Union Banka customers still in the dark

It has been almost two weeks since the near bankrupt Union Banka closed its doors leaving nearly 250,000 customers and business without access to their accounts. Pressure is mounting on the Czech National Bank to do something about the situation. Martin Hrobsky explains.

Management of Union Banka: Roman Mentlik (right) and Paolo Catalfamo, photo: CTK

Union Banka closed its doors on February 21st, prompting the Czech National Bank to revoke its license due to a lack of liquidity, meaning the bank had become unable to provide capital to its customers. Representatives of the struggling bank have recently submitted a proposal for rescuing the bank which would allow for the gradual renewal of the bank's operations. Union Banka is owned by the Italian financial group Invesmart, which took over the bank in October of last year.

On Tuesday Parliamentary deputies called on the Czech National Bank and the Finance Ministry to do their best to protect deposits at struggling Union banka. Deputies tried to persuade Central Bank governor Zdenek Tuma to take responsibility for the situation at Union Banka, saying the Central Bank should try to restore normal operation as soon as possible. Here is what Zdenek Tuma told parliament:

"It is absolutely key that shareholders will be able to find essential funds to prove that the bank will be financially stable in the future. Invesmart took over a number of problematic debts, pledging to pay off the liabilities, so long as the state shared the cost. Since this requirement has now fallen through the question remains whether Invesmart will honor its earlier pledge, whether such an option remains credible. These are circumstances that need to be cleared up."

The Deposit Insurance Fund has started paying compensations to clients of Union Banka. Minister of Finance Bohuslav Sobotka:

"According to my information the Deposit Insurance Fund is capable of pooling enough funds to be able to cover insured accounts, in order to be able to satisfy the 121, 000 Union Banka customers who had insured accounts. At this point in time the Deposit Insurance fund has 9 billion crowns at its disposal, and the difference can be obtained on the market, meaning the state will not have to put up finances to help the fund."

The Czech National Bank has said that it will decide the bank's future as soon as possible, however soon cannot come quickly enough for the bank's customers.