IuteCredit: Kosovo Subsidiary with revocation of license without prior notice

Published on: 06 Dec 2019

Initiated investigation and evaluation of legal measures to resolve situation

Tallinn, Estonia, 6 December 2019, 8:30PM. IuteCredit Kosovo (ICKO), a wholly owned subsidiary of IuteCredit Europe and sister company of IuteCredit Finance S.à r.l., today without prior notice, received notification from the Central Bank of Kosovo (CBK) that the ICKO microfinance license has been revoked with immediate effect. According to the CBK decision, the reasons for the revocation of the license are that the ICKO shareholder is not appropriate and that ICKO has not ensured the application of the effective interest rate communicated in the business plan at the time of submission in 2017.

The revocation of the license is completely unexpected. Neither ICKO nor the Group as a whole received any prior objections from CBK as to the appropriateness of the ICKO shareholder or any warning of revocation of license due to deviations to the business plan. ICKO even applied to CBK for a license to expand its business to payment services, which was submitted on 19 October 2018 and full documentation was completed on 15 April 2019 after CBK review. CBK had stated that ICKO would receive the reply to the license application after 90 days.

Regarding the assumed non-compliance with its business plan, ICKO had submitted a revised business plan to CBK on 14 November 2019, which reflected ICKO’s adjusted business operations, including, among others, reduced effective interest rates. To date, no notification has been received from CBK on that business plan.

With regard to the appropriateness of the ICKO shareholder and the overall shareholder structure of IuteCredit Europe, the fact should be noted that the shareholder of ICKO and IuteCredit Europe shareholder structure have remained substantially unchanged since ICKO obtained its license from CBK. The controlling shareholder of IuteCredit Europe is Alarmo Kapital with 89.81% of the shares, with Tarmo Sild (CEO) and Allar Niinepuuu (Chairman of the Supervisory Board) being the ultimate beneficiaries of Alarmo Kapital.

The Company immediately initiated an investigation and legal assessment of the facts in order to make full use of all available legal measures to help resolve the situation and protect the interests of IuteCredit Europe as a shareholder, creditor and investor in Kosovo.

The ICKO portfolio amounts to 12.3 million EUR, which equals 11% of the Group’s total balance sheet. ICKO does not have any creditors other than the Parent Company with a debt claim of 5.8 million EUR, and Mintos crowdfunding platform investors with a debt claim of 3.9 million EUR. The loan origination in Kosovo has been stopped. The collection of receivables from customers as of today is and remains ongoing.

„We simply disagree with the unexpected and drastic decision of CBK. As we are dealing with the materialization of a business risk associated with operating in different legal and administrative environments, we as shareholder, creditor and investor are convinced that a satisfactory solution can be found within the rule of law and dialogue in Kosovo and we will challenge the decision by all means as soon as possible”, said Tarmo Sild, Group CEO of IuteCredit Europe.