Meeting with representatives of the Association of Montenegrin Banks

23/02/2021

Today, the Central Bank of Montenegro (CBCG) held a meeting with the representatives of commercial banks and the Association of Montenegrin Banks. They discussed the continuation of activities to mitigate the Coronavirus pandemic’s adverse consequences on citizens, the real economy, and the financial system.

The interlocutors discussed the current macroeconomic situation. They concluded that it would be most practical to focus the new package of measures on micro, small and medium (SME) enterprises. A part of this sector has suffered the most significant consequences of the pandemic-caused crisis. This measure is justified with the SME sector employing over 75% of the total number of employees in Montenegro. At the same time, it has the same share in exports.

In this regard, the CBCG will prepare an amendment to the earlier decision targeting the sectors identified as the most affected as soon as possible. This category has been enabled a moratorium, approval and restructuring of loans with preferential regulatory treatment. The amendment will include expanding the list of priority sectors to include all those activities the Government has identified as endangered. It will include some additional ones identified by the CBCG together with commercial banks.

“It is crucial to find a balance between providing the necessary support to the economy and preserving the stability of the banking sector,” said Governor Žugić. He added that measures are taken in phases and caution due to this and to avoid moral hazard. They agreed more frequent communication with banks and constant monitoring of relevant trends to timely adjust the measures’ duration to the current situation.

At the meeting, they also agreed to consider the possibility of providing additional support to vulnerable households as soon as possible by defining measures aimed at loans related to the household sector.

The interlocutors showed an expectation that the started immunization will contribute to the recovery of the economy in the foreseeable future, first to the service sector recovery, i.e. tourism and complementary activities.

At today’s meeting, they also discussed the implementation of the independent asset quality assessment (AQR) of Montenegro’s banking sector. Despite the pandemic’s aggravated circumstances, banks carried out activities on performing obligations for the first three working blocks following the agreed deadlines. Therefore, the interlocutors praised their cooperation and timeliness.