2010年-世界发展银行全球_Serbia___Financial_Sector_Assessment_17页_3mb

Summary of the Financial Sector Assessment for Serbia (2010)

I. Overall Assessment

The Financial Sector Assessment Program (FSAP) update team noted that Serbia has made progress in implementing recommendations from the 2005 FSAP. Key issues identified included:

• High credit growth driven by foreign banks, resulting in rising non-performing loans (NPLs).
• Poor management and low capital in state-controlled banks.
• Deficiencies in banking supervision under the Basel Core Principles (BCP).

Despite these challenges, Serbia managed to weather the global financial crisis, although at a cost. The economy experienced a 4% real GDP contraction in 2009, with 18% of household deposits withdrawn. The banking sector remains highly capitalized and liquid, with a capital adequacy ratio (CAR) of 21% for the entire system, well above the 12% minimum. However, increasing NPLs and declining profitability, especially for smaller banks, are concerns.

The insurance sector is underdeveloped, despite adequate capital relative to risk exposure. It remains one of the least developed in the region.

II. Key Recommendations

A. Banking Sector

• Reassess high reserve requirements in the context of weak asset growth and rising NPLs.
• Streamline prudential rules, formalize cooperation agreements with significant home supervisors, and continue capacity building for the Banking Supervision Department (BSD).
• Implement a corporate workout framework with incentives for stakeholders.
• Establish a centralized registry for bills of exchange and amend pledge laws to protect prior interests in cash collateral.
• Strengthen enforcement procedures and create a regulated profession of enforcement officers.
• Form a task force to address corporate fraud impacting the banking sector.
• Promote the liberalization of the local reinsurance market and encourage the separation of life and non-life insurance.

B. Regulatory and Supervisory Framework

• The 2005 Law on Banks (LOB) was updated to align with international standards, EU Directives, and BCP.
• A two-step licensing procedure, consolidated supervision, and lowered thresholds for ownership approval were introduced.
• The NBS has enhanced risk management standards, with conservative risk weights for certain loan types (e.g., foreign currency lending, housing loans).
• However, loan classification and provisioning remain complex and open to interpretation, requiring more precise criteria.

C. International Cooperation

• The NBS has signed bilateral MOUs with most regional and some EU home supervisors.
• Formal MOUs with France, Austria, and Germany remain pending due to information sharing constraints with the Serbian tax authority.
• A reconsideration of these obligations is recommended to enable proper cooperation.

III. Stability Policies

• The Banking Stability Law (BSL) is proposed to replace crisis-specific measures with a systemic crisis management framework.
• The NBS and MOF will have the authority to implement enhanced deposit or liability coverage and government financial assistance.
• The GoS is expected to divest its equity in troubled banks within a year.
• Lender-of-last-resort mechanisms could be supported by government guarantees for solvent banks with insufficient collateral or undercapitalized systemic banks.
• The BSL will enable the exit from emergency measures once stability is restored.

IV. Developmental Issues

A. Bank Regulation and Supervision

• The BSD has adequate staffing and budgeting, but lacks specialized competences, especially in information technology audit.
• Capacity building for the BSD is recommended to handle the increasing complexity of the financial sector and international regulations.

B. Corporate Debt Restructuring

• A corporate debt restructuring framework is needed to address NPLs and corporate distress.
• Debt rescheduling is a partial solution, but deeper restructuring is required for over-leveraged or distressed firms.
• Amendments to the Law on Payment Transactions should be made to support a corporate workout framework, allow cash collateral usage, and improve creditor rights in blocked account scenarios.
• Enforcement procedures need to be streamlined, with clearer rules, faster court proceedings, and closure of loopholes to prevent delays.
• A regulated enforcement profession is recommended to improve efficiency and reduce delays.

C. Insurance Sector

• The insurance sector is small and underdeveloped, with low insurance consumption per capita compared to regional peers.
• Reinsurance restrictions have led to high net risk retention (over 92% of GPW in 2008).
• The industry's balance sheet has improved, with a higher share of liquid assets and lower receivables.
• Solvency ratios are healthy, with a surplus capital adequacy of over 200%.
• The market is largely private, with only one government-owned insurer holding less than 28% of the market share.

V. Conclusion

The FSAP update team concludes that while Serbia's financial sector has improved in terms of capitalization, regulatory alignment, and crisis response, several developmental and stability challenges remain. These include persistent NPLs, low profitability, complex regulatory frameworks, and underdeveloped insurance and reinsurance markets. The BSL and corporate restructuring framework are seen as critical tools for long-term financial stability. Continued capacity building, legal reforms, and enhanced international cooperation are essential for the sector's future resilience.