Who buys bankrupt banks only for the land they own?

The assets of bankrupt banks in Serbia worth 1.27 billion euros were sold for only 61 million euros, i.e. for five percent of the value, and the buyers were 11 companies, including companies that were operating at a loss until they purchased banks’ assets moment, says the Bankruptcy Report published by Anti-Corruption Council

These assets, in fact, consist of hard-to-collect receivables of bankrupt banks from companies that dispose of valuable building and agricultural land and buildings.

In November 2021, the ABL Solvent Company from Zemun became the owner of the Machinery and Tractor Industry (IMT) business complex in Novi Beograd, buying it out of bankruptcy for 70.6 million euros. The Vojvodina research and analytical centre VOICE then indicated that large claims against the former industrial giant IMT were held by Beobank (also bankrupt), that they were secured by a mortgage on IMT’s land and that ABL Solvent came into possession of the property by taking over Beobank’s claims.

In its Bankruptcy Report, the Anti-Corruption Council analyzes which companies and for how much bought hard-to-collect receivables from the Deposit Insurance Agency (AOD), which is the bankruptcy administrator of banks.

Analyzing precisely the receivables purchased by ABL Solvent, the Council states that “the sale and cashing out of the property, which brings a huge profit, was not carried out by the Agency in the best interest of bank creditors, but by a company that has one owner, no employees and no business references. This has generated enormous personal material benefit to the detriment of creditors and bank capital owners”. The Council also states that the book value of receivables is almost one billion euros higher than its sales value.

According to the data from the Report, the Deposit Insurance Agency managed procedures in 15 banks, two insurance companies, and eight bankruptcy and liquidation groups in May 2022.

Based on the AOD data, the total liquidation value of assets (excluding deposits) is 248.9 billion dinars or about 2.1 billion euros. Creditors’ recognized claims are 319.2 billion dinars or about 2.7 billion euros.

The quarterly report also shows that the amount of unrecognized claims at certain institutions is higher than recognized ones.

The Council asked the Agency for data on how many hard-to-collect receivables were sold in the last three years, what their book value was, how much they were sold for and who were the buyers.

According to the report, there are a total of 11 buyers of these hard-to-collect receivables.

These are EOS Matrix, ABL Solvent, BK Tesla, A.T.N. Electronics, Šumadija Real Estate, all from Belgrade, as well as Dijamant Real Estate from Novi Sad, Uniroyal Group from Sremska Mitrovica, Avangarda Suites, Mekonta Investment Group Belgrade, PEK Agrar Miljević and Worbax, all from Belgrade.

The accounting value of the sold receivables is 1,219,183,545 euros and 5,615,637,385 dinars, which makes a total of 1,266,976,203 euros (the exchange rate – 117.5 dinars to 1 euro).

The sales price of these receivables amounted to 56,688,576 euros and 549,321,583 dinars, which makes a total of only 61,363,653 euros.

“These figures show that the selling price of hard-to-collect receivables of banks in bankruptcy and liquidation is about 20 times lower than their book value. That difference is the biggest in the case of the sale of receivables to ABL Solvent from Belgrade, where the book value of the receivable is almost one billion euros higher than its sales value,” the Council points out in its report.

Such a difference in values, as stated – “requires a more serious analysis for which the Council has no documentation and expects other relevant institutions to do it”.

“According to the data from the Serbian Business Register Agency (APR), ABL Solvent was registered on November 2nd, 2012. The owner is a natural person with a total paid-up capital of 7.9 million dinars, or about 67,000 euros,” the report states, which includes some other data on the company’s operations. 

The Council points out that ABL Solvent reported a profit of 5.4 billion dinars or about 46 million euros in 2021 alone, in contrast to previous years when it operated at a loss.

“Certain questions arise – how is it possible that a company with practically no valuable assets, profitable businesses, no employees and operating at a loss, participates in a tender for the purchase of bank claims, i.e. the assets of its debtors, the book value of which is one billion euros,” the Council asks.

It also raises the question of how the company managed to raise 46 million euros to pay the sales price of claims to the Deposit Insurance Agency (AOD) and how it made the payment.

“Which financial institution approves loans to such a company? On the basis of which business results after the purchase of hard-to-collect receivables from AOD does the company report a net profit of 5.4 billion dinars, while in previous years it operated at a loss?” the Council wonders.

Also, if that company reported a profit of 46 million euros in 2021 after the transaction with AOD, the question is why the Agency failed to monetize the banks’ assets, which consist of valuable building and agricultural land, buildings, equipment and more.

“Namely, the AOD did not sell or monetize the assets that bring huge profits and worked in the best interest of bank creditors. Instead, this was done by a company that has one owner, no employees and no serious business references, thus making a huge personal material benefit to the detriment of creditors and owners capital of banks”, the Council points out.

(N1, 18.09.2023)


This post is also available in: Italiano

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