State to increase its stake in Agrobank by 6 to 10 percent - Bank plans to conquer Diaspora and BH market

- The Republic of Serbia will increase its stake in Agrobanka by 6 to 10 percent by end of July at the latest - said Bojan Zaric, a member of the Executive Board of that bank.

As Zaric explained, the bank already negotiates with the state on Agrobanka's obligation to purchase the shares of the Republic of Serbia, which was created upon resolving of the issue of debt to the IBRD in 2007.

We should not forget that an agreement with the state, concluded in 2007, made it possible for Agrobanka to resolve the direct component of an IBRD loan through the conversion of claims into a stake, which also included the bank's obligation to purchase the government's shares. Indirect component of the loan was resolved in late 2009 when a law that completely freed Agrobanka from that obligation came into force.

In addition to the state, which has a 20 percent stake in Agrobanka, other major stakeholders are enterprises (40 percent), population (14 percent), and the bank's custody accounts (26 percent).

What is interesting is that, aside from the stake in Agrobanka, the state also has a stake of over 20 percent in all leading banks quoted on the Belgrade Stock Exchange - Komercijalna, Jubmes, and Cacanska.

Growth of the share in total assets from current 2.9 to 5 percent by 2013, formation of a special bank for the Diaspora, as well as expansion of the operations in Bosnia-Herzegovina through Agrobanka AD Banja Luka, are among the primary goals for the forthcoming period.

Penetration of markets of Bosnia-Herzegovina and Diaspora

The bank will start its operations in Bosnia-Herzegovina in mid-2011. It will first expand to the territory of Banja Luka and then open affiliates in Sarajevo and Bijeljina.

Agrobanka intends to implement the second channel of expansion of international operations by setting up a bank for the Diaspora, which will be investing the funds of our fellow citizens from abroad in projects in Serbia.

Since 2007, when EUR 26 million losses were registered, profits have been constantly growing, reaching 11.3 million euros in 2010 (6.2 percent of the total banking market), which suggests that this is one of the most profitable domestic banks. Agrobanka also attracted 3.6 percent of deposits and 2.9 percent of assets, which earned it the 10th place on the list of 33 banks in the Serbian banking market.

Shares are acquired by loan users

When asked if the bank management saw any problem in regard to the formulation of the future credit policy since the major buyers of shares of Agrobanka on the Belgrade Stock Exchange were numerous users of loans of that bank, Zaric stressed that "they do not hold a significant stake and, therefore, cannot affect the conducting of the bank's business policy".

Agrobanka has an extensive network of offices in Serbia. The number of these offices grew from 75 in 2003 to over 150 in 2011, employing a total of 880 people. Although it is primarily an agricultural bank, which serves about 50,000 farmers, it has also attracted 270,000 physical persons who deposited EUR 365 million in that bank.