Serbia's banking sector solvent - NBS governor

Serbia's banking sector solvent - NBS governor

She said that at the moment there are no system risks which would jeopardize the current situation, and noted that the recent revocation of operation licences for certain banks came as a consequence of individual weaknesses, oversights and irregularities.

In most cases, the problem was connected to corporate management, inadequate risk management systems and poor internal controls which resulted in bad placements, huge credit losses and consequent solvency crisis, Tabaković explained.

"The case of Univerzal Banks affair (whose licence was seized due to insolvency on January 31) will never happen again primarily because controls would be much more serious and inspections will visit banks on a regular basis," she said.

The NBS governor said that NBS will perform regular controls in ten banks and special controls in five more.

She noted that the problem lies in the easy procedures for opening and closing banks in Serbia while debts remain unpaid. Another difficulty is that the Serbian Business Registers Agency does not have a black list of phantom firms or a list of blocked companies which, for example, operated a month at the most.

"There are companies which change only one letter in their title and open a new bank account as a new firm but are not solvent," Tabaković said and added that this is why a new law on accounting and auditing would be adopted to introduce some new regulations in company operations.

Tabaković announced that banks from the United Arab Emirates will penetrate the Serbian financial market and underscored that better competition and general performances of the banking sector are exceptionally important for NBS.

According to her, the Finance Ministry is working on the strategy to ensure the future of local banks owned by the government.

Speaking about the implementation of the decision to reduce interest rates, Tabaković noted that some banks have expressed readiness to cut their interest rates for current account overdrafts.

"Nevertheless, the valid law on protection of financial services consumers does not envisage a reduction of interest rates by default and this is why NBS would find a model which will make it possible for banks to implement the decisions on the reduction of interest rates and the ways to accelerate the process," Tabaković noted.