Police in Bosnia have arrested 10 people in relation to a banking scam in which nearly 63 million euros ($71.4 million) in fraudulent loans and bank guarantees were issued by the now-defunct Bobar Bank.

The prosecutor's office said Thursday the arrested were members of a criminal enterprise responsible for reckless lending and the illegal issuance of bank guarantees to companies founded by Bobar Bank's owner and other legal entities related to the bank.

Their actions "caused harm to (the country's) banking sector," with financial damage equal to over 10 percent of the combined budget of all public institutions in Bosnia.

The late bank owner Gavrilo Bobar was a member of parliament of Bosnia's highly autonomous Serb-run region Republika Srpska, where the bank operated until it was shut in 2014.