Merger of four state-owned banks still uncertain – no interested buyers

Merger of four state-owned banks – Postal Savings Bank, Srpska Banka, Credy Bank and Privredna Banka Pančevo – is still uncertain, and it is becoming less and less probable because there are no interested potential buyers.

The state hoped to get 270m EUR, but all the chances are that that is not going to happen. The financial crisis has led to the fact that even the largest banks in Serbia are having serious problems, so that nobody needs the new ones.

The National Bank of Serbia was the first in favor of integration of our banks, the majority owner of which is the state, and that idea was also backed by numerous experts because the business costs would be reduced in that way. At the time of the crisis and strict monetary policy, the chances are small for these banks, which can not boast good business results, to find the new owners. All four banks are registering losses.

The largest losses are registered by the Postal Savings Bank, which ended year 2007 with the deficit of 2.8 billion RSD. During the first half of the last year, the losses amounted to 2.78 billion RSD. Other banks are also registering losses, which amount up to 0.5 billion RSD. It is hard to turn a loser into a good bank. Three years ago, there was an attempt at merging the Postal Savings Bank and Srpska Banka, but it failed.

- It is now easy to buy a bank, but nobody wants to do such thing. At this moment, it is difficult to sell one bank, let alone four banks merged into one. We should wait – said Veroljub Dugalić, the Secretary of the Association of Banks of Serbia.

According to the words of economist Milan Kovačević, the idea of merging four banks into one is not logical because the banks decide to merge with each other when there is a mutual interest. In this case, there is none. And the idea of having the state as the owner is bad, says Kovačević, and it is, also, not good for any of the banks to be additionally capitalized from the budget, with the tax payers’ money. Maybe someone would even buy these banks, but the question is – at what price.

Credy Bank, Privredna Banka Pančevo and Srpska Banka were supposed to be sold last year, while the Postal Savings Bank sought the strategic investor. In the meantime, no tender has been announced for any of the banks.
Credy Banka from Kragujevac was on tender on two occasions, but both tenders were declared unsuccessful because there were no interested buyers.

(Note: complete text is taken from newspaper "Novosti" of April 21st, 2009)