Central Bank of Montenegro prepares new methodology for loan policy

Central Bank of Montenegro prepares new methodology for loan policy

The Central Bank of Montenegro is working on the methodology to be used for the review, that is, assets quality assessment in 13 banks- loans, mandatory reserves and collateral. CB representatives said that the key objective was to strengthen financial stability and trust in the financial system.

The quality review was discussed it the meeting in Frankfurt in October. The meeting was dedicated to high-level dialogue between the European Central Bank and Montenegrin delegation headed by the Governor, Radoje Žugić.

Over EUR 3 billion in loans have been given to the economy and citizens. For eight months of the current year, banks have granted a total of EUR 3,03 billion.

Representatives of the CB say that assets assessment entails several items: checking quality and adequacy of the used estimates of assets value and parts of the collateral, as well as practices of the reduction of the banks’ assets value. Independent individuals with high professional reputation will be involved in the process.

“In order to get familiar with the process of the quality assessment, plans and dynamics, Central Bank have held a meeting with the CEOs of banks”, pointed out CB representatives.

The main goal is to provide an external, independent assessment of the quality of the banks’ assets.

On the basis of the results of the quality assessment, appropriate measures to ensure absorption of potential lacks of capital established in the assessment will be taken. In accordance with the best international practice, the Central Bank has formed working teams for the implementation of the asset quality review (AQR).

Plans are prepared for further reinforcement of supervision and control of banks, especially in the domain of money laundering prevention.

“The Central Bank of Montenegro is working hard on the institutional and staff improvement in the domain of supervision. Supervisory structure of the CB has been further enhanced by the creation of the Supervisory Committee, whose role is to support higher management in the decision-making process”, said the CB representatives.

A control division has been formed in the Sector for the control of banks, with the aim of strengthening supervision and providing continuous monitoring of the banks’ operations.

In addition, a Division for monitoring EU regulations and international standards in the area of banking has been formed, as well as a Division for measures and assessment of the harmonization with regulations./ibna