AQR presentation in September


06/08/2021

With regard to the frequently voiced arbitrary assessments of the stability and adequate capitalisation of the banking system in Montenegro and in order to provide the public with accurate information, the Central Bank hereby announces the following:


The independent Asset Quality Review (AQR) of the banking sector in Montenegro is coming to an end and the results will be publicly presented during the first week of September this year.


The results of the AQR, as the most effective prudential instrument for assessing the quality of bank assets, will provide the most objective insight into the health of the banking system in Montenegro and identify the possible need for recapitalisation of individual banks. 


The AQR was conducted in line with the ECB methodology and the process itself was carried out with the support of the renowned auditing companies with significant experience on the matter. The CBCG consultant in charge of managing the AQR project in Montenegro was Ernst & Young d.o.o. Belgrade, with the involvement of their experts from Germany and the Czech Republic, while individual banks hired reputable audit and consulting companies previously approved by the CBCG to carry out the relevant tasks.


We would like to underline that the CBCG started activities on this project following the recommendations of the IMF`s FSAP mission and those of the European Commission, which suggested conducting an independent analysis of the quality of the banks` assets, in accordance with the best international practice. Unlike Bosnia and Herzegovina and Serbia where AQR was a part of the arrangement with the IMF, AQR in Montenegro was initiated by the CBCG, which is in line with the recommendations of the FSAP mission. The Central Bank decided the AQRs to be implemented in all 13 banks on the Montenegrin market, while the practice in most EU countries is that only systemically important or asset-sensitive banks are subject to the review. This approach was chosen in order to act preventively, whilst minimizing any residual risk that could be hidden in the banks` balance sheets.