Split-based Brodosplit shipyard is suspending production because €60 million of its funds are currently blocked, management board chair of the DIV Group and the shipyard, Tomislav Debeljak said on Thursday.

Brodosplit is financing the building of two ships with VTB Europe funds, a Russian-owned bank which is subject to considerable restrictions because of the war Russia waged in Ukraine, Debeljak said, speaking to the Croatian state news agency Hina.

“The situation we are in is extremely dramatic, because VTB has stopped all further loan payments because of the war in Ukraine, which has blocked us,” he said.

€60 million of the company’s funds were “trapped” in those projects, he said, adding that the money is now used so that projects can be realised on time before a solution is found with the Croatian Bank for Reconstruction and Development (HBOR).

“In order to protect both Brodosplit and the DIV Group, as well as all other stakeholders in our operations, we are suspending the shipbuilding activity until financing is solved,” he added.

Brodosplit, DIV and the state are exposed to VTB. Debeljak said that given the extent of the problem and the urgency, they proposed to the government and HBOR that HBOR take over that amount since no commercial bank could do so at the moment due to Russia’s involvement.

HBOR has the know-how and the potential for the refinancing, he added.