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Report: ERB Bank unable to meet obligations

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Report: ERB Bank unable to meet obligations

is unable to meetits financial obligations, with clients to receive full compensation for theirdeposits and interest of up to €100,000 from the Czech Republic's financialmarket guarantee system, the Czech central bank said, Hospodarske Noviny reported Oct. 11.

Theregulator reportedly added that it will not provide any further information aboutthe lender until administrative proceedings have been completed. These werelaunched in March,when ERB — which is one of the Czech Republic's smallest lenders — was alsobanned from issuingnew loans and accepting new deposits.

Thecentral bank already initiated a procedure to cancel ERB Bank's license, butits decision is not yet legally binding and the lender lodged an appeal, Hospodarske Noviny said. It noted that ERBBank customers stand to receive a total of 3.6 billion Czech koruny from thefinancial market guarantee system.

Thelender specializes in financing trade transactions between Czech and Russianclients, according to Hospodarske Noviny.It added that the bank is controlled by Russian businessman Roman Popov, butalso had ownership ties with FCRBBank LLC, a Russian lender that lost its in July.

Popov— who in July deniedmoney-laundering allegations against ERB — told the newspaper that the lenderhas sufficient financial resources and that it has been working toward meetingthe central bank's requests, but the regulator is hindering the process.

Healso noted that a Switzerland-based financial holding with Europeanshareholders was keen to buy ERB and increase its capital by 700 million Czechkoruny, but the central bank's measures against the lender make the acquisitionimpossible.

As of Oct. 11, US$1 wasequivalent to 24.44 Czech koruny.