Press Releases 2015 - September

30.10.2015 - Saving Week Begins

16.10.2015 - Press release

10.10.2015 - PRESS RELEASE: Delegation of Montenegro at the Annual Meetings of the World Bank and the IMF in Lima, Peru

09.10.2015 - Delegation of Montenegro Meets the IMF officials in Peru

01.10.2015 - The CBCG Council holds its 76th meeting

CENTRAL BANK OF MONTENEGRO
Podgorica, 30 October 2015

Saving Week Begins

The Governor of the Central Bank of Montenegro, Mr Milojica Dakić and directors of all commercial banks operating in Montenegro have signed today an agreement on the implementation of the campaign "Savings Week", conducted twelfth year in a row, celebrating the World Savings Day, 31 October.

To the children born between 31 October and 6 November 2015, whose parents opened savings deposit book in one of the Montenegrin commercial banks, the Central Bank donates 200 euros. Commercial bank which parents choose donates another 200 euros. The amount of total 400 euros will be deposited for one year. After the expiry of this period, parents can raise this money or again deposit the money. The deadline for the submission of documents is 31 March 2016.

The action "Savings Week" is dedicated to children, and, as well as in previous years, is organized in cooperation with all commercial banks operating in Montenegro: Atlas banka, Crnogorska komercijalna banka, NLB Montenegro banka, Prva banka, Hipotekarna banka, Hypo-Alpe-Adria banka, Erste banka, Invest Banka Montenegro, Podgorička banka Societe Generale Group, Komercijala banka AD Budva, Universal Capital Bank, Lovćen banka, Zirrat banka i Zapad banka.

By this traditional action, the Central Bank of Montenegro has so far donated more than 250,000 euros to the children born in the saving week, and only in the previous year 148 children received their first savings.

CENTRAL BANK OF MONTENEGRO
Podgorica, 16 October 2015

Press release

In order to inform interested persons with the authorites of the Central Bank of Montenegro (hereinafter: the Central Bank) in the process of monitoring the implementation of the Law on the conversion of loans denominated in Swiss francs (hereinafter: the Law on Conversion), the Central Bank has assessed the need to address the public, primarily the citizens interested in the implementation of the Law on Conversion.

In accordance with this Law, the Central Bank is authorized to supervise its implementation. The process of supervising the implementation of the Law on Conversion implies the procedures prescribed by the Banking Law, as the Decision on the supervision of the Law on the conversion of loans denominated in Swiss francs into euro stipulates that supervising the implementation of this law shall be conducted according to the rules laid down in the Banking Law.

On 28 September 2015, the Central Bank adopted the Decision on supervising the implementation of the Law by Hypo Alpe Adria banka AD Podgorica (hereinafter: the Bank), as the only bank in the system, which approved loans denominated in CHF, thereby creating formal and legal prerequisites for the start of the supervision procedure in accordance with the Law and that procedure is ongoing.

Supervision procedure includes both, on-site and off-site examination of the Bank, preparation of the appropriate reports on examination containing any potential irregularities in the Bank’s operations, giving objections to the report by the Bank, the Central Bank’s opinion on these remarks and subsequently, prerequisites to impose any potential measures against the Bank within the powers of the Central Bank, are met.

Significant problems have appeared in the process of implementation of the Law, and as a particularly controversial and topical the question of whether the Law on Conversion covers also receivables arising from loans that the Bank assigned to other persons. Assignment of receivables to other person, in accordance with the Law on Obligations, waives all rights and obligations of the assignor of receivables which are transferred to the person to whom the receivable is assigned. In particular case, according to the data available to the Central Bank, there is no ownership and managerial connection between companies to which receivables were assigned and the Bank, but these are companies which are independent entities whose status is regulated by the systemic laws. We also note that, with respect to these companies, the Central Bank has no supervisory powers.

