Union banka buys insurance

In an aggressive ad campaign, Union banka is offering 0% loans to those who put 125% of the loan amount into a term or current account. One banker told us UB has been losing term deposits and needs to match its long-term obligations. Another banker said he suspects that Invesmart, UB's new owner, is also seeking insurance against a failure to get state aid for the bank. UB CEO Radovan Vávra told MFD last year that without the aid, Invesmart will lose interest in the bank. Invesmart is now trying to cut its exposure, our source said. Deposits that UB attracts are covered by deposit insurance, while any loans issued against them are an asset that can be sold if the bank runs into trouble. This could be good for Invesmart, the source said, but perhaps not for customers. If UB went under, customers could lose part of their deposits but would still have to repay the loans.