Banking Sector
Privatization and Investments
BANKING SECTOR Source: Bulletin of the Central Bank of Montenegro (July, August, September 2012).
Total Bank Assets and Liabilities From end-June to end-August 2012, total bank assets and liabilities totalled € 8,453.2 million, while the average monthly level was 2,817.7 million. Total bank assets and liabilities were recorded as € 2,839.0 million at end-August 2012, thus showing a decline on an annual level (2.9%). At end-June, end-July and end-August 2012, within the structure of total bank assets, loans recorded a decrease, while monetary assets and deposits with depository institutions recorded an increase (Graph 1). Total bank capital amounted to € 834.4 million from June to August 2012, while on an average monthly level it amounted to € 278.0 million. At endAugust, total bank capital amounted to € 267.0 million, thus recording a decline on an annual level (5.9%). Deposits Total deposits amounted to € 5,714.4 million from June to August 2012 and on a monthly level amounted to €1,904.8 million. At end-August, total deposits amounted to € 1,954.4 million. Observing data from August 2012 and comparing it with figures from August 2011, total deposits increased by 3.4%.
age about 50.8%) and deposits with a maturity period of up to 3 months (average about 22.7%). Deposits with maturity periods ranging from 1 to 3 years showed a decrease. Observed on a sector by sector basis, within the deposit structure, deposits made by natural persons remained dominant with a percentage share of about 56.8%.
Household Deposits Total household deposits amounted to € 3,246.4 million, and on a monthly level amounted to € 1,082.1 million. At end-August, total household deposits amounted to 1,108.3 million and recorded an increase of 2.0% on a monthly level and of 8.5% on an annual level. From end-June to end-August 2012, within the maturity structure of household deposits, time deposits were dominant and were recorded as representing 68.7%. However, time deposits recorded a slight decrease in comparison with earlier figures (Graph 1).
Loans Total loans granted by banks amounted to € 5,814.1 million, which, on a monthly basis represented € 1,938.0 million. At end-August, total loans amounted to € 1,905.6 million, and thus recorded a decrease of 5.1% less in comparison with the previous year. The loan-to-deposit ratio1 amounted to 1.10 at end-June 2012, 1.02 at endJuly and 0.98 at end-August 2012. When observing data from August 2012 and comparing it with data recorded in June 2012, it can be seen that the ratio between loans and deposits improved. In the structure of total loans disbursed, corporate and household loans were dominant (91.0%) during the period from June to August 2012; the remainder referred to banks, other financial institutions, public owned organizations, non-profitable organizations and others. Interest Rates From June to August 2012, the weighted average lending effective interest rate (lending interest rates) amounted to around 9.54%. The weighted average deposit effective interest rate (deposit interest rates) amounted to around 2.98% in the same period. ■
Graph 1. The maturity structure of household deposits, in %
Within the deposit maturity structure, time deposits recorded a decrease (around 60.0% of total deposits), while demand deposits recorded an increase (around 40.0% of total deposits). Within the structure of time deposits, the largest segment was made up of deposits with a maturity period ranging from 3 months to 1 year (aver-
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Source: Bulletin of the Central Bank of Montenegro: July, August, September 2012. 1 This ratio represents the relationship between loans and deposits. In this case loans exceed deposits by 10% at end-June, by 2% at end-July and were 2% lower than deposits at end-August 2012.
Privatization and Investments Despite business barriers and the economic crisis, Montenegro still has a high inflow of investments for an economy of its size. It is expected that FDI will reach €450 million by the end of the year, according to an announcement made by the MIPA. Currently, one major privatization procedure is underway – the Simo Milosevic Institute, a health care centre, which is expected to be completed soon. However, a few other major investments are still pending.
Investments EIB Provides €49 Million in Loans and Grants for Montenegro The European Investment Bank (EIB) has signed 4 contracts in favor of the local economy in order to support the country in its path towards the European Union. The EIB will lend Montenegro €25 million to support the country’s small and medium-sized companies (SMEs) and €20 million for urgent flood relief and prevention. The bank will also provide an additional grant worth €600,000 as part of the Western Balkans Investment Framework for the reconstruction of the water supply system in Cetinje and another grant worth €3.5 million to realize plans for a wastewater treatment plant in Pljevlja. Dario Scannapieco, the EIB Vice-President responsible for the Western Balkans said, “Thanks to these operations we are able to continue supporting the country in the sector of small and medium enterprises and also in the reconstruction process after the floods. Moreover, I am really delighted about the two grants in the water sector, because technical assistance plays a crucial role in preparing projects of a high standard.”
US Invenergy Eyes 5-10-MW Solar Park in Montenegro A US clean energy company, Invenergy, has expressed interest in constructing the first solar power facility in Montenegro with a capacity of 5-10-MW. The company’s president, Michael Polsky, at a meeting with the Montenegrin Prime Minister, Igor Luksic, expressed interest in the solar park as well as in evaluating the potential of the Moraca, Kamarnica and Maoca rivers. Polsky said that conditions were favorable for energy investment in Montenegro and that this represented a new development opportunity for Invenergy. Chicagobased Invenergy is currently implementing around 6,600MW in various energy projects and is developing new ones totaling about 15,000 MW. UniCredit Group Ready to Support Investment Projects in Montenegro The UniCredit Group plans to support investment and development projects in Montenegro. With its present tax policy, Montenegro is becoming an attractive and competitive business destination. In a statement issued after the meeting between the Montenegrin Finance Minister, Milorad Katnic, and the Vice-President of the
UniCredit Group, Fabio Fornaroli, the government said that this is a good basis for receiving support from financial institutions. China’s Gezhouba Group Plans to Bid for the Construction of TPP Pljevlja Block II China’s Gezhouba will make an official offer to lead a new power generation project in Montenegro, related to the construction of a second block at the thermal power plant Pljevlja, by the end of September. Gezhouba first visited Montenegro in July to gather information for the preparation of a feasibility study and to prepare a project proposal. The coal fired power plant at Pljevlja has an installed capacity of 210 MW and uses coal from the Pljevlja basin. The potential second unit will use coal from the same reserves, which should be enough to guarantee a supply for both blocks during their lifespan. The Economy Minister, Vladimir Kavaric, pointed out that the government would not issue any guarantees for the project and that any business risk would be borne entirely by the investor, and not by the state. Preliminary estimates state that the second block would cost €330 million, and that construction works would take three years. The new energy source would generate 1.3 billion kWh. Montenegro Attractive to Chinese Investors Representatives from the International Port Group from Shanghai held a meeting with the President of the Municipality of Bar in order to discuss possible cooperation opportunities. The Chinese representatives stressed that the aim of their visit was to become familiar with the economic potential of Montenegro and to explore potential possibilities for cooperation in the areas of economy and tourism. Despite its size, Montenegro is attractive to Chinese investors. The President of the Municipality of Pavićević concluded
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