These borrowers have the obligation to the person to whom receivables have been assigned, so that, according to the opinion of the Central Bank, all current consequences arising from any further growth of the Swiss franc during the existing legal solutions cannot be eliminated, because the Law on Conversion does not define any obligations for persons to whom such receivables are assigned.

Please note that the Central Bank in the process of adoption of the Law on Conversion repeatedly pointed to this problem. The opinion of the Central Bank, which was, in the process of adoption of the Law on Conversion, submitted to the competent Parliamentary Board during July, contains, inter alia, the following conclusion:

"The Central Bank again points to the problem of resolving the status of clients whose obligations were transferred to other persons (factoring companies), which generally are not covered by this law, and which remain fully the obligations of loan repayment in accordance with the originally signed agreement, only to the second creditor. For this category of clients, proposed legislative solutions cannot provide equal status in relation to other clients, although the aim of the proposed law is to protect all Bank’s clients who have concluded contracts on loans denominated in CHF. "

We believe that this fact will be convincing enough that persons and organizations that report in public that the Central Bank was not involved in the process of adopting the Law, and that it is acting biased in the process of implementation of the Law to change this attitude and to focus future activities more on finding solutions which can help this category of borrowers.

All activities of the Central Bank before the formal start of the examination, which reflected in the communication with the Bank and other interested parties are activities that aimed at an attempt to create the conditions for the Bank to fulfil its legal obligations as soon as possible, due to extremely tight deadlines for the implementation of obligations from the Law on Conversion.

All requests, correspondence and other documents of interested parties concerning the application of the Law on Conversion received in the meantime, or during the supervision, the Central Bank will take into consideration in the process of supervision.

At the same time, we inform borrowers that the deadlines set by the Bank for specific actions in the proceedings, such as the deadline for the acceptance of the offers by the borrowers, are not binding for borrowers and because of their failure borrowers will not lose any right granted to them by this Law. If the supervision discloses that borrowers, who have concluded new credit agreements, violated any rights from the Law on Conversion, the Central Bank will appropriately inform borrowers of the irregularities and the manner of their elimination.

CENTRAL BANK OF MONTENEGRO
MINISTRY OF FINANCE
Podgorica, 10 October 2015

PRESS RELEASE: Delegation of Montenegro at the Annual Meetings of the World Bank and the IMF in Lima, Peru

Delegation of Montenegro consisting of the Governor of the Central Bank of Montenegro Milojica Dakić, the Deputy Minister of Finance and Director of the Budget Department Nikola Vukićević, and the Vice governor of the Central Bank Nikola Fabris, and, are participating in the Annual Meetings of the World Bank and the IMF in Lima, Peru. During the second and the third working days, Montenegrin delegation has met with the high officials of the World Bank and IFC: the Vice President for Europe and Central Asia Cyril Muller, Director for Europe and Central Asia Tomasz Telma, Executive director of the Dutch Constituency in the World Bank Frank Heemskerk, and the World Bank’s Country Director for the Western Balkans Ellen Goldstein.

Mr. Cyril Muller gave positive reviews of Montenegro’s implementation of policies and activities in the area of finances and banking.  In this context, all parties concluded that the previous period yielded successful cooperation between Montenegro and the World Bank reflected in the implementation of numerous projects in the areas of: health, asset management, environment protection, high education reform, energy efficiency and public facilities.  

Delegation of Montenegro appreciated the quality of analytics in the Systematic Diagnostic of Montenegro within which the World Bank, for the purposes of developing new Strategy for Montenegro 2016-2010 (Country Partnership Framework) performed analysis of Montenegro’s macroeconomic as well as the overall economic policy with a view to establishing the area of cooperation for the following four-year period. The main objectives of the new Strategy will be to reduce of poverty, and contribute to inclusive and uniform growth. The areas in the focus of the new Strategy are: infrastructure, energy industry, agriculture, and sustainable tourism. The adoption of the new Strategy expected in the first half of 2016 was welcomed and supported by the Vice President Muller.

