Tabakovic: Serbia's banking sector solvent

BELGRADE - Serbia's banking sector is solvent, well-capitalised and capable of securing the entire financial sector of the economy and population, Governor of the National Bank of Serbia (NBS) Jorgovanka Tabakovic stated.

All banks are solvent and there is considerable potential for credit growth which is currently lacking, mainly due to the lower demand for credit products, Tabakovic said in an interview for the Belgrade-based daily Vecernje Novosti.

She said that at the moment there are no system risks which would jeopardise the current situation, and noted that the recent revocation of operation licences for certain banks came as a consequence of individual weaknesses, oversights and irregularities.

In most cases, the problem was connected to corporate management, inadequate risk management systems and poor internal controls which resulted in bad placements, huge credit losses and consequent solvency crisis, Tabakovic explained.

The case of Univerzal Bank affair (whose licence was seized due to insolvency on January 31) will never happen again primarily because controls would be much more serious and inspections will visit banks on a regular basis, she said.

The NBS governor said that NBS will perform regular controls in ten banks and special controls in five more.

She noted that the problem lies in the easy procedures for opening and closing banks in Serbia while debts remain unpaid.

Another difficulty is that the Serbian Business Registers Agency does not have a black list of phantom firms or a list of blocked companies which, for example, operated a month at the most.

There are companies which change only one letter in their title and open a new bank account as a new firm...