Alta Bank Deposits Up to 50,000 Euros: Who Pays and When

The National Bank of Serbia (NBS) said on Monday, November 2, that all deposits covered by statutory insurance are protected and will be paid in the full insured amount, up to 50,000 euros per depositor, backed by a guarantee from the Republic of Serbia. For Alta Bank savers, the key line concerns the money: “The Deposit Insurance Agency has the necessary funds, which will be paid to depositors within the legal deadline,” the National Bank of Serbia stated.

The NBS Executive Board revoked the operating license of Alta Banka a.d. Beograd, but sources disagree on the date. The Deposit Insurance Agency gives October 31 in its statement, the portal Srpskainfo reports October 30, and N1 refers to a decision taken on Saturday. The date matters less than what follows: payout deadlines do not run from the license revocation but from the ruling of the Belgrade Commercial Court opening bankruptcy.

Who pays the money, and when do the deadlines start?

Alta Bank itself will pay nothing. The payout is handled by another bank, which the Deposit Insurance Agency selects and to which it sends the lists of depositors. That bank has not been named so far. The NBS promised that depositors would be “informed in good time about the bank through which payments will be made, as well as about all necessary procedures.”

The Agency’s statement set two limits, both counted from the day the court issues the bankruptcy ruling:

• within three working days of the ruling at the latest, it publishes the conditions, places and deadlines for payment, in the media and on aod.rs, along with a call for small investors to file claims for payment of protected receivables
• within seven working days of the ruling at the latest, payment of insured amounts begins

The ruling was expected to be issued today. The sources we reviewed do not confirm that it was. If it was issued on November 2, by our calculation the notice arrives by November 5 at the latest and payments begin by November 11 at the latest. Every day of court delay pushes both dates back.

The Agency’s director, Ljubica Pantelic, told Radio Belgrade:

“Alta Bank savers will be informed as soon as possible at which bank they will be able to withdraw their deposits up to the insured amount of 50,000 euros, as well as how to file the remaining claims and how those will be paid.”

Why is the claim that payments start today being disputed?

Dejan Gavrilovic of the Effective Association told N1 that the claim that payments begin today is false. “The fact that Alta Bank is the only one that put out a statement that payments start today is untrue, it is not possible,” Gavrilovic said. He urged citizens not to wait in lines: “Alta Bank is closed, it is not operating, it cannot pay them anything.”

Gavrilovic said that signs were taken down from some branches the previous day, and that he expects the paying bank to become known within the next three days. On Saturday morning the association emailed the Agency asking how large the fund is and what the total amount to be paid out is, and had received no reply by the time of the interview. Gavrilovic counts the payout deadline as seven days from the moment depositors are notified. That is his interpretation: the Agency’s statement counts the deadline from the court ruling, and that deadline is the binding one.

Who is entitled to a payout, and in which currency?

Individuals, entrepreneurs and micro, small and medium-sized legal entities are entitled to payment. The insured amount is 50,000 euros per depositor. Economic consultant Branislav Jorgic explained to Euronews Serbia that the limit applies per person, not per account, and covers both current accounts and term savings. Large companies do not have insured deposits.

Dinar deposits are paid in dinars and foreign currency deposits in euros, at the middle exchange rate on the day bankruptcy is opened. Payment is free of charge, and withdrawing money requires an ID card and proof of a business relationship with Alta Bank. Jorgic added that there is no reason to rush to the counters as soon as payments begin: “Those claims are valid for the next three years.”

What about the amount above 50,000 euros?

The part of savings above the limit enters the bankruptcy proceedings as a claim. Gavrilovic gave an example: someone who had 70,000 euros will get 50,000 from the Agency and will wait for the remaining 20,000 to be recovered from the bankruptcy estate. Vesna Perincic of the republic’s consumer union told Kurir Biznis:

“Citizens should file the rest of their claims against that bank in the bankruptcy proceedings and follow the NBS instructions.”

How much will be recovered depends on the bank’s assets and receivables. Bojana Stanic of the Serbian Chamber of Commerce set out the order of recovery from the bankruptcy estate: taxes and contributions first, then small deposits up to 50,000 euros, then other clients, with small shareholders last. Money for the insured amounts comes from the deposit insurance fund, and if that proves insufficient, the Agency seeks help from the republic’s budget. The Agency says the fund has enough money.

Former governor Kori Udovicki warned that the deposits of public enterprises at Alta Bank were not insured, which is why the authorities need to ensure their operations continue.

How many accounts are blocked, and what happens to the loans?

According to the newspaper Alo, 66,481 accounts at Alta Bank are blocked: 56,390 belonging to citizens and 10,091 to companies. The paper does not name the source of these figures. Since Saturday, citizens have been unable to withdraw cash at ATMs or pay by card.

Alta Bank held a 2.9 percent market share and was ninth in size, Euronews reports, while Nebojsa Atanackovic, honorary president of the Serbian Association of Employers, puts it at about three percent. The Association of Serbian Banks said the banking sector is safe, liquid and well capitalized.

Alta Bank’s loans will be taken over by other banks: one may take over the entire business, or it may be split, with one bank taking retail loans and another corporate loans. Economist Boran Kerim said the closure of Alta Bank will not affect interest rates on existing loans at other banks.