On 29 May the
International Monetary Fund published the text of a statement issued in
Podgorica on 20 May at the conclusion of an IMF staff visit to the
country. The statement calls in
particular for 1) “fiscal consolidation” (budget cuts) in order to reduce the
high public debt, 2) the immediate cessation of public subsidies to the
nation’s largest industrial facility, the aluminum plant Kombinat
Aluminijuma Podgorica (KAP), and the liquidation of the plant, and 3) the encouragement
of foreign direct investment (FDI) – especially in tourism and energy – through
improvements to the business environment by means of reforms that facilitate
property registration and that deal with construction permits. The section of the statement that regards the
banking system is reproduced below verbatim, with emphasis as per the original.
Facilitate the cleanup of bank and private sector balance
sheets
7. Banking
system downsizing in the aftermath of the collapse of the lending boom is
advanced, though rising non-performing loans (NPLs) and continued private
sector balance sheet impairment are a concern. Banks have significantly reduced
foreign liabilities since 2008 and are now entirely financed by local deposits.
They have also made efforts to clean up their portfolios by selling off
troubled loans to factoring companies. But there has been limited progress on
the restructuring and resolution of these claims, and household and corporate
balance sheets remain burdened with very high debt. As a result of this, and
bank risk aversion, credit to the economy has continued to contract.
8. Structural
distortions that hinder the cleanup of bank and private sector balance sheets
should be removed.
There is a need to accelerate collateral execution that is constrained by
inconsistent judicial application of the law and lengthy court procedures.
Efforts should be made to improve the independence and accuracy of appraisals,
introduce a private bailiff system, strengthen land registry, and improve the
quality of accounting and auditing standards. The implementation of the ongoing
World Bank project to facilitate out-of-court settlement and remove regulatory
and legal obstacles should also be accelerated.
9. Continued
supervisory vigilance is essential, and given the high NPL level and weak
profitability, it is critical the authorities maintain their proactive approach
to seeking additional capital, as needed. The authorities’ regular stress tests on banks are
welcome and should form the basis for assessing the need for additional
capitalization. They should also continue to strictly monitor NPLs, enforce
provisioning, and ensure that banks respond promptly to capital shortfalls, if
needed. The authorities should ensure that the regulatory and supervisory
umbrella appropriately extends to factoring companies and minimizes regulatory
arbitrage. The mission encourages the authorities to continue to strengthen
their contingency planning framework and implementation plans in line with
recent IMF technical assistance recommendations.
Sources:
In earlier news, in
the second half of May the commercial bank Komercijalna Banka published audited
financial statements for 2012, and the commercial banks Prva Banka and Atlas
Banka published results for 1Q 2013.
Komercijalna Banka (Komercijalna
banka a.d. Budva) in 2012 realized a net profit of € 970,000, virtually
unchanged from the results achieved in 2011 (€ 1,000,000) and 2010 (€ 981,000). The most significant differences from 2011 to
2012 were a decline in recovered bad debts (naplaćena otpisana potraživanja)
from € 1,856,000 to € 759,000, and a decrease in the cost of asset write-downs (troškovi
za gubitke po stavkama aktive) from € 2,685,000 to € 1,264,000. Total assets at end-2012 were € 96.7 mln, up
8.2% from the level of € 89.3 mln at end-2011.
During 2012 total deposits increased by 14.0% to € 53.8 mln, while total
loans increased 14.9% to € 58.7 mln.
The quality of the
bank’s loan portfolio improved markedly in 2012. Below are shown figures for loan quality – excluding
loans secured by cash deposits (krediti obezbijeđeni gotovinskim
depozitom) – as classified according to the loan-quality categories established by
the Central Bank of Montenegro (CBCG) in art. 19 of its Decision on Minimal
Standards for Management of Credit Risk in Banks of 18 September 2008 .
Loan portfolio quality at yearend
for Komercijalna Banka, 2011-2012 (in 000 €)
Category
|
2012
|
2011
|
A
|
34,542 (57.4%)
|
21,060 (40.6%)
|
B
|
18,345 (30.5%)
|
23,523 (45.4%)
|
C
|
4,967 (8.3%)
|
6,384 (12.3%)
|
D
|
2,303 (3.8%)
|
890 (1.7%)
|
Total
|
60,157 (100%)
|
51,857 (100%)
|
The data reveal that in 2012 a large number of loans
in categories B (“special note”, 3-8% reserve requirement) and C (“substandard”,
20-50% reserve) moved upwards to A (“good”, 1% reserve), and only a small
number moved downwards to category D (“doubtful”, 75% reserve).
In the bank’s statement
of cash flows the most significant differences between 2011 and 2012 were an
increase in revenues from government bills, from € 0 to € 1,000,000, and a
decrease in the negative cash flow from securities available for sale, which
changed from € -4,000,000 to € -1,651,091 due to reduced purchases of
securities.
Komercijalna Banka
is 100% owned by the Serbian bank Komercijalna Banka (Комерцијална
банка а.д. Београд), which in turn is owned 42.59683% by the Republic of Serbia and 25.00003% by the
European Bank for Reconstruction and Development (EBRD). At end-2012 the Montenegrin subsidiary had
117 employees, up from 113 at end-2011.
