Udovicki: NBS should have acted sooner regarding Alta Bank, triggering a broader financial crisis would require a deliberate, major effort

Following the parliamentary elections, the National Bank of Serbia (NBS) should have strengthened its oversight due to the potential for capital outflows, says former Governor Kori Udovicki. She highlights that the key questions are how Alta Bank ended up in such a poor operational state and why the authorities did not intervene immediately. She emphasizes that the banking system remains stable. For a broader financial crisis to occur, someone would have to make a serious, deliberate effort to bring it about, Udovicki notes.

Addressing the revocation of Alta Bank's operating license, former National Bank of Serbia Governor Kori Udovicki stated that citizens had no reason to worry regarding the stability of the broader financial system.

She points out that during the period of fiscal consolidation and cooperation with the IMF from 2014 to 2016, mechanisms were established that helped avert a financial crisis. Furthermore, both the National Bank of Serbia and the Ministry of Finance have retained the instruments necessary to maintain stability.

– At this point, someone would have to make a concerted effort to trigger a crisis on a broader scale. Meanwhile, the levers for intervention, both at the National Bank and the Ministry of Finance, remain in the hands of those who have managed these areas for over a decade – Udovicki said during an appearance on the RTS news program Dnevnik.

"Every sector of the NBS monitors bank operations"

Discussing the revocation of Alta Bank's license, Udovicki highlights two key questions - how the bank ended up in such a poor operational state, and why the authorities did not take earlier measures to prevent the outflow of funds.

She believes that, over the past week, an opportunity was missed to halt the transfer of funds to accounts held by related parties or abroad.

– The National Bank is not just a mailbox. It is a massive institution where every sector - specifically three of the four sectors overseen by members of the Executive Board, or Vice-Governors - examines a specific aspect of a bank's operations on a daily basis – Udovicki pointed out.

Could the National Bank have acted sooner?

Udovicki assesses that, while the NBS has generally performed its duties effectively across the broader banking system, the case of Alta Bank reveals serious issues. She specifically points to the transfer of funds from the Ministry of Finance's treasury to a private bank, emphasizing the need to determine who authorized this action.

She notes that the Alta Bank case is an isolated incident, though not the only one, and that the National Bank of Serbia has not handled the entire system in this manner.

– I will reiterate: the system is secure – Udovicki stressed.

Udovicki believes that the NBS, particularly following the parliamentary elections, should have intensified its oversight due to the potential risk of capital outflow.

According to her, if the allegations made public by lawyer Ivan Ninic regarding the transfer of funds to an account in North Macedonia are accurate, the NBS could have restricted the bank's international payment transactions without halting its domestic operations.

– This is a measure available to the National Bank that has existed since 2007. There was no need for anyone to hear about it, there was no need to cause panic. The bank could have continued its operations in the country while being subject to enhanced supervision – explained Udovicki.

Vlada Republike Srbije

Ministarstvo finansija Republike Srbije

Narodna banka Srbije Beograd

Alta banka ad Beograd

Međunarodni monetarni fond-MMF Beograd

Elektroprivreda Srbije ad Beograd

Government of Serbia

Ministry of Finance

National Bank of Serbia

NBS

Alta Bank

International Monetary Fund

IMF

EPS

Kori Udovički

Ivan Ninić

revocation of operating license from Alta Bank