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Press Releases 2018 - December

27.12.2018 - Thirty-sixth Session of the CBCG Council Held

19.12.2018 - MEDIA STATEMENT

14.12.2018 - The Central Bank of Montenegro recognized for contributing to the development of voluntary blood donation

11.12.2018 - CBCG and CEF shall continue cooperation on education and professional development

10.12.2018 - The CBCG meets with the World Bank representatives

10.12.2018 - Moratorium on the payment of liabilities of Atlas Bank and IBM Bank banks under interim administration introduced

10.12.2018 - ANNOUNCEMENT

07.12.2018 - Interim administration introduced in Atlas and IBM banks

03.12.2018 - Financial Stability Council meeting held


CENTRAL BANK OF MONTENEGRO
Podgorica, 27 December 2018

Thirty-sixth Session of the CBCG Council Held

The Council of the Central Bank of Montenegro held its thirty-sixth session today, chaired by the Governor, Mr. Radoje Žugić.

The Council discussed today the Report on the Central Bank of Montenegro Business Activities and Policy Implementation for November 2018. It was noted that the activities of the Central Bank conducted in November 2018 were implemented in line with the Central Bank Work Programme for the current year. Members of the Council were informed on the current activities of the interim administrators appointed in the Atlas Bank and the IBM Bank. It was noted that the interim administration measures imposed against these banks did not have any adverse effects on the banking sector stability nor on the confidence of depositors. This was also confirmed by the data on the growth in deposits at the system level, which was accomplished in period after the introduction of the interim administration.

The Council discussed and adopted draft of the Credit Institution Law, draft of the Credit Institutions Resolution Law, and draft Law amending the Bank Bankruptcy and Liquidation Law. These laws were drafted with the aim to align the national legislation with the Directive 2013/36/EU (CRD) in the areas that refer to the access to the activities of credit institutions and investment firms, the models for governing these institutions and the framework for their supervision, as well as to align the legislation with the Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms (BRRD). The Credit Institutions Resolution Law, which adoption is expected by the end of the following year, will upgrade the legal basis for implementing timely resolution tools in a distressed bank in order to ensure the continuance of key financial and economic functions of the respective banks, while limiting to the lowest extent the effects of bank's failure on economic and financial system and ultimately, with minimum possibility for taxpayers to bear resolution costs.

The Council also adopted the Decision amending the Decision on Minimum Standards for Credit Risk Management in Banks, which, in line with relevant EBA guidelines, upgraded the solutions from the current decision that refer to the collateral valuation in asset classification and allocation of loan loss provisions in banks.

Macroeconomic Report of the CBCG for the Third Quarter of 2018 showed the growth in the value of the completed construction works for the first nine months 2018 (31.5%) compared to the same period of the previous year, as well as the number of tourists arrivals (12.4%) and industrial output (24.4%), whereas a substantial growth of even 84.8% was recorded in energy sector. The banking sector in Montenegro, at the system level, was characterised by the safety and stability during the first three quarters 2018, which was accompanied by high liquidity and solvency. One bank recorded deterioration of the liquidity indicators. Total balance sheet of banks reported an increasing trend in the observed period and it grew by 5.5% at end-September relative to the end of the previous year. The growth in loans was the main driver of the asset growth, while deposits in banks recorded the highest growth within the liabilities side. As at end-September 2018, non-performing loans stood at 200.6 million euros and they made up 6.71% of total loans. Two banks recorded substantially higher level of the NPLs. High liquidity in banks as well as financing conditions in the international financial markets affected further decline in interest rates of banks. Weighted average lending effective interest rate has continued the perennial declining trend (9.57% in September 2014), and it reached its minimum of 6.40% in September 2018. Compared to December 2017, weighted average lending effective interest rate fell by 0.41 percentage points, while its y-o-y decline was 0.58 percentage points.

The deceleration of inflation was noted in the third quarter in the Inflation Report for the Third Quarter of 2018. The average consumer price rate (first nine months of 2018 compared to the same period of the previous year) amounted to 2.9%, while the annual prices increased by 1.9%. The annual growth rates of consumer prices were also recorded in the regional countries as well as in majority of the EU countries, which resulted from the growth in global oil prices. As for inflationary expectations, a survey conducted by the CBCG shows that most banks and companies expect inflation between 2.5% and 3%. Model projection for end-2018 predicts inflation from 2.1% to 3.2%, with the central trend of 2.6%. The CBCG expert projection is based on the deceleration of inflation in the third quarter and predicts inflation in 2018 between 1.5% and 3.5%.

