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Radoslav Jelasic,
National Bank of Serbia |
Since you’ve become central bank governor there have been many changes in the banking industry especially in the past 12 months with the influx of many more foreign banks than before. How do you see the state of the banking industry in Serbia?
Well the processes that were initiated in 2002, the debt for equity swaps with the Paris and London Clubs and the decision that the banks would be sold later, are materializing now in 2005 and 2006.
The state has already sold Novosadska Banka, Jubanka, Kontinental Banka and right now we are entering the final stage of selling Vojvodjanska Banka. As of today, already two-thirds of the banks are majority foreign owned and we are very proud of the fact that all of these foreign banks are well known. Also a lot of private owners have seen the possibility of cashing in a large amount of money from their ownership in private banks and also a way out from being scrutinized by the central bank because a lot of them have banks not as a main function but as a supporting function that they needed in the 1990s.
I’m sure that this process will continue and I would not be surprised if at the end of this year ownership by majority foreign-owned banks will be up to 80%.
What’s driving the banking system forward?
It is important to mention that in the past two years the balance sheets of the banking sector have doubled and private individual savings went up by more than 40% in just the last year, meaning that the banking sector is mainly fuelled today by local savings and not by foreign borrowings. And we have the problem of too high a loan portfolio against which we are fighting with both monetary and supervisory measures.
Last year we had $1.5 billion of foreign direct investment and about $2.5 billion direct borrowing both by banks and legal entities abroad.
It seems that confidence has returned then.
Let me give you an example. Four years ago if you went to a bank and asked for your money, for your own money, it was a perfectly acceptable answer for the bank to say: “We don’t have the cash, come back tomorrow.” And if you got such an answer you would ask: “At what time should I come, should I come in the morning or the afternoon?” Now we have ATMs, there are more than 2.5 million credit and debit cards in Serbia already, banking through mobile telephones is also part of day-to-day practice and I’m sure that you’ve never seen a country that has such an open invitation to get into debt as in Serbia.
What is the central bank’s strategy?
The central bank also has responsibilities for supervising insurance companies, leasing companies and at the end of 2005 we also got the supervision of voluntary pension funds. So the central bank is already in charge of the entire financial system, except the securities and exchange commission, which is separate.
So one thing is going to be to consolidate all these activities, to look at these financial institutions not only as banks but to treat them on a consolidated basis, meaning to look at their insurance and leasing activities as well.
How is this changing the bank’s focus?
In 2001, 2002 and 2003 the key challenge was solvency and liquidity; right now we are putting much more emphasis on this consolidated kind of supervision, and much more emphasis on pushing banks into more transparency regarding the services that they are offering, and in order to bring in more and more competition in the banking industry.
We are definitely going to focus a lot on the currency mismatches in the balance sheets of the banks: if you look at the liabilities they are in foreign currencies and if you look at the assets they are in dinars. Last but not least is cooperation with the home supervisors, for example the supervisor of Raiffeisen in Vienna.