Governor of the Central Bank (CBCG) Radoje Žugić said that the supreme monetary institution is still considering whether to allow the merger of Crnogorska kommercielja banka (CKB) and Societe Generale Montenegro banka, which is certain to leave the Montenegrin market.
Žugić said that the question of merging two banks is a business that the CBCG approaches very responsibly and professionally, and that it is a delicate decision.
"Our analyzes should answer the question of whether this is an undesirable or desirable concentration on the market, whether it is a good banking practice or not. What potentially imposed caution is that we have the two largest banks that would merge into one and we have to look at all aspects of the work that has been initiated", Žugić told reporters after the annual awards on the occasion of the April 11 Day of the CBCG.
In the event of a merger of the two banks, the new CKB would acquire a 60 percent share in the total payment transaction, which would be a great dominance compared to other banks.
Žugić said that it is definite that Societe General is leaving the Montenegrin market.
"We would perhaps prefer it to remain a separate legal entity, but if that is not possible, then we will find the aspects that are most sustainable for our jurisdiction regarding the stability of the monetary system," said the governor.
The owner of CKB is the Hungarian-based OTP Group, which is part of the Splitska Bank Group in Croatia. Sources of "Vijesti" previously said that an agreement on the sale of two banks in Croatia and Montenegro can be reached at the group level, but that this does not mean a merger on the Montenegrin market if the CBCG does not give its consent.
In the last few months, Žugić met twice with representatives of Hungarian capital in Montenegro. The first meeting was at the end of January, and the second at the beginning of this week with the new CEO of CKB Bank, Pal Kovač.
The Union of Montenegrin Banks is concerned about the idea of Societe Generale Montenegro banka being sold to the OTP group. The Syndicate expects the Central Bank not to allow the merger.
"That would cause multiple damage to the employees in the banking sector and enable a monopoly position on the small Montenegrin banking market," Lidija Pejović, president of the Union of Banks and the Union of Societe Generale of Montenegro Bank, recently told "Vijesta".
OTP Group is predominantly (63,7 percent) owned by foreigners (EBRD, IBRD, EIB, natural persons), and Hungarian investors still hold 28 percent of the shares.
OTP Group bought 100 percent of CKB shares at the end of 2006 for around 100 million euros. The total assets of CKB at the end of last year were EUR 594,68 million, liabilities EUR 501,45 million, and profit EUR 2,86 million.
At the end of September, Societe Generale had assets of 450,21 million, liabilities of 394,40 million and a profit of 7.79 million euros.
Žugić estimated that the Montenegrin economy will most likely grow by 3,6 percent this year thanks to the construction of the highway and investments in tourism and energy.
The Governor supports the Government's decision to collect the tax debt through the law on reprogramming and believes that it will predominantly be collected.
"There are elements of unfairness, but it is much better to preserve a broad tax base, due to the sustainability of the fiscal economy," said Žugić.
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