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. Last Updated: 07/27/2016

Big Banks Abandon Card Deal

A deal between MOST-Bank and Uneximbank to jointly run their plastic-card businesses has collapsed, with MOST-Bank alleging serious misconduct on the part of Uneximbank officials involved in the venture.

In a statement released on Wednesday, MOST-Bank said it intended to ask government regulators to investigate the "doubtful actions of a few officials at United Card Service and Uneximbank."

MOST-Bank accused officials at UCS, the card-processing center that it jointly owns with Uneximbank, and officials at Uneximbank of "serious abuses" of their positions. It did not elaborate on this allegation.

The bank announced it would break off the year-old alliance with Uneximbank because it no longer wanted to be responsible for the actions of UCS.

MOST-Bank and Uneximbank became joint owners of UCS in October 1996 after Uneximbank bought a controlling 51 percent stake in UCS from the troubled Credobank.

MOST-Bank remained the minority shareholder with a 49 percent share. At the time, it also had its own processing center, Multikarta, for its MOST card.

In January 1997, under a joint venture deal, MOST-Bank and Uneximbank merged their payments' processing units.

After, the merger both banks received a 50 percent share in Multikarta, which became a 100 percent owner of UCS.

Multikarta was to become the managing company, and UCS was to be its processing company.

However, MOST-Bank claims this did not happen and that the companies continued to operate separately. MOST-Bank said they expected profits from UCS's operations but got nothing.

Uneximbank dismissed suggestions of impropriety Friday, saying audits by Price Waterhouse every year since 1994 had not uncovered any evidence of wrongdoing.