Besides its headquarters in Budva, as of 31 December 2012 the bank had
six branches (Herceg Novi, Kotor, Bar, Podgorica, Nikšić, and Bijelo Polje) and
nine other offices.
Prva Banka (Prva banka
Crne Gore a.d. Podgorica osnovana 1901. godine) in the first quarter of
2013 reported a net loss of € 810,000 for the quarter. This marked a return to the red for a bank
that has not seen two consecutive quarters in the black for three years:
Quarterly financial results of Prva
Banka, 2010-2013 (in €)
Quarter
|
Net profit or loss for
qtr.
|
1Q 2013
|
-810,000
|
4Q 2012
|
723,000
|
3Q 2012
|
-347,000
|
2Q 2012
|
1,326,000
|
1Q 2012
|
-1,406,000
|
4Q 2011
|
-3,465,000
|
3Q 2011
|
-1,481,000
|
2Q 2011
|
-3,486,000
|
1Q 2011
|
-238,000
|
4Q 2010
|
-7,130,000
|
3Q 2010
|
-72,000
|
2Q 2010
|
358,000
|
1Q 2010
|
152,000
|
As of 31 March 2013 the bank
had total assets of € 250.1 mln, total deposits of € 203.7 mln, and total loans
of € 182.2 mln. The aggregated figures at
31 March for the entire commercial banking sector in Montenegro, consisting of 11
banks, were respectively € 3,118.1 mln, € 1,999.3 mln, and € 2,490.7 mln before
taking provisions into account. Prva
Banka therefore had a market share of 8.0% in assets, 10.2% in deposits, and
7.3% in loans.
At end-2012 the bank's
largest shareholders were Aco Đukanović (39.22%), the national power company
Elektroprivreda Crne Gore a.d. Nikšić (24.10%). and a collective custody
account at Prva Banka itself (3.23%). At
end-2012 the bank had 248 employees and operated from 35 locations in
Montenegro.
Prva Banka – whose
name means “first bank” – was founded in 1901 in the town of Nikšić as First Nikšić
Savings Bank (Прва никшићка штедионица), and was the first
savings bank to be founded in the Principality of Montenegro. The bank’s charter received approval on 5 March 1901 from Nicholas I of Montenegro Montenegro
Atlas Banka (Atlas
banka a.d. Podgorica) reported for 1Q 2013 a net loss of € 228,000. As seen in the following table, the bank's
performance over the last three years has been very uneven:
Quarterly financial results of Atlas
Banka, 2010-2013 (in €)
Quarter
|
Net profit or loss for
qtr. (€)
|
1Q 2013
|
-228,000
|
4Q 2012
|
-41,000
|
3Q 2012
|
-239,000
|
2Q 2012
|
155,000
|
1Q 2012
|
397,000
|
4Q 2011
|
921,000
|
3Q 2011
|
-34,000
|
2Q 2011
|
-88,000
|
1Q 2011
|
-358,000
|
4Q 2010
|
249,000
|
3Q 2010
|
4,000
|
2Q 2010
|
-66,000
|
1Q 2010
|
119,000
|
Total assets at 31 March 2013 were € 68.8 mln, total deposits by
non-financial customers were € 153.6 mln, and total loans came to € 116.9 mln.
As of 31 March 2013 the
bank's largest shareholders were Atlas Capital Holding Ltd of Limassol, Cyprus
(37.63%), a collective custody account at Invest Banka Montenegro (16.70%),
Podravska Banka of Koprivnica, Croatia (9.24%), and Cerere S.p.A. of Trieste,
Italy (9.24%). The bank's auditor is Deloitte
d.o.o. Podgorica. As of 31 March 2013
the bank had 219 employees and operated at 22 locations in Montenegro (10
branches, 5 offices, and 7 windows) and 3 locations abroad (Moscow, Belgrade,
and Limassol, Cyprus).
The bank's operation in
Moscow is a locally licensed subsidiary, LLC Atlas Bank (ООО «Атлас Банк»).,
which as of end-2011 was 100% owned by Atlas Banka. The subsidiary showed a loss of RUB 216,000 (€
5,427) for 1Q 2013, and as of 1 May 2013 had total assets of RUB 1,156,012,000
(€ 28.5 mln). The bank does not
participate in Russia's deposit insurance system.
Principal sources:
Komercijalna Banka: Revizorski
izveštaj 2012. godinu
Komercijalna Banka: 2012 Godišnji izvještaj
Komercijalna Banka: Revizorski
izveštaj 2011. godinu
CBCG’s Decision on Minimal Standards for Management
of Credit Risk in Banks: Odluka
o minimalnim standardima za upravljanje kreditnim rizikom u bankama
(2008-09-18)
Prva Banka: Izvještaj
za I kvartal 2013 (2013-05-15)
Prva Banka: FINANSIJSKI IZVJEŠTAJ za period
01.01.-31.12.2012 godine
Prva Banka – History: Istorijat banke
Prva Banka – Approval of charter by Nikola I: Википедија:
Прва банка Црне Горе (accessed on 2013-05-30)
Prva Banka – Clause of charter specifying Serbian as
operating language: “Српски језик у уставном поретку Црне Горе”, by Предраг
Вукић, in Слово -
Часопис за српски језик, књижевност и културу, бр. 12 (април, 2007.),
pp. 24-30
List of first banks founded in Montenegro