At the meeting with World Bank’s Country Director Ellen Goldstein several projects which are in the planning process were discussed. The main topics of the discussion were the concept and scope of the project related to securing financial stability and improving financial efficiency of local self-governments. This project, along with proposed measures for strengthening the capacities on the side of income as well as expenditures, should represent a framework for the future efficient management and the improvement of capacities for the management of local self-governments finances.  Health department project, the implementation of which would contribute to the efficiency of the system as well as improve technological equipment was also discussed at the meeting.

With IFC representatives the delegation exchanged opinions on current and potential investment projects in the areas of transportation, renewable energy sources, sustainable tourism, and agriculture. Both parties agreed on the need to create prerequisites for the continuation of arrangement in Luka Bar, and to effectuate the announced support of microcredit financial institutions.   

The necessity of creating the prerequisite of higher IFC involvement in the support of the private sector, which was not the case in the previous period, was emphasised in relation to drafting the new Strategy.

Representatives of Montenegro’s delegation voiced their gratitude to the World Bank for their previous engagement, and showed readiness for the highest level of cooperation during the forthcoming negotiations on the priority directions of development.

During the annual meetings, representatives of Montenegro had several bilateral meetings, with the counties of the region and the countries of Dutch Belgian Constituency, with a view to consider possibilities of further cooperation in the area of banking, economic and fiscal policies.

CENTRAL BANK OF MONTENEGRO
Podgorica, 09 October 2015

Delegation of Montenegro Meets the IMF officials in Peru

Delegation of Montenegro led by the Governor of the Central Bank of Montenegro Milojica Dakić, the Vice governor Nikola Fabris, and the Deputy Minister of Finance and Director of the Budget Department Nikola Vukićević, are participating in the Annual Meetings of the World Bank and the IMF in Lima, Peru. During the first working day, the delegation has met with the high officials of the IMF: Deputy Managing Director Min Zhu, Director of the European Department Poul Thomsen, the Executive Director of the Dutch Constituency Meno Snell, and representatives of the Monetary and Capital Markets Department and Fiscal Affairs Department.

Technical assistance was sought at the meeting with representatives of the Monetary and Capital Markets Department to cover payment system oversight and the field of insurance. Also, the Deputy Minister of Finance discussed with the Fiscal Affairs Department the issue of technical assistance in the implementation of the European System of National and Regional Accounts (ESA) 2010 standards that should contribute to a more precise and transparent statistics of public finance and national accounts, as well as technical assistance in capacity building in debt sustainability analysis. Besides representing an addition to Article IV of the IMF`s Articles of Association, the implementation of debt sustainability analysis will also enable a more precise assessment of the public debt dynamics and its resilience to external shocks in the long term.

At the meeting with the IMF`s Executive Director of the Dutch Constituency, Meno Snell, the collocutors exchanged views on the current economic situation in Montenegro and other countries of the Constituency. Discussions also covered the analysis of the Greek and immigrant crises impact on Montenegro, as well as the level and dynamics of planned investment projects. A particular emphasis was placed on the recent conclusions of the FSAP mission of the World Bank and the IMF, primarily the quality of their recommendations that should lead to further strengthening of the banking system`s resilience to external shocks, systemic NPL resolution, ample implementation of macroprudential measures, and further strengthening of financial stability.

Discussions with the Director of the European Department, Poul Thomsen, extended to the current economic situation in Montenegro, with a particular emphasis on fiscal and monetary policy measures and conclusions of the recent FSAP mission. This was also the opportunity to agree the content and dynamics of the forthcoming IMF`s Article IV mission.

At the meeting with the IMF`s Deputy Managing Director Min Zhu, the Governor pointed out the high level of cooperation with the IMF in the past and expressed his appreciation for the ample technical assistance related to the FSAP for Montenegro that was provided by the IMF over the past year. 

CENTRAL BANK OF MONTENEGRO
Podgorica, 01 October 2015

The CBCG Council holds its 76th meeting

The CBCG Council held its 76th meeting today, chaired by Milojica Dakić, the Governor.

