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Privatizationand Investments

BANKING SECTORPrivatization and InvestmentsBanking Sector

Total Bank Assets and Liabilities From the end of September to the end of November 2012, total assets and liabilities of banks amounted to € 8,551.20 million, while the average monthly level amounted to € 2,850.4 million. Total assets and liabilities of banks amounted to € 2,822.10 million at the end of November 2012, record-ing a decline at the annual level (1.2%). At the end of September, the end of October and the end of November 2012, in the structure of banks’ as-sets, net loans accounted for the main share (61.0%), followed by cash and deposits with depository institutions (about 27,0%) (Graphic 1).

Graphic 1: The structure of total banks’ assetsand banks’ liabilities, in %

0,02 0,04 0,06 0,08 0,0

Loans

Monetary assetsand deposits

Other asset items

Deposits

Borrowings

Total banks’ c apital

Other

Bank

s’ as

sets

SeptemberO ctober November

Source: Bulletin of Central Bank of Montenegro October, November, December 2012.

From the end of September to the end of November, within the banks’ liabilities, deposits accounted for the main share (about 69.6%) and re-corded an increase of share in total banks’ liabilities. In addition, bor-rowings (average around 15.01%) recorded a fall of share, while total banks’ capital (average around 10.5%) recorded an increase of share in total banks’ liabilities (Graphic 1).

The total capital of banks amounted to € 833.4 million from September to November 2012, while at the average monthly level amounted to € 277.8 million. At the end of November, the

total capital of banks amounted to € 277.9 million, recording a decline at the annual level (3.1%).

DepositsTotal deposits amounted to € 5,949.50 million from the end of September to the end of November 2012 and at the monthly level amounted to € 1,983.17 million. At the end of November 2012, the total deposits amounted to € 1.982,90 million. Observing data from November 2012 and comparing to November 2011, total deposits increased by 8.3%.

From the end of September to the end of November 2012, within the deposit maturity structure, share of time depos-its recorded a decrease (amounting to around 60.5% of total deposits), while share of demand deposits recorded an increase (amounting to around 39.5% of total deposits).

