IMF Publishes Report on the 2017 Article IV Consultation with Serbia

The National Bank of Serbia (NBS) is making good progress in harmonizing the regulatory framework with EU standards. Basel III capital and liquidity coverage regulations became effective starting at the end of June 2017, establishing countercyclical capital buffers (currently set at 0%) and systemic risk capital buffers (of 3%) on banks with significant foreign currency credit portfolios. Minimum capital requirements have been reduced from 12% to 8%, while additional capital buffers have been introduced—in line with the EU’s Capital Requirement Directive. In addition, the NBS has adopted a framework for domestic systemically important banks (D-SIBs), identifying seven banks as D-SIBs and subjecting them to additional capital buffers (of 1 or 2%).

The authorities and staff agreed that the effective enforcement of these regulations will strengthen the resilience of the banking sector and further align the prudential framework with international standards. The authorities expect no significant issues related to banks’ compliance with the new minimum capital requirements, but some technical challenges remain in relation to reporting and capacity. Staff underlined the importance of continuing NBS engagement with banks to ensure a smooth implementation process. 

Related Link: Staff Report (PDF)

Keywords: Europe, Serbia, Banking, Article IV, Basel III, CRD, IMF