The Serbian city of Vranje is seeking to recover 177 million dinars in public funds deposited with Alta Bank after the country’s central bank revoked the lender’s operating license.
City officials confirmed that the money was held under a short-term deposit agreement designed to generate additional income for the municipal budget.
The funds, worth approximately $1.75 million, were still deposited when the National Bank of Serbia revoked Alta Bank’s license on October 31.
Vranje has since initiated legal proceedings to protect its financial interests and recover the money.
How Vranje’s Public Money Became Tied to Alta Bank
Earlier this year, the city invited commercial banks to submit offers for overnight deposits of temporarily available budget funds.
Alta Bank submitted the most favorable offer, according to the municipal administration.
Under the agreement, Vranje transferred available funds from its Treasury account to an account held by the bank at the National Bank of Serbia.
The bank was required to return the entire amount the following day, together with the agreed interest.
However, the arrangement became complicated when Serbian regulators revoked Alta Bank’s operating license.
At that moment, Vranje had 177 million dinars deposited under the agreement.
The city emphasized that it did not use Alta Bank for regular municipal payments. Instead, all routine budget transactions were conducted through accounts within Serbia’s Treasury and central banking systems.
Officials also stated that Alta Bank had previously fulfilled its contractual obligations, including returning deposits and paying interest on time.
According to the city, similar financial arrangements generated 38.2 million dinars in additional budget revenue over the past decade.
Legal Action Begins as Other Serbian Cities Face Exposure
Vranje has requested information from the National Bank of Serbia about the status of its deposited funds and the execution of its repayment instructions.
The city has also initiated proceedings involving the Commercial Court in Belgrade and Serbia’s Deposit Insurance Agency, which was appointed as bankruptcy administrator.
Its legal actions include a request to separate the municipal funds from the bank’s bankruptcy estate.
However, the outcome remains uncertain, and the authorities have not confirmed when the money might be returned.
The situation extends beyond Vranje.
The Serbian city of Pirot has also reported exposure to Alta Bank. Local officials said the municipality had deposited 400 million dinars under a separate arrangement.
The bank’s collapse has raised questions about the financial risks faced by municipalities and public institutions that placed funds with the lender.
Vranje maintains that the disputed money was not intended for immediate daily payments to municipal budget users.
Nevertheless, the city has pledged to continue pursuing available legal mechanisms to recover its funds.
The case highlights the challenges local governments can face when short-term public deposits become entangled in banking insolvency proceedings.
