Transcript Document

Banking Risk Assessment:
Macedonia
Tony O'Rourke
University of Stirling
Scotland
21/07/2015
BACEE Seminar, 16 November
2006
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OVERVIEW
Banking sector in risk in Macedonia has
diminished significantly over the past 3
years. EBRD has now rated
Macedonia’s banking sector at 3- in
terms of reform progress
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Background 1
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The banking sector, inherited from the former
Yugoslav system in 1992, was badly dislocated
by the sanctions on FR Yugoslavia and the Greek
trade blockade
The capacity to commence reform was then
slowed by the civil unrest that erupted in 20002001
It was not until 2002-2003 that significant
measures were taken to reform and restructure
the banking system
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2006
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Background 2
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In 1999 there were 23 banks;
there are now 19
The level of non-performing loans
was very high at 62.6%
Between February 2002 and
August 2005, the Deposit
Insurance Fund indemnified
depositors to the sum of EUR 2.8
million
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2006
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Macedonia’s banks
today 1
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As at end-June 2006, there are 19 banks – 16
with a full licence and 3 with a partial licence
The banking system is dominated by the big 3 –
Stopanska, Komercijalna and NLB Tutanska
each with more than EUR 245 million in assets
– which account for 66% of total bank assets
There are 3 medium sized banks – each in the
EUR 74-245 million assets band – which
account for 12% of total bank assets
There are 13 small banks – each with less than
EUR 74 million in assets – which account for
22% of total bank assets
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Macedonia’s banks
today 2
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During 2005 total banking sector deposits
increased by 18.3% y/y
The supply of bank credits to the private sector
in 2005 grew by 20.5% y/y
Only one bank remains in state control, MBPR,
which is in effect a state credit & guarantee
institution
There has been a strong expansion of lending
to households – this rose from 1.2% of GDP at
end 1999 to an estimated 6.0% of GDP at end
2005
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Foreign Investment
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At the present time foreign capital has a 53.6%
share of Macedonian bank equity
Stopanska banka is 73% owned by National
Bank of Greece
Tutunska banka is 77% owned by Nova
Ljubljanska Banka
ProCredit banka, Alpha banka and 3 other
banks have significant foreign investment
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2006
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The Macedonian Banking System
Assets
EUR 2449 million
Capital
EUR 320 million
Deposits
EUR 1741 million
Loans
EUR 1124 million
Net profit
EUR 17 million
ROAA
1.42%
ROAE
9.26%
Provisions for NPL
8.17%
Capital adequacy ratio
19.61%
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The Big 3
Assets
EUR 1603 million
Capital
EUR 155 million
Deposits
EUR 1252 million
Loans
EUR 948 million
Net profit
EUR 16 million
ROAA
2.01%
ROAE
19.93%
Provisions for NPL
9.14%
Capital adequacy ratio
13.00%
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The Medium 3
Assets
EUR 302 million
Capital
EUR 45 million
Deposits
EUR 197million
Loans
EUR 140 million
Net profit
EUR 4 million
ROAA
2.48%
ROAE
15.91%
Provisions for NPL
4.02%
Capital adequacy ratio
25.73%
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The Small 13
Assets
EUR 544 million
Capital
EUR 153 million
Deposits
EUR 293 million
Loans
EUR 236 million
Net profit
(EUR 2 million)
ROAA
-0.94%
ROAE
-3.02%
Provisions for NPL
7.19%
Capital adequacy ratio
37.06%
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The Future?
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The outlook is favourable given the
strong integration of the country into the
regional trading structures and the
significant impetus of EU membership
Further rationalisation will see
Macedonia's banks occupying an
important position on the trans-Balkan
trade and transport routes
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Strengths
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There will be a growing opportunity for
banks to expand their personal customer
base – especially in the home loans
market
The level of supervision and regulatory
oversight provided by the National Bank
appears to meet normal prudential
standards
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Weaknesses
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The political environment has the
potential to dampen the fuller
development of the banking system in
the short-term
The savings institution sector and the
smaller banks provide a challenge for the
regulatory system in forcing
consolidation
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Opportunities
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Macedonia is at the crossing point of two
vital trans-European transport networks
– this provides a key opportunity for the
banking system
Tourism has immense potential and
could be more opportunistically exploited
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Threats
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The level of corruption in Macedonian
society remains a major challenge to the
banking system
Foreign influence in banking is split
between Slovenian interests and Greek
interests. Unless a third force enters the
market, there will be a degree of
polarisation between these two interest
groups
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