Serbia to get Bank Restructuring Fund

Serbia is getting a Bank Restructuring Fund, and the decision on the establishment of this fund, as well as on the rules for investing the fund’s assets and managing these assets was made by the Executive Board of the National Bank of Serbia, as published in the Official Gazette.

– The National Bank of Serbia is establishing the Bank Restructuring Fund in order to provide funds for financing bank restructuring in accordance with the law governing banks – the decision states, adding that this fund does not have the status of a legal entity.

The National Bank of Serbia will manage the fund and conclude legal transactions in its own name, and on behalf of the Fund. On the other hand, the assets and liabilities of the fund will be kept separate from the assets and liabilities of the National Bank of Serbia.

– The NBS is not liable for the fund’s liabilities, nor does it participate in any way in financing the fund. The NBS is entitled to reimbursement of expenses it incurs in connection with managing the fund, and from the fund’s assets, the decision specifies.

An internal act of the National Bank of Serbia will regulate in more detail the organization of the fund, the management of the fund and other issues significant for its position.

When it comes to the fund’s assets, as specified, the fund consists of funds paid by banks based on regular contributions. In addition to these, the fund’s assets also consist of funds paid by banks into the fund based on extraordinary contributions in accordance with the NBS regulation, funds obtained from loans and other forms of financing, funds paid into the fund based on loan repayments, activated guarantees and other contributions given in the bank restructuring process, as well as income from these funds, assets acquired in the restructuring process, as well as income from investing the fund’s assets.

– The fund’s assets are kept in special dinar and foreign currency accounts with the NBS and are used for purposes in accordance with the law governing banks – the decision noted.

Rules for investing the fund’s assets

When determining the amount of the fund’s assets available for investment (free fund assets), the starting point is the amount of assets, taking into account the possibility of initiating the restructuring procedure of the bank or banking group and the potential assets required to finance that procedure, liabilities arising from loans taken or other forms of financing, fund costs, ensuring the minimum amount of liquid reserves of the fund, as well as achieving the objectives of investing the fund’s assets, in accordance with this decision.

The National Bank of Serbia will manage the fund’s free assets in order to ensure liquidity sufficient to finance the restructuring of banks, preserve the value of the fund’s assets and generate appropriate income.

– The NBS manages the fund’s free assets in accordance with the liquidity principle, which implies that the fund’s free assets are invested in highly liquid and easily marketable financial instruments (bonds and money market instruments), which can be cashed out in the short term in the event of a need to finance the restructuring of banks and meet the Fund’s obligations. The funds are also managed in accordance with the principle of security, which implies that the fund’s free assets are invested in a manner that ensures the protection and preservation of their value, i.e. that they are invested in high-quality, low-risk financial instruments, as well as in accordance with the principle of profitability, which implies that the NBS strives to achieve the highest possible return on the investment of the fund’s free assets – this is specified in the decision, which emphasizes that the fund’s free assets are invested in accordance with the guidelines for investing dinar and foreign currency funds of the fund, adopted by the Executive Board of the National Bank of Serbia, and based on their availability and the dynamics of the inflow and outflow of fund funds.

The fund’s dinar assets, as indicated, can be invested in deposit placements with banks in the Republic of Serbia; debt securities issued by Serbia and traded on the secondary market; as well as in dinar securities issued by international financial organizations, development banks or financial institutions founded by a foreign state, whose credit rating has been determined by the rating agency Standard & Poor’s or Fitch-IBCA as AAA, or Moody’s as Aaa.

Narodna banka Srbije Beograd

National Bank of Serbia

Bank Restructuring Fund