The domestic Sberbank, which lost its banking license as a result of the war in Ukraine and the connection to Russia, may not be cut. Liquidator Jiřina Lužová would like to sell it as a whole.
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“I want to do everything we can to satisfy the claims of all creditors as soon as possible and in full, if the bank’s assets can be sold quickly as part of the liquidation,” she told SZ Byznys.
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“The fastest way, of course, would be to sell the whole bank to a potential buyer at once. If it fails, it would be sold in packages, “said Lužová.
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It assumes that there will be interest among the bank’s individual portfolios. “The bank was healthy and stable and the share of classified loans was low,” said the liquidator.
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“In the meantime, we have to wait until an information package is created that will show the state of Sberbank’s portfolio,” said Jan Juchelka, CEO of Komerční banka, in an interview with SZ Business.
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“To put it simply, it was a bank for retail and small and medium-sized enterprises. We, as one of the largest banks in the Czech Republic, are happy to look at the portfolio. So far, it is premature to speculate whether we would be interested in one or the other part or whether we would be interested at all, “he added.
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Like when a car hits a wall
According to Česká spořitelna analyst Josef Boček, Sberbank was a relatively healthy bank with a relatively good capital adequacy. “She was not very profitable, but neither was she unprofitable. It was laid down only by the loss of confidence after the outbreak of war in Ukraine, because it was owned by the Russians through the Austrian entity. ” he said earlier for SZ Business.
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The indicator of the share of non-performing loans in large domestic banks in 2021 ranged from two to three percent. In Sberbank it was 2.14 percent, but in 2020. The bank did not publish a more recent annual report.
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“Sberbank was a standard operating bank, but claiming that the value of its assets was not affected by the revocation of the banking license is the same as claiming that the value of a car will not be affected by its impact on the wall,” said Michal Žižlavský, lawyer and insolvency administrator. He, too, has a special permit from the Ministry of Justice to deal with the bankruptcy of banks, financial institutions and corporations, so he was one of the possible candidates for the liquidator of Sberbank.
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We intend to continue to work actively with receivables, not just wait for what percentage will be paid to them once.
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It is not yet clear whether Sberbank CZ will go into liquidation or insolvency. Only the extraordinary financial statements and the audit of the current value of the bank are being prepared, which should be completed by the end of the summer. If the liquidator finds that she will be able to satisfy all creditors one hundred percent, the bank will remain in liquidation. If he finds that Sberbank is over-indebted, he will have to file for insolvency.
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Even if the company remains in liquidation, the liquidator must regularly review the assets of the liquidated entity. This is called an insolvency test.
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“Especially in terms of whether there is a reason to enter insolvency proceedings. This will most often be the case if the entity does not have sufficient assets to repay its liabilities and at the same time there will be many creditors, “describes lawyer Jiří Hartmann.
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The liquidation of each bank is a little different. “Sberbank CZ is facing a sanction regime, which I will have to deal with during the liquidation. At the moment, it is difficult to estimate more precisely whether some creditors will decide to sell their receivables from the bank quickly at a discount, ”said Lužová.
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Receivables arose mainly from deposits in accounts where the balances were above the insured limit of CZK 2.5 million. “I would rather say that they will wait until the decision whether the bank will go through liquidation or insolvency,” she added.
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However, offers to buy receivables from Sberbank have already appeared on the market. The value of money decreases over time and some creditors will not want to wait years before they get to their property. It is also not at all certain how much they will eventually get back.
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Repurchase of receivables
He was the first to buy out clients’ receivables from Sberbank IFIS. It currently offers creditors a redemption for half the face value. According to the Brno lawyer and majority shareholder of the company Marek Indra, receivables in the amount of around 50 billion crowns are at stake.
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“There is no speculation behind our repurchase of deposit receivables from Sberbank that the yield from the subsequent insolvency will be higher than what we now offer for receivables. We intend to continue to work actively with receivables, not just wait for what percentage will be paid to them one day, ”explains Indra.
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The IFIS fund managed to settle mutual receivables with Sberbank, ie bank deposits and loans. Therefore, it is offered that IFIS could work with the credit technique within the liquidation. Marek Indra did not rule out this as one of the ways to deal with purchased receivables.
