Three new banks to set up shop in Montenegro

Three new banks to set up shop in Montenegro

Podgorica, January 9, 2015/ Independent Balkan News Agency

By Adnan Prekic

In the next few months three new banks are preparing to set up shop in Montenegro. Turkish “Ziraat Bank” has already submitted an application for opening, while branch offices of two banks are in the process of obtaining a license. In Montenegro currently operate 12 banks, out of which only “Prva bank”, “Atlas bank” and “IBM” with domestic capital.

In late January, at the latest at early February in Montenegro will begin to operate two new bank under the name “Zapad” and “Gora”. “Zapad Bank” was formed by the Ukrainian capital, and “Gora bank” is a consortium from Switzerland and the United Kingdom. The request for a license was also submitted by Turkish “Ziraat Bank” in mid-December, however, the process of checking and registration could take up to six months, which is the statutory maximum.

With the arrival of new banks to Banks Association of Montenegro it is expected growth in credit activities, in addition to a continuation of a slight downward trend in  lending interest rates. Secretary General of the Association of Banks of Montenegro, Mirko Radonjic, considers that the lending activity of banks will grow by using adequate and greater inflow of new quality and healthy business ideas and projects, which will certainly work in favour of the banking sector.

The announcement that three foreign banks are entering the Montenegrin market in this year is good news, since it is indicative of a significant attraction of foreign investors who are estimated to be in the banking market in Montenegro regularly and operate successfully. In addition, the opening of new banks will improve the banking offer, increase the available credit funds, strengthen competition and create favorable conditions for the users of financial services, said Radonjic.

The situation in the banking sector in Montenegro in the previous year was stable, but banks have a number of problems, including the biggest problem that is non-performing loans. The banking sector at the end of the third quarter of 2014 achieved a positive financial result of 20.72 million EUR and it is likely to be the same as last year. Non-performing loans in Montenegro at the end of October 2014 have reached a level of 16.46 percent in total and amounted to EUR 398.9 million, which is a 5.7% drop compared to the end of 2013.