English

Montenegro can become regional financial center

Halil Kalač

Merging Montenegrin Commercial Bank and SGM represents the beginning of the activities aimed at turning Montenegro into a financial center in the region. Besides, advantages of a euro will be used more efficiently, says the banking ombudsman, Professor Halil Kalač.

Merging of the two banks was officially approved by the Central Bank of Montenegro on 16 May.

Previously, OTP bank said that its Montenegrin branch had signed the contract for purchasing 90,56% of SGM shares for €40,5 million. However, the law stipulates that merging isn’t possible without the approval of the CB.

Regardless of the risks that might incur, Mr Kalač said that Montenegrin Commercial Bank is inevitably getting stronger through merging.

“The merger is supposed to result in greater business activity volume and that entails greater number of employees, higher tax and greater number of financed projects. These are the benefits for the state economy. Of course, processes like these lead to the reinforcement of banking system and protect it from the monopoly”, says Mr Kalač.

Mr Kalač reminds of the risk protection.

“Mechanisms of risk protection serve to protect from the undesirable effects of bankruptcy”, says Mr Kalač.

That’s exactly the reason why the number of applications submitted to the office of banking ombudsman has increased in the first quarter of this year.

“Introducing measures in Atlas and IBM bank is the main reason. Clients and guarantors of IBM and Atlas bank have appealed against the deposit blockage and impossibility to use their money”, explains Mr Kalač.

The fact that IBM and Atlas banks have went bankrupt has definitely had a negative impact on clients’ trust.

“However, clients have put trust in other banks, and that’s encouraging”, says Mr Kalač.

IBM and Atlas bank take part in the banking system with less than 10%. That’s how much they can affect the entire banking system.

“In the first three months of this year, banking ombudsman has processed seven complaints. Complaints were lodged by clients and they all related to banks”, points out ombudsman.

He emphasizes successful operation of 13 banks on our market.

“That indicates that systemic conditions enable successful bank activities. Investors are very interested in our banking system”, says Mr Kalač.

He points out two simultaneous processes on the market.

“There are two different phenomena occurring in our banking system: two bankrupt banks and a merger between two banks that are among the most important subjects on the market. This merger is a proof that banks can operate successfully. Therefore, the success of banks depends primarily on the quality of corporate management in the banks”, says Professor Kalač.

These two phenomena indicate that corporate management quality is different.

 

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