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11/11/2022

As someone presenting as an economic analyst and, even worse, who was a part of two Montenegrin banks’ management, Mr Drecun has again demonstrated a dumbfounding level of elementary ignorance in his latest media appearances.

To inform the public accurately and eliminate doubts that Mr Drecun’s blanket observations may cause on the issue, we point out that the solvency ratio calculating method has been defined in Article 134 of the Law on Credit Institutions fully harmonised with the relevant European acquis implementing Basel III requirements. Using the calculation method referred to in the mentioned legal provision, as a relative indicator of total banks’ capital adequacy, the Montenegrin banking sector’s solvency ratio was 18.43% on 30 September. It amounts to almost twice the minimum statutory rate at the level of individual banks (10.625%), including the combined buffer value.

To further educate Mr Drecun, the total capital to total assets ratio, which he claims is the solvency ratio, represents the leverage ratio, i.e., the capital to borrowed funds ratio. The method of calculating the said ratio is defined in Article 496 of the Decision on Capital Adequacy. As of 30 September 2022, the financial leverage ratio was 7.76%, significantly above the statutory minimum of 3%.

The fact that total deposits have increased by almost 1.7 billion euros (or over 50%) over the last two years (30 September 2020 - 30 September 2022) best proves the unfoundedness of Drecun’s conclusion that the deposits growth in the previous period mainly resulted from the GDP growth over the same period.

We also point out that independent external auditors confirmed the accuracy of the balance sheet positions and indicators banks submitted to the CBCG in their annual reports on performed audits available on the websites of individual banks and the CBCG. Moreover, the independent Asset Quality Review (AQR) results gave the best independent assurance about the state of the Montenegrin banking system. The independent audit companies conducted the survey according to the European Central Bank’s methodology, once more confirming the domestic banking system’s stability and adequate capitalisation.

Finally, we point out again that the banks in Montenegro are highly liquid, well-capitalised and profitable, and their potential represents the best guarantee and assumption for the Montenegrin economy’s dynamic development.

With due respect to Mr Drecun, we believe that relevant international financial institutions and our European partners, whose reports have fully affirmed the banking system's stability and resilience and the CBCG work concerning the above, are more invited to assess the Montenegrin system.