Preserving Financial Stability Requires Everyone to Act Responsibly
Given immoderate views expressed in public unjustly threatening popular confidence in the financial system of the Republic of Serbia, and bearing in mind the responsibility of the NBS in maintaining financial stability, as well as the results achieved from 2012 onwards, it is our duty to underline that the NBS has always acted within its remit and provided all necessary assistance and information to the competent state bodies in the field of supervision of anti-money laundering/combating the financing of terrorism (AML/CFT) activities.
To prevent the inflow of “dirty money” to legal financial channels as well as to prevent the concealment of links between proceeds and criminal activity, the regulatory framework has been improved and a number of regulations adopted, including the Law on the Prevention of Money Laundering and Financing of Terrorism.
When weaknesses are identified regarding implementation of AML/CFT measures, the NBS – acting as a supervisor of the banking system – imposes corrective measures on banks and introduces sanctions in line with regulations. Where suspicion exists of money laundering and/or financing of terrorism, the NBS reports to the relevant bodies.
The public is invited to report all suspicious cases to competent state bodies if they have not already been processed.
In the prior period, the NBS has adequately monitored and restricted transactions between banks and their parent banking groups in order to prevent the occurrence of risks and their spill-over into the domestic banking market, while at the same time protecting all depositors and financial services consumers. Please note that the activities of commercial banks in Serbia are strictly regulated, most often more stringently than in the markets of parent banks. The NBS monitors relations between banks and their parents on a daily basis and responsibly asserts that no capital outflow from Serbia is taking place on any grounds. Over the past years, since Governor Jorgovanka Tabaković assumed office, the NBS has restored confidence in the domestic currency by maintaining a stable exchange rate, preserving low and stable inflation, while household savings rose nearly threefold relative to 2012, which attests to the confidence of citizens in the domestic banking system, and so in the measures and decisions the NBS takes to that end.
To promote transparent communication with the public, the NBS underlines the following facts:
- The annual profits of the banking sector, more precisely of the foreign-owned part of the banking sector, were never as high as around EUR 400 mln. As a result of the macroeconomic stability and economic recovery, the profits of the banking sector were around EUR 170 mln at end-2016, while being significantly lower in prior years.
- Thanks to the reduced reliance of banks on funding from parent banks, and further reduction in the costs of financing – the latest data indicate that interest rates at which predominantly foreign banks borrow from related entities have ranged between 1.62% and 1.8% in the recent period. Total loan costs of the banking sector and other costs of funding from parent banks are measured in dozens rather that in hundreds of millions of euros, so the alleged “hidden profits” of banks of around EUR 800 mln which they transfer to their parents cannot be true under any hypothetical scenario.
Preserving financial stability requires everyone to act responsibly. False and in particular malevolent information harms everyone, and it is the citizens who suffer the consequences. The NBS intends to continue to exercise its supervisory role, and shall apply adequate measures in line with law and other regulations in the event of the disclosure of any irregularities.