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According to Michal Žižlavský, however, the sale of receivables is still a lottery bet. “A large part of creditors are companies, cooperatives, municipalities and regions. Their representatives must act with due diligence and need information to do so. We do not yet have official outputs from the activities of the liquidator, “explains the lawyer. “We also do not know exactly how the monetization of Sberbank’s assets will take place. Therefore, it is difficult to estimate the amount of satisfaction of receivables. So the right time for their sale may yet come, “he added.
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The Natland investment group also came into play. In joint action with LitFin and with the support of the Association of Small and Medium-Sized Companies, it offers the possibility of financing the enforcement of claims of injured clients, so-called litigation financing.
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“For clients, this means that we pay all legal expenses and court fees,” said Václav Žalud, head of restructuring and litigation at the Natland Group and a lawyer at Glatzová & Co. In case of a win, the group will take a percentage reward.
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As municipalities have received a promise of state aid, Natland mainly targets small and medium-sized enterprises. “For them, the process can be extremely confusing and their individual claims against the bank too small,” explains Žalud. Natland counts on the classic repurchase of receivables only in individual cases. In such a case, the discount would correspond to the extent of the assumed risk of loss.
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“It simply came to our notice then. We do not speculate on the profit from the difference between the purchase price of the receivable and the degree of its satisfaction. We strive to achieve the highest possible satisfaction of clients’ receivables, “described lawyer Václav Žalud.
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One of the solutions mentioned by Natland is the offsetting of purchased receivables against loans in Sberbank. “In addition, many clients can get refinancing, which is the most advantageous solution for both the bank and damaged clients,” added Žalud.
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Insolvency
Insolvency administrator Michal Žižlavský thinks that Sberbank will not end up in liquidation, but will go into insolvency.
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“If the information on the quality of the loan portfolio provided by Sberbank is confirmed, and if the liquidator avoids litigation, creditors can expect relatively decent satisfaction in insolvency proceedings, significantly higher than 50 percent,” he said. “It simply came to our notice then. It will require the active exercise of creditor rights, “he said.
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In liquidation proceedings, individual creditors should be paid only after all the bank’s assets have been monetized. No one should have a privileged position.
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In contrast, in insolvency proceedings, some creditors have priority. There, receivables can be satisfied gradually through partial schedules.
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How creditors are satisfied
“At the imaginary peak are the so-called” substantive “receivables and placed on an equal footing with them,” describes lawyer Jiří Hartmann. These are, for example, receivables associated with the insolvency process itself, costs associated with maintaining and managing the debtor’s assets or the wages of its employees. These receivables are satisfied to the maximum extent possible at any time after the bankruptcy decision.
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Next in the ranking is secured receivables, such as a lien on real estate. These are primarily satisfied by monetizing the item with which they are secured. Only unsecured receivables are normally satisfied within the final schedule.
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“First, the receivables of the Financial Market Guarantee System, which arose from the payment of compensation for insured deposits of up to EUR 100,000, will be satisfied. After that, among other things, the receivables of the bank’s clients are satisfied to the extent that they exceeded the limit of 100,000 euros. And only then do other unsecured creditors be satisfied, ”says Hartmann.
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After that, the holders of specific non-preferred bonds are satisfied and at the very end are the receivables arising from participation in the company or cooperative.
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According to Sberbank liquidator Jiřina Lužová, insolvency is likely to satisfy creditors’ claims to a high degree. However, she has not yet dared to estimate the percentage of satisfaction.
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According to the annual report of the Financial Market Guarantee System for 2020, the satisfaction rate of creditors of banks to which the CNB took a license and which then went into liquidation or bankruptcy averaged 31 percent of the claims.
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The record holder among domestic cases of bankrupt banks is Česká banka as, which lost its banking license at the end of 1995. The subsequent bankruptcy did not end until September 2015. Twenty years of suffering, in which almost no money was returned.
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It should be noted that the case of Sberbank is different. It didn’t end because she was in trouble or tunneled. But because of the connection to Russia. Therefore, the recovery of receivables may be higher.
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