Moratorium for credit users who have been operating sustainably

Banks, in accordance with the latest decision of the Central Bank (CBCG), will be able to approve the moratorium to credit users who had a sustainable business in the previous period, because the rules of the general moratorium valid until now conditioned the risk to stability, disrupting the liquidity and capital of banks.

"Now the emphasis is on the moratorium on loan users who had a sustainable business in the previous period and on more efficient channeling of bank funds to those loan users whose problems in business, i.e. profitability, are of a temporary nature," said the CBCG to the Mina-business agency.

The previous decision of the CBCG on temporary measures gave the right to a moratorium to all loan beneficiaries, regardless of their financial situation and delay in repayment in the period preceding the pandemic.

"According to the new decision, banks can grant a moratorium only to loan users who, on December 31st, did not have a loan repayment delay of more than 90 days, whose loan was not classified as non-performing on that day, and for whom a loan for which a moratorium is requested it was not restructured this year," explained the CBCG.

The CBCG stated that the rules of the general moratorium, which were in force until now and applied to all loan beneficiaries, caused a risk to stability, disrupting the liquidity and capital of banks.

"On the other hand, the discipline of repayment of credit obligations was violated, enabling non-payment even by those debtors who are financially capable, but do not want to pay using their legal right," explained the CBCG.

The CBCG recalled that in mid-March they passed the Decision on temporary measures to mitigate the negative impact of the new coronavirus on the financial system, which established temporary measures related to the treatment of loans approved by banks, as well as other measures aimed at mitigating the negative impact of the new coronavirus in to bank operations.

"One of the established temporary measures established the general right of loan users to a moratorium on repayment for up to 90 days," the CBCG added.

The supreme monetary institution said that after the easing of measures to protect the population from infectious diseases, conditions have been created for an accelerated transition to regular operations of most companies in Montenegro.

"Therefore, it was assessed that the conditions for redefining the established temporary measures on bank operations have been met, in such a way that these measures in certain segments are gradually adjusted to the standards applied in regular banking operations," the CBCG explained.

According to the preliminary data submitted by the banks, as of April 30, the total amount of loans for which the request for moratorium was submitted amounts to 1,35 billion euros.

"The amount of loans for which a request for a moratorium was submitted represents 47,73 percent of the total approved loans in the system as of March 31," specified the CBCG.

Citizens and businesses submitted a total of 68,54 thousand requests. 64,69 thousand requests, i.e. 94,38 percent, related to citizens, while 3,85 thousand related to companies.

"The amount of citizen loans, for which a request for a moratorium has been submitted, amounts to 772,3 million euros, or 56,32 percent of total citizen loans, according to data from the end of March this year," the CBCG announced.

According to available data from the end of March on the number of citizens using bank loans, it is concluded that 52,71 percent of them used this right.

"When it comes to companies, the right to activate the moratorium was used by 78 percent, that is, slightly more than three quarters of companies that are beneficiaries of loans from Montenegrin banks," said the CBCG.

Out of a total of 4,94 thousand loan beneficiary companies, 3,85 thousand of them submitted requests for a moratorium.

"Loans for which moratorium requests have been submitted for companies amount to EUR 579,8 million, or 39,62 percent of total company loans, according to data from the end of March," said the CBCG.

With the latest decision of the CBCG, the ban on dividend payments to bank shareholders, as well as the reduction of compensation to banks for the use of mandatory reserves, still remain in force.

The CBCG believes that banks, in accordance with the recommendations of the Government and the Institute of Public Health, have taken all preventive measures aimed at protecting the health of employees and all citizens, as well as ensuring regular and uninterrupted operations.

"Banks have provided unhindered provision of any service to citizens and the economy, as well as mechanisms for regular supply of ATMs with cash. "Also, most banks have abolished fees for withdrawing money at ATMs, as well as fees for using electronic payments," said the CBCG.

All banks, as they said, are operating smoothly and the new circumstances do not threaten the operations of any bank.

"The ban on the payment of dividends based on the realized profit for the last year, in the total amount of 51 million euros, will have a positive effect on the increase of the banks' own funds and the solvency ratio," the CBCG concluded.