Hearts chief Vlad sees bank profits wiped out

VLADIMIR Romanov's bank has seen its profits nearly wiped out as the impact of the global recession takes its toll.

New figures from Ukio Bankas, where the Hearts chief is the major backer, show profits shrunk by 91 per cent in the first half of this year.

In the six months to the end of June, the Lithuanian bank only just stayed in the black, recording a net profit of £1.1 million.

News of the plunging performance of the firm that has helped Mr Romanov earn his fortune comes amid growing concerns about Hearts' bills going unpaid.

Last month, a "wind-up" action was lodged by HM Revenue & Customs over unpaid tax, although the dispute has now been resolved, and there is no link between the bank and the Tynecastle club.

Despite its profits dive, Ukio Bankas insists that its start to the year has been "positive".

Arnas Zalys, head of the firm's finance office, said: "Taken into consideration current market situation we view the first half-year results of Ukio bankas positively.

"The main reasons of the group's lower profits are growing expense for provisions and narrowed net interest margin due to more expensive borrowing in the local market, also reduced client activity during economic recession."

There is no longer a direct link between Hearts owner Ukio Bankas Investment Group and Ukio Bankas, the club's sponsor, as UBIG was sold by the bank several years ago.

However, Mr Romanov remains a major backer in both companies and Ukio Bankas first announced plans to open a branch in Edinburgh soon after he took the reins at Hearts.

There remains serious doubt about whether it will ever be able to open its branch at 10 Castle Street to the public.

It was first supposed to open by the end of March 2007 but it is understood that the company has found it difficult to get a UK bank to back its move into the country.

A bronze plaque was erected at the office in 2007 with the company's name on it and a team of seven members of staff have been working from Castle Street for nearly a year – without any customers.

A dedicated UK website was set up for the firm nearly two years ago, featuring the company's logo and a picture of Edinburgh Castle, but it still says: "The website of Ukio Bankas Edinburgh branch is coming soon."

Nobody at the company could be contacted today to confirm whether it was still confident about the move into the city.

But banking sources say few UK banks would be willing to underwrite a foreign company's arrival into the country in the current climate.

Bryan Johnston, a divisional director at investment firm Brewin Dolphin, said it is not surprising to see profits decline by as much as 91 per cent in the current climate.

He said: "Markets are difficult at the moment and everyone's margins are under pressure.

"If anything, it is actually quite commendable for a company like that to make any sort of profit.

"It all depends in what extent the management are involved in the less recognised asset classes.

"Some smaller banks are quite conventional and have very few toxic loans. It is these types who are doing slightly better than others."