In September, AQR will show whether there are any bad banks

Yesterday, as they stated, due to the "increasingly frequent presentation of flat-rate assessments on the stability and adequate capitalization of the banking system in Montenegro", the Central Bank announced that the independent asset quality assessment (AQR) of the banking sector is coming to an end and that the results will be publicly presented during the first week of September.

The only assessment of the stability of banks recently was the report of the external auditor of Prva banka, which pointed to the rapid reduction of multimillion-dollar time deposits of state-owned companies since the beginning of this year, as well as after the chairman of the Board of Directors of Elektroprivreda (EPCG) Milutin Djukanovic, asked the executive director of Prva Banka to provide them with a report on the external supervision of asset quality.

EPCG explained this request by saying that the company owns 19,75 percent of Prva banka's shares and that they have significant funds deposited in the bank, as well as that they are interested in the bank's operations and balance sheets, especially the capital balance.

"We are aware that the IMF insisted that an extraordinary supervision of the quality of the bank's assets be carried out and that the German company PWC be engaged. As EPCG, as the second largest shareholder of the bank, was not informed about this, and our business decisions will depend on the results of that supervision, we ask that you immediately deliver the final report of PWC from Germany", said Đukanović in a letter to the director of Prva banka last week.

From the Central Bank, headed by the Governor Radoje Žugić, the former Minister of Finance and formerly the director of Prva banka, announced yesterday that AQR will identify any problems and needs for recapitalization of individual banks.

"The results of AQR, which is 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 eventual need for recapitalization of individual banks. The asset quality assessment was carried out in accordance with the methodology of the European Central Bank, and the process itself was carried out with the support of renowned international audit firms with significant experience in these matters. The CBCG consultant, in charge of managing the AQR project in Montenegro, was Ernst&Young doo Belgrade, with the involvement of their experts from Germany and the Czech Republic, while individual banks, with the prior approval of the CBCG, hired reputable audit and consulting companies to carry out these tasks. , stated in a statement from the Central Bank.

They remind that the CBCG started activities on this project based on the recommendations of the FSAP mission of the International Monetary Fund (IMF) and the European Commission, which, as they state, suggested conducting an independent analysis of the quality of the banking system's assets, in accordance with the best international practice.

"Unlike Bosnia and Herzegovina and Serbia, where the AQR was part of the program with the IMF, in our case it is an initiative of the CBCG, which is compatible with the recommendations of the FSAP mission. The CBCG decided that AQR should be carried out in all 13 banks present on the Montenegrin market, while the practice in most EU countries is that only systemically important or sensitive banks are subject to assessment. This approach was chosen in order to act preventively, while minimizing the possible residual risk that could be hidden in the balance sheets of the banks", stated the Central Bank.

The largest single shareholder of Prva banka is Aco Djukanovic, brother of the president of the state and until recently the ruling party DPS.