Bank Supervision  


Central Bank controls credit worthiness and legality of operations of banks and financial institutions and is authorized, as the only one responsible for establishing and maintaining of sound banking system, to undertake measures for banks' rehabilitations, that is, open and carry out bancruptcy or liquidation of banks.

The Central Bank controls credit worthiness and legality of banks’ operations by:

 ·        Following reports, information and data which banks submit to the Central bank (off-site control);

 ·        Directing review of business books, accounting and other documents in the bank (on-site control);

  ·        Analysing collected information, rating the indicators of operations and comparing  with prescribed limits, previous data and accepted international standards.

In performing on-site and off-site controls, the Central bank adopted and is applying internationally accepted CAMELS methodology and based on such methodological approach is permanently performing rating of banks. With this rating system it is possible to identify early potential and existing weaknesses which relate to financial position and banks’ operations.

By this rating system for banks, every bank assigned a composite rating which is based on evaluation and rating of six main components of financial position and banks’ operations and those are: C – capital adequacy, A – asset quality, M- quality of management, E- quality and level of earnings, L- liquidity adequacy and S – sensitivity to market risk.

Component and composite ratings are shown by adequate marks according to the numeric scale from 1, expressing the best rating, to 5, expressing the lowest rating.

After the examination, supervisors state in their reports the noticed deficiencies in banks’ operations after which the Central bank, by undertaking adequate measures, directs the banks towards business on sound basis.  Central bank of Montenegro, on the basis of authorization from the law on banks, passed enabling acts which regulate more closely the issues of founding and business operations of banks and financial institutions in Montenegro.