Bloomberg News

Serbia’s Agrobanka Shareholders Want New Balance Sheet Audit

April 09, 2012

The minority shareholders of Agrobanka AD (AGBN), a Serbian bank that reported a loss last year and was placed in receivership three months ago, demand another audit before the lender is overhauled.

A new shareholders’ meeting to pick the auditor will be held by the end of April, Branislav Bogdanovic, chairman of AC Broker, a Belgrade-based brokerage, said in a phone interview on April 6. The bank, in which the government holds a 20 percent stake, had an unaudited 2011 loss of 29.7 billion dinar ($348 million).

AC Broker represents more than 20 percent of the mostly foreign institutional investors with stakes in Agrobanka, who have requested a new audit to check on the 2010 financial statement signed by KPMG’s Serbian arm.

“KPMG assessed the bank’s financial performance as positive for 2010” and said its capital stood at 167 million euros ($218 million), AC Broker said. “However, as of June 30 last year the National Bank of Serbia assessed the bank’s capital at 625 million dinars or 6.12 million euros. KPMG has offered no explanation for the difference,” Bogdanovic said.

KPMG “has implemented all relevant domestic rules, KPMG’s standardized procedures and international auditing standards,” the global accounting firm said in a written answer to Bloomberg questions, e-mailed today.

Saving the bank, whose name indicates the main focus on agriculture, will stop ripple effects in the economy, the banking industry and the capital market, said Bogdanovic, whose brokerage canceled a market-making contract in February “due to lack of information and excessive share price volatility.”

Overhaul Plan

Serbia’s central bank fired Agrobanka’a management on Dec. 29 and placed it in receivership after inspectors discovered its capital didn’t match the risk it had assumed with its business. The bank, whose market share was 2.3 percent in 2011, ranked 12th among 33 banks operating in the Balkan country in terms of assets.

The government agreed with the lender’s shareholders on an overhaul plan, aimed at boosting the bank’s capital, Bogdanovic said.

The plan, approved by the central bank, calls on the government to replace Agrobanka’s bad assets with “interest- yielding government bonds,” which will boost its capital adequacy ratio from zero to 6 percent, Bogdanovic said. The bank will try to meet the required minimum capital adequacy ratio of 12 percent by the end of September.

Part of the agreement is that there will be neither a major ownership change nor “recapitalizations” until the bank meets the capital requirement, Bogdanovic said. Deputy Finance Minister Goran Radosavljevic said on Feb. 1 that the bank would need at least 100 million euros to put it back in business.

The bank reported the loss after a full-year pretax profit of 1.18 billion dinars in 2010 and a loss of 2.27 billion dinars at the end of September 2011. The central bank withdrew the report from the website just hours after publishing it on April 2 saying that “Agrobanka is still in receivership.”

Agrobanka’s shares dropped 6.22 percent to 919 dinars per share at 11:37 a.m. in Belgrade, according to the Belgrade Stock Exchange figures. Its shares fell 34 percent from April 2.

To contact the reporter on this story: Gordana Filipovic in Belgrade at gfilipovic@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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