The Council adopted the Governor’s report on operations and pursuing the CBCG Policy in June and July 2015, which stated that the CBCG implemented activities according to the plan determined in the Work Programme of the CBCG for 2015. The Council analysed and assessed the effect of potential risks on financial stability, and concluded that the financial system is sound, and the level of systemic risk moderate.

The Council also adopted the Quarterly Report on Banks and MFIs’ Operations for Q2 2015, with the Information on the implementation of banks’ operating objectives related to reducing the level of non-performing loans. The Report stated that increased assets, loans, deposits and capital characterised banks’ operations during the reporting period. Solvency and liquidity ratios were significantly above the statutory level. Compared quarter-on-quarter, all assets quality items, except past due loans over 90 days, increased. The banking sector recorded profit. The Council analysed the efficiency of the implementation of banks’ strategies in the area of non-performing loans (NPLs) resolution and concluded that banks had been more successful in applying the restructuring option than in the option of enforced resolution of NPLs.

Furthermore, the Council adopted the Macroeconomic Report of the Central Bank of Montenegro for Q2 2015. According to the CBCG estimate, real growth of Montenegrin economy in H2 was within the expected range of forecasted annual growth with central projection of some 3.5%. The most of statistical indicators had growing trend in H1 2015 and confirmed such expectations. Total industrial output, volume of activities in forestry, transport activity, and retail trade turnover increased, as well as the value of performed construction works, and tourist arrivals and overnights trended up. In early 2015, the current account deficit increased as well as the inflow of foreign direct investments. The banking system is sound, solvent and liquid. Fiscal sector data point to stable trends reflected as increased revenues and decreased expenditures relative to the plan, The Council assessed that the public debt growth requires long-term approach and continual prudence in pursuing fiscal policy in order not to aggravate fiscal stability.

In addition, the Council adopted the Inflation Report for Q2 2015. The Report states that the CPI inflation in Montenegro increased 1 percent in Q2 2015. Compared y-o-y, consumer prices in June 2015 increased by 1.9 percent. Annual HICP inflation in Montenegro was 2% and it was higher than the HICP inflation in Euro area that amounted to 0.2%. Expectations of banks and companies on inflation trend and amount at the end of this year varied. The most of surveyed companies expected inflation to range between 2 and 3 percent, while the most of surveyed banks expected inflation between 1 and 1.5 percent. The model projection showed that the inflation in end-2015 would range between 1.3 and 2.9 percent. According to expert assessment, expected inflation remained unchanged compared to Q1, was similar to model assessment and ranged between 1.25 and 3.25 percent.

The Council also adopted the Information on problems in implementing the Law on Consumer Protection – beneficiaries of financial services and stated that some solutions meant a step backward in terms of harmonising national legislation with the acquis communautaire, i.e. that they provided lower level of consumer protection. Moreover, the problem is also that the Law regulates some issues that had already been regulated by other laws harmonised with the Acquis Communautaire, in a different manner. Bearing in mind the previously mentioned, the Council stated that, from the CBCG responsibility perspective, this had opened the following disputable issues: (i) how to fulfil the CBCG’s obligation from the Law to adopt the secondary legislation for the implementation of the Law within three months after the Law’s entry into force, particularly in situation where some secondary legislation regulating the same issues had already been adopted in line with the Consumer Credit Law, (ii) how to legally supervise financial loan providers, i.e. which provisions should thereby be provided since there are two laws with the same legal powers and specific different solutions to these issues.

With a view to resolving this legal situation, the Council concluded that, prior to fulfilment of obligations of the CBCG arising from the Law, it would be necessary to inform entities participating in the preparation and the adoption of the Law in order to create joint position on resolving the problems.

The Council also discussed the information on difficulties in the implementation of the  Law on the Conversion of Swiss Franc-Denominated Loans Into Euro-Denominated Loans.