Banking system strongly responds to the COVID-19 pandemic challenges

06/04/2020

The Governor of the Central Bank of Montenegro (CBCG), Mr. Radoje Žugić, and his associates met today with the Deputy Speaker of the Parliament of Montenegro, Mr. Branimir Gvozdenović, the Minister for Finance, Mr. Darko Radunović, an Advisor to the Prime Minister, Mr. Radule Raonić, the Chairman of the Investment and Development Fund’s Board of Directors, Mr. Zoran Vukčević, the President of the Chamber of Commerce of Montenegro, Mr. Vlastimir Golubović, the CEOs of commercial banks, and representatives of the Association of Montenegrin Banks. The topic of the meeting, organised as a part of the ongoing communication between the CBCG and commercial banks, was the banking system’s role against the backdrop of new coronavirus’s adverse impact on the economy. 

The representatives of the CBCG, legislative and executive power, the association of entrepreneurs, and the Association of Banks unanimously commended the banking system’s response to the most significant challenges caused by the COVID-19 pandemic impact on Montenegro’s economy.

The effects of the Decision on Interim Measures prepared by the CBCG in cooperation with commercial banks and adopted by the CBCG Council on 17 March 2020 were presented and analysed at the meeting.

The first element of the Decision is a 90-day loan repayment moratorium, where Montenegro is one of the rare twelve countries in the world to adopt this measure, with interest calculated throughout the moratorium identically as in other jurisdictions. This decision enables legal and natural persons to increase their disposable income during these challenging times. The moratorium’s effects are apparent - during the seven days of the moratorium application, a total of 61,434 loan beneficiaries or 47% of retail loan beneficiaries applied, as well as almost 75% of the economy, while the loans for which the moratorium application was submitted amount to 1.23 billion euros or 44% of total loans at the system level.

Another essential element of assistance to citizens and economy is liquidity loans granting both during the moratorium and the recovery process after the expiry. In March, the banks approved 3,486 loan sub-accounts for retail and 282 loan sub-accounts for corporate loans or 73.4 million euros in total. Banks are ready to channel their available liquidity towards clients, the economy, and citizens, at present and during the economy’s recovery.

Credit support will be provided under currently the most favourable objectively possible conditions. With the liquidity support, banks have committed to work actively on flexible loan restructuring in line with the new expected cash flows of the economy and citizens.

By working the distance, the crisis is also a chance for banks to develop card operations and e-banking for their clients further, and thus reduce the cash in circulation.

The common conclusion was the necessity to work on all the abovementioned issues, with the obligation to preserve the banking system’s stability, since this system is the basic lever for our economy’s recovery in the challenging period ahead