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Tartu Union Fails, Freezing €40M in Deposits Amid Insider Loan Probe
Estonia's Tartu Credit and Savings Union has filed for financial recovery, jeopardizing approximately €40 million in depositor funds after an internal audit uncovered problematic loans issued to related companies with insufficient collateral.
- —Tartu Credit and Savings Union (KSO) has filed for sanation (financial recovery proceedings) with the court, potentially jeopardizing approximately 40 million euros in depositor funds.
- —The union cited management errors and unfavorable market conditions as primary reasons for its financial distress, which intensified in the autumn of the previous year.
- —An internal audit, conducted from December 5, 2025, to January 2026, revealed that loans were issued to related companies, some of which are problematic, with insufficient or later-sold collateral.
- —The union's board has decided to resume interest payments on deposits from February 1, 2026, though the withdrawal of principal remains suspended.
- —Legal representatives for depositors are demanding a seven-figure sum, highlighting the significant scale of deposits held by the union compared to previous failed cooperatives.
Recap
The Tartu Credit and Savings Union's recovery filing is more than a financial failure; it's a case study in potential mismanagement and conflicts of interest, with an internal audit pointing towards possible intentional damage. The €40 million at risk dwarfs previous cooperative collapses in Estonia, highlighting significant governance and regulatory vulnerabilities in the sector as it faces mandatory re-registration as banks.