 12th among 33 banks operating in the Balkan country, is 20 percent state-owned. 

The auditor’s report is calculated with a “worst-case scenario,” Radosavljevic said. “Maybe it could turn out that not all those bad loans are non-performing.”

The government considers Agrobanka a bank of “systemic importance which deserves to be saved,” Radosavljevic said.

Agrobanka held an extraordinary shareholders meeting on Jan. 13 and prepared a plan which needs to be endorsed by the central bank, the regulator. It may take as long as nine months to implement the plan. 

Agrobanka, which has a market capitalization equal to $14.9 million, posted a loss of 2.27 billion dinars ($28.32 million) at the end of September, after full-year profit of 1.16 billion dinars in 2010, according to the central bank.