Banks and international institutions on non-performing loans in Serbia

The first meeting of the Belgrade Initiative, a host country cross-border banking forum, was held in Belgrade Friday (8 March 2013).

The meeting, which was hosted by the National Bank of Serbia (NBS) and jointly sponsored by the International Monetary Fund (IMF), brought together the largest banks operating in Serbia, the parent banking groups, home country regulators from Austria, France, Greece and Italy, and the Serbian authorities, NBS said in a release.

Representatives of the IMF, World Bank, European Bank for Reconstruction and Development, European Investment Bank, European Banking Agency, European Systemic Risk Board, European Central Bank, European Commission and of the chairman of the Vienna Initiative also participated.

The participants in the meeting discussed prospects for the Serbian economy and financial system, parent bank strategies in local markets and the part played by the Serbian subsidiaries in operations of the banking groups.

There was a frank discussion of regulatory and tax issues affecting banks in Serbia and measures to ensure financial stability.

Also discussed were the implications for Serbia and its financial system of broader international initiatives, such as the implementation of Basel III, CRD4, and the EU proposals for a banking union.

The issue of non-performing loans (NPLs), which have become an impediment to the growth of the Serbian economy, was particularly discussed. The participants also analyzed a report of the NBS working group on this issue, as well as on the latest regulatory and legal changes which are an important step in the right direction.

Another topic was the development of the local capital market and actions needed to strengthen the role of the dinar (“dinarization”) in the economy. The gradual introduction of longer-term securities could promote domestic savings, create alternative channels for financing of corporates, and extend the maturity of bank funding. Actions were considered that might be taken by the banks, the Serbian authorities and the international financial institutions to promote development of this market. Also discussed were the challenges for further improvement of the dinar government securities market.

All the participants expressed their commitment to engagement in Serbia and agreed that the meeting has provided a useful opportunity for a frank exchange of views and identification of issues for whose realization both cooperation and shared experiences will be needed and most welcome.

The meeting was held under the auspices of the second Vienna Initiative, which brings together the major international bank groups operating in Central, Eastern and South East Europe, their local subsidiaries, the home and host regulators and international organizations to discuss and resolve matters of common interest.