Banking sector in Montenegro

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Banking sector in Montenegro
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Sources Central Bank Of MontenegroInstitute
for Strategic Studies and Prognoses
Macroeconomic data Macroeconomic data Macroeconomic data Macroeconomic data Macroeconomic data Macroeconomic data
2002 2003 2004 2005 2006
GDP (mil ) 1,301.50 1,433.00 1,535.00 1,644.00 1,778.81
GDP per capita 2,109.11 2,317.90 2,472.99 2,638.00 2,790.50
GDP growth () 1.70 2.30 3.70 4,10 6.50
Inflation 9.40 6.70 4.30 1,80 2.5
Unemployment rt. 30.45 25.82 22.6 17,00 15.5
Average wage 193 271 302.81 326.50 376.37
Total credit 124.66 200.63 284.08 377.30 653.1
Savings deposits 22.21 45.07 80.68 173.02 351.8
Investments 182.90 213.62 111.08 382.82 502.00
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SWOT analysis Banking sector in Montenegro

• Strengths
• Stability and strong currency
• Favorable legislative and institutional
  framework
• Independent Central bank without emission
  function
• Implemented international standards in the bank
  monitoring
• Private banking sector
• Liberal system in financial and capital flows
• Good human capital

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SWOT analysisBanking sector in Montenegro

• Weaknesses
• Distrust in banking sector
• Low rating deposit
• High interest rate on credit
• Furlough from international market for year
• Missing regulation in certain districts
• Payment circulation is still not completely
  reformed
• Rigid labor law
• Inefficient court system

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SWOT analysisBanking sector in Montenegro

• Opportunities
• Attracting foreign investments
• Continuation of implemented international
  standard in banking monitoring
• Improvement of cooperation with international
  financial institutions
• Implemented IT technology in
• extension banking services

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SWOT analysis Banking sector in Montenegro

• Opportunities
• Continue perfection human capital
• extension banking services bank
• Dispersal variety of banking
• Improvement of monetary statistic and analytic
• Implemented IT technology in
• extension banking services bank

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SWOT analysis Banking sector in Montenegro

• Threats
• High transaction costs
• Unfair competition
• Early assumption of determination of
  international bureaucracy standard
• Inefficient adhibition of legislative solutions
  in certain districts
• Inefficient and long procedure of bank
  bankruptcy and liquidation
• Impossibility of outstanding account payment

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Objectives

• Finalizing bank privatization and opening
  bankruptcy and liquidation
• process
• Further increase in efficient monitoring of the
  
• banks through implementation of principles of
  Basel 1.
• Making conditions for further decreasing interest
  rate

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Objectives

• Working on further legislation improvement
• which directly or indirectly influences banking
  sector
• Improvement of payment circulation in order to
  increase its efficiency
• Decrease in transaction costs of user banking
  services

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Bank Founding

• A bank is founded and operates as a joint stock
  company.
• A bank may be founded by domestic and foreign
  legal entities and private individuals, at least
  two founders.
• No party may engage in banking operations without
  license of Central Bank
• Minimum financial amount of initial capital may
  not be less than EUR 5,000,000.
• Source Central Bank

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Bank Founding

• The bank founders shall submit to the Central
  Bank the application for a bank license with next
  documents
• the foundation contract,
• the proposed by-laws,
• data on professional qualifications and working
  experience for the last five years for proposed
  members of Managing Board of the bank,
• data of shareholders holding more than 5,
• business plan of the bank for the next three
  years,
• technical and personal capabilities data
• Source Central
  Bank

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Status of banking sector

• 10 commercial banks
• Concentration of financial potentiality 59,5
  of total banking capital is assets of 3 bank.
• Increasing trend in credit activities of banks -
  total sum of credit was increase for 40 in
  2006

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Institutional ambient of banking sector

• Institutional ambient in which bank work
  characterizes usage of euro as legal means of
  payment
• Since establishment of Central bank adoped new
  laws are
• Law on the Central Bank
• Law of bank
• Law of bankruptcy and liquidation
• Law of deposit security
• Source Ministry of Tourism

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Bank in Montenegro
Name of bank headquorters Establishing year
1 Crnogorska Komercijalna banka AD Podgorica 1997
2 Euromarket banka NLB AD Podgorica 2000
3 Hypo Alpe-Adria Bank AD Podgorica Podgorica 2006
4 Podgoricka banka AD Podgorica 1906
5 Opportunity banka AD Podgorica 2002
6 Atlasmont banka AD Podgorica 2002
7 Montenegrobanka AD Podgorica 1995
8 Prva banka Crne Gore AD Nikšic  Nikšic 1901
9 Hipotekarna banka AD Pljevlja 1991
10 Komercijalna banka AD Budva 2003
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Leading financial groups

• Societe Generale Group One of the leading
  financial groups in the euro zone. 386 billion
  assets under management. The third corporate and
  investment bank in the euro zone. More than 19
  million customers in the real banking in the
  world. The Societe Generale Group purchased
  64,4 shares of Podgoricka Banka in state
  ownership, for 385 euros per share.
• Hypo Alpe-Adria-Bank Group is in Montenegro,
  too. This group have locations in Austria,
  Italy, Slovenia, Croatia, Bosnia and Herzegovina,
  Serbia and Montenegro, and Germany. The Hypo
  Alpe-Adria-Group employs more than 5,200 people
  that serve more than 750,000 customers. The three
  strategic business sectors of the Hypo Alpe-Adria
  Group - banking, leasing and consulting .