Stress for banks - simulation of possible critical scenarios

The National Bank of Serbia will be testing strength and endurance of four state-owned and 12 largest business banks until the end of September in case of unexpected impacts on business. After that, all other banks in the country will be analyzed.

This analysis, which is quite usual in the world, is Serbia's obligation from the contract signed with the International Monetary Fund.

People from IMF say that the introduction of "stress tests" in Serbian business banks was the consequence of the need for checking how much money they really have and how their capital would behave in high-risk situations.

- Various scenarios are simulated with the aim of determining their influence on financial strength, condition and endurance of banks - people from the National Bank of Serbia explained.

People in NBS point out that the result of "stress testing" can not be seen as the final response, but it can be a framework for creation of an image of current sensitivity of a bank or the whole sector to possible disturbances.

- We want to draw attention of managers, directors or regulatory bodies to detection of the factors of risks that can affect stability of certain bank, or even its survival - said the people from NBS.

Results to be kept secret

According to the people from the National Bank of Serbia, the results of the tests will not be made public.

- They represent business secret because of the high risk from misinterpretation.

The results of such tests are kept secret everywhere in Europe, while USA put them on public display.

(Note: complete text is taken over from "Novosti" of July 9, 2009)