The Council also considered the Report on Bank Lending Survey Results for the Third Quarter 2018. The Survey results show that credit terms and conditions for enterprises and households were more favourable in the third quarter compared to the previous quarter, in particular those based on lower margins, commissions and fees. Banks expect that almost all credit terms and conditions for the household sector will be eased in the following quarter. The survey also shows that the demand for enterprise and household loans increased, whereby the demand for loans that the banks approve to enterprises was driven by the requirement to fund capital investments, working capital and restructuring of the existing debts. However, in the households sector, the main factors contributing to the increase in demand for loans were requirements to refinance the existing debts and purchase immovable property, and consumer durable goods.

The Council supported the Proposal of the 2019 Budget Law at the session that was held today, assessing that the implementation of the consolidation measures will continue by applying this law, which will contribute to the strengthening of the fiscal sustainability. On the other hand, the highest amount of capital budget has been anticipated so far, which represents strong development component that will generate new value and influence future growth and development.

The Council also discussed other current issues under its competence at the session held today.


CENTRAL BANK OF MONTENEGRO
Podgorica, 19 December 2018

MEDIA STATEMENT

Taking into account the allegations made by certain media, referring to the competences of the Central Bank of Montenegro (CBCG), in the sense that the CBCG acted inadequately to prevent the commission of the offense, i.e. money laundering, we consider it necessary to inform the public of the following:

Pursuant to the Law on Prevention of Money Laundering and Terrorist Financing (OGM 33/14, 44/18), the CBCG monitors the implementation of the Law and regulations enacted on the basis of the Law, with regard to banks and other financial institutions. In accordance with the Law, the CBCG shall, before conducting inspection, inform the Administration for Prevention of Money Laundering and Terrorist Financing (Administration) about the monitoring activities it plans to undertake.

Supervision of business compliance of Atlas banka AD Podgorica (Bank) with the regulations regarding money laundering and terrorist financing was conducted in 2018.

Prior to carrying out of this supervision, the CBCG notified the Administration and requested to be provided information and data that it had obtained in the process of conducting the legally prescribed obligations, which would be further checked by the CBCG supervisors during their on-site supervision in the Bank.

During the aforementioned inspection, the authorized supervisors, among other, performed supervision of the Bank's operations with customers who were using the e-Commerce service. For more detailed information, a representative sample of supervision was taken, consisting of 32 legal entities out of 108 entities who deal or have dealt with e-Commerce service, which represents 29.63% of total customers who opened an account with the Bank with the intent of engaging in e-Commerce services. Of these, 24 customers have a status of active of the total 47, which represents a share of 51.06%. The Bank presented 61 customers who have the inactive status on the day of supervision. Out of that number, the Supervision selected 8 customers (13.11%).

Therefore, during the supervision of the Bank, pursuant to the Law on Prevention of Money Laundering and Terrorist Financing, the CBCG checked whether the Bank performed measures and actions in accordance with the Law, i.e. whether it:

  1. Identified risks, conducted risk assessments and established policies, supervisions, procedures and whether it undertook actions to reduce the risk of money laundering and terrorist financing;
  2. Identified and verified customers based on credible, independent and objective sources and monitored customer`s business operations;
  3. Possessed the appropriate information system, therefore providing automated support for customer risk assessment, continuous monitoring of customers' business relations and supervision of transactions, as well as timely delivery of information, data and documentation to the Administration;
  4. Appointed an authorized person for the implementation of measures to detect and prevent money laundering and terrorist financing and its deputy and whether it had provided conditions for their work;
  5. Organized regular professional training and further education of employees;
  6. Created and regularly updated the list of indicators for identifying suspicious customers and transactions;
  7. Kept records and provided protection and storage of data and documentation obtained in accordance with the Law on Prevention of Money Laundering and Terrorist Financing;
  8. Established and monitored a system that enables it to respond in full and in a timely manner to the requests of the Administration and the competent state authorities in accordance with the Law. 

Pursuant to the Law on the Prevention of Money Laundering and Terrorist Financing, if the CBCG, during the supervision, estimates there is a suspicion of money laundering or terrorist financing related to transaction or entity or determine facts that may be related to these, it shall immediately inform the Administration without delay.

Also, pursuant to the Law on Prevention of Money Laundering and Terrorist Financing, all banks shall submit to the Administration the reports on cash transactions for the amounts of at least 15,000 euros, as well as the reports on customers and transactions suspected to be engaged in money laundering or terrorist financing.

