Regulatory Update — Serbia: the key risks and mitigating measures in the banking sector, the Vienna Initiative and more

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By Darko Jovanovic

There are 30 banks in Serbia, of which six are state owned (wholly or partially) and 21 are foreign owned. Banking assets in Serbia are 75 per cent owned by ultimately foreign banks, of which 71 per cent are owned by EU-based banking groups. The top 10 banks hold 73.2 per cent of assets while seven are foreign owned (one Russian, the rest EU/eurozone). In the past two years, three banks that were under ultimate state control lost their licences.

The Serbian banking sector is exposed to a number of risks that can be categorised into those of a foreign nature and those that are domestic. The main foreign risks are that EU-based banks have been reducing their cross-border exposure and that the prolonged negative effect of the economic crisis in the EU has reduced foreign direct investment. Another factor that must be reviewed, as it remains unclear, is whether the establishment of the European banking union pre-supposes a single regulatory mechanism or supervision…

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