Non-performing loans in Serbia: new legal framework and old — practical issues - .PDF file.
Non-performing loans (NPLs) have steadily risen in Serbia over the last several years. According to the latest report on the banking sector from the National Bank of Serbia (NBS), NPLs to total gross loans have risen between the second and third quarters of 2012 from 19.5% to 19.9%, and the total volume of NPLs in the third quarter of 2012 was RSD 399.5 billion (approximately EUR 3.56 billion). 59% of the NPLs were granted to companies both in the private and public sector, and more than 80% of the corporate NPLs in the private sector were related to the construction and real estate industries, again rising by 6% over the second quarter of 2012. The rising level of NPLs adversely affects the financial results and capital of banks, thus leading to increased credit risk.
Faced with this problem, the NBS amended the Decision on Risk Management of Banks (“Official Gazette of the Republic of Serbia”, nos. 45/2011, 94/2011, 119/2012 and 123/2012) in December 2012, effective as of 31 December 2012. Amendments to the Risk Management Decision allowed for the possibility of assignment of receivables from NPLs granted to legal entities by the bank to any legal entity, provided that these receivables are due for payment…
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