Mystery bank keeps the Serbs in business

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FOR MILLIONS of Serbs, if the future holds any hope, it lies with an energetic middle-aged woman with dyed orange hair and a shocking pink suit. Dafina Milanovic is the director of Dafiment Bank, a self-styled private bank that is reaping enormous profits while the rest of the Serbian economy disappears into a black hole. Dafiment Bank offers a stupendous return for your money: 15 per cent on a 30-day deposit of foreign currency such as German marks or US dollars, 280 per cent on a six-month deposit of Serbian dinars.

'I've done something unusual for this country. I haven't used socialist methods of business,' she said in her swish Belgrade office, where two security men with flowery shirts and greased-back hair patrol the corridors. 'I'm not tied down by red tape. Quick thinking and quick decision-making, that's me. The capital is mine, the risk is big and I'm taking the risk.'

Dafiment Bank has 37 branches in Serbia and Montenegro. Every day people form long queues outside to deposit money or claim interest. For those who have foreign currency, and there are many with savings acquired in Communist times, the bank represents manna from heaven. It offers a great opportunity not just to beat Serbia's annual inflation rate of more than 20,000 per cent but actually to make a profit.

Serbia's dinar billionaires like Mrs Milanovic, too. 'A man rang up this week and said he had five billion dinars ( pounds 120,000) to deposit,' she said. 'He wanted us to supply a bodyguard to escort him to the bank.' She said her bank handles 14 million private accounts, a startling assertion given that the combined population of Serbia and Montenegro is less than 10 million. She said it had assets of 'several billion dollars' and, while registered in Belgrade, had interests stretching from London, Luxembourg and Munich to Greece, Bulgaria, Cyprus and Tel Aviv.

According to a bank publicity brochure, Dafiment Bank was founded in 1991 with 75 per cent of the capital provided by Mrs Milanovic and 25 per cent by Israel Kelman, described in the brochure as 'a Jewish businessman'. How the bank gets round the United Nations sanctions clamped on Serbia's economy remains a mystery. 'The main sources of our revenues are foreign exchange and stock markets, trading, investments. There is a very fast circulation of money,' Mrs Milanovic said.

Her claim that Dafiment is independent of Serbia's authorities is dismissed as ludicrous by Western monitors. 'This bank sprang up from nowhere and is nothing but a front for the Serbian government, which has been so bankrupted by the war that it is desperate to tap into people's private holdings of foreign currency,' one said.

Mrs Milanovic ran unsuccessfully as an independent candidate in last December's Serbian elections, but she openly identifies with the government's nationalist themes. In particular, she said she supported the self-styled Serbian Republic of Krajina, which was created out of parts of Croatia that the Serbs conquered in 1991. She said she had recently formed a company to invest in Krajina with Zeljko Raznjatovic, a Serbian warlord better known as Arkan, whom the United States wants to put on trial as a war criminal.

Public confidence in Serbia's banks was badly damaged this week when the boss of the Yugoskandic bank, Zedimir Vasiljevic, who organised last year's chess match in Serbia between Boris Spassky and Bobby Fischer, left for Israel and accused the Montenegrin authorities of racketeering. The bank's branches temporarily closed, causing panic. Mrs Milanovic said she had to appear on Serbian television to scotch a rumour that she had been arrested. But she said that, even if all her investors withdrew their money, Dafiment Bank would still have reserves of 600m marks ( pounds 255m). 'I believe that if God wasn't helping me I wouldn't be as successful as I am,' she said.

(Photograph omitted)