Banking sector would handle crisis well - result of stress test on 16 banks in Serbia

- Business banks in Serbia are able to cover the losses in case of crisis from their existing capital and reserves and to stay above the legal minimum of 12% - the National Bank of Serbia announced yesterday (October 8, 2009).

According to the results of the stress test that was performed today by NBS on 16 out of total of 35 banks in Serbia, none of them has the need for prophylactic or emergency additional capitalization.

The assumptions of the test were that the drop in GNP would amount to 6% at the end of year 2009, and 3.5% in 2010.

The Governor of NBS, Radovan Jelašić, said that the stress test showed what would happen to the banking sector in Serbia in case of the worst possible scenario.

As he explained, the test shows that the share of late loans in overall loans would be increased from 8.1% to 24%.

- The adequacy of the capital would be reduced from 19 to 18% at the end of 2009, and it would amount to 16.42% at the end of 2010, which is above the legal minimum of 12% - said Jelašić.

According to Jelašić, the chances for such scenario to come true are minimal because the macroeconomic conditions in Serbia have been improved lately.