In accordance with the above, the Report of the Bank Onsite Examination was submitted to the Administration, according to the procedure and after the expiration of the legal deadline for submitting remarks on the report by the Bank.


CENTRAL BANK OF MONTENEGRO
Podgorica, 14 December 2018

The Central Bank of Montenegro recognized for contributing to the development of voluntary blood donation

The Institute for Blood Transfusion honoured the Central Bank of Montenegro for its outstanding contribution to the development of voluntary blood donation.

The CBCG employees took part in voluntary blood donation activities in the past two years and in this way contributed to the promotion of voluntary blood donation development in Montenegro, showing solidarity with those who needed help most.

Such activities are a confirmation that social responsibility, humanity and solidarity are important principles of the CBCG business dealings.


CENTRAL BANK OF MONTENEGRO
Podgorica, 11 December 2018

CBCG and CEF shall continue cooperation on education and professional development

The Governor of the Central Bank of Montenegro, Radoje Žugić, met with Director of the Center of Excellence in Finance (CEF), Jana Repansek.

At the meeting, the participants discussed the cooperation between the Central Bank of Montenegro and the CEF and the plans for the forthcoming period. The interlocutors assessed the cooperation of the two institutions as very successful and agreed to expand the training program and professional training of the CBCG staff, especially emphasizing the importance of the on-line program.

As Montenegro is taking over the chairmanship of the CEF Governing Board from Moldova in 2019, the activities to be undertaken in this direction were also discussed at the meeting.

The CEF is an international organization based in Ljubljana which has a mission to support the development of the capacity of the financial sector of the Southeast Europe countries, through learning and training.


CENTRAL BANK OF MONTENEGRO
Podgorica, 10 December 2018

The CBCG meets with the World Bank representatives

The Governor of the Central Bank of Montenegro, Mr. Radoje Žugić, met today the World Bank team led by Linda Van Gelder, the World Bank's Regional Director for Western Balkans.

The Governor Žugić introduced World Bank representatives with the current macroeconomic developments and the situation in the banking sector. As the Governor pointed out, preliminary data indicate that the year-on-year economic growth amounted to respective and 4.5% and 4.9% in Q1 and Q2 2018, mostly resulting from positive trends in tourism, industrial output (especially electricity production) and construction.

The banking sector data for the first ten months of 2018 show that all key business indicators recorded positive trends compared to the same period of 2017, and thus assets grew by 6.6%, loans by 9.2%, deposits by 8.5% and capital by 0.1%. The average weighted effective lending interest rate continued to drop, reaching its historic nadir of 6.39%. Non-performing loans also declined, mostly as the result of the implementation of the Law on Voluntary Financial Restructuring of Debts towards Financial Institutions.

The Governor informed the World Bank representatives about the introduction of interim administration in Atlas bank and IBM bank, expressing his expectation that this measure will stabilize the situation in the troubled banks. As he said, the interim administration was necessary due to deteriorated financial condition of these banks and its primary aim is to protect the depositors’ interests.

The Director Van Gelder commended the impressive progress made in the strengthening of the financial sector stability resulting, as she indicated, from the activities of the Central Bank of Montenegro taken so far.

The World Bank representatives expressed their readiness to continue supporting further activities of the Central Bank of Montenegro aimed at additional strengthening of the banking sector’s soundness.


CENTRAL BANK OF MONTENEGRO
Podgorica, 10 December 2018

Moratorium on the payment of liabilities of Atlas Bank and IBM Bank banks under interim administration introduced

We hereby inform the public that, upon the proposal of the Interim Administrators in Atlas bank and IBM bank, on 10 December 2018, the Central Bank issued the order to temporary suspend payments of liabilities in these two banks under interim administration (moratorium) for a period of 45 days.

Pursuant to Article 125 of the Banking Law, liabilities referring to salaries and other personal income of the bank’s creditors (salaries, pensions, social security benefits, and the like), life and health insurance claims and current expenditures necessary for a bank’s regular functioning are excluded from the temporary suspension of payments of liabilities.

Although the Banking Law prescribes the possibility for moratorium up to 90 days, it was decided to introduce this measure for a period of 45 days to shorten the time to the maximum extent possible during which the rights of depositors and other creditors will be constrained. During this period, the Interim Administrators shall undertake all measures and activities necessary for the banks’ continuity and the protection of their property. They shall also draw up reports on the financial and operating conditions of the banks and give proposals for resolution.

Bearing in mind that this is a measure with limited duration, which is directed toward the preservation of the banks’ property and/or protection of depositors, we believe that the depositors and other creditors of the Atlas banks and IBM bank will show their understanding with regard to the activities that are to be taken.


CENTRAL BANK OF MONTENEGRO
Podgorica, 10 December 2018

ANNOUNCEMENT

A press conference following the introduction of interim administration in Atlas bank and IBM bank will be held on Tuesday, 11 December 2018, at 12:00 hours.

The Governor, Mr. Radoje Žugić, and the management of the Supervision Department of the Central Bank of Montenegro will address the press conference.

The venue of the conference is the Central Bank of Montenegro, Sala Guvernera (ground floor).

We hereby invite all interested media to communicate the names of their representatives who will attend the event to slobodan.raonic@cbcg.me, no later than by Tuesday, 11 December, 10:00 hours.


CENTRAL BANK OF MONTENEGRO
Podgorica, 07 December 2018

Interim administration introduced in Atlas and IBM banks

We hereby inform the public that the Central Bank of Montenegro has passed a decision today to introduce interim administration in Atlas bank, and a decision on introducing interim administration in IMB bank.

The decisions were passed on the basis of supervision findings that revealed that the capital of these banks did not correspond to the level of their business risk.

Taking into account the established facts and aiming to protect the interests of depositors and prevent further deterioration of financial position of Atlas bank and IBM bank, the Central Bank of Montenegro acted in accordance with the Banking Law and passed decisions on introducing interim administration in these banks.

The employees of the Central Bank of Montenegro with longstanding experience in banking supervision have been appointed the interim administrators in these banks.

Please note that interim administration is one of the corrective measures taken by the Central Bank in line with the Banking Law and it aims to create conditions for eliminating identified irregularities and improving the financial situation in these banks. We expect the forthcoming interim administration measures to contribute to improving the situation in both Atlas bank and IBM bank.


FINANCIAL STABILITY COUNCIL
Podgorica, 03 December 2018

Financial Stability Council meeting held

The Financial Stability Council held its forty-second meeting today, chaired by Radoje Žugić, the Governor of the Central Bank and the Chairman of the Council. All other members of the Council attended the meeting: Darko Radunović, Minister of Finance, Branko Vujović, President of the Council of the Insurance Supervision Agency, and Zoran Djikanović, President of the Capital Market Commission. Upon invitation, Predrag Marković, the Director of the Deposit Protection Fund attends the Council meetings.

At today's meeting, the Council discussed the Information on the state of financial stability for the third quarter of 2018, and the current issues under the competence of the Council.

Considering international macroeconomic environment, the Council acknowledged the continued positive quarterly growth rates of GDP recorded in the euro area, even though the economic growth rate of 0.2% in Q3 was the lowest during the last four years. Such result was mostly due to negative growth rate of Germany (-0.2%), as the largest economy of the euro area. On the other hand, the US economy grew 3.5% in the third quarter compared quarterly, recording the highest growth in the last two quarters since 2014.

Regarding the domestic macroeconomic environment, economic indicators for the nine months of 2018 also point to the continued positive developments from the previous year. The industrial output sector recorded the highest y-o-y increase of 24.4%, with increase recorded in retail trade turnover (4.3%), the number of tourist arrivals (12.4%), and the volume and value of construction works (31.5%) as well.

Some fiscal indicators also recorded positive trends. Preliminary data show that source revenues of the budget for the nine months of 2018 were 14.1% higher compared y-o-y. Budget expenditures increased 7.9% compared to the same period of the previous year (due to higher realisation of capital budget in the current year), yet being 5.8% lower than the plan.

The Council noted that the indicators of stability and quality of operations at the banking, insurance and capital markets were positive and recorded positive trends.

As at the end of Q3 2018, the total assets of banks amounted to 4.41 billion euros and it recorded quarterly growth of 2.4%. Total loans and deposits in Q3 2018 recorded respective increase of 2% and 3.3%. The share of non-performing loans and receivables in total loans and receivables was 6.7% as at end Q3 2018, which was quarterly decline of 0.3 percentage points. Despite its decline, the non-performing loans ratio in some banks is still a challenge requiring intensified measures for it resolving.

Based on the impact analysis of all abovementioned factors on the overall economic stability, with particular focus on financial sector stability, the Council concluded that the financial system is relatively stable with present moderate risks.

The Members of the Council also discussed other issues under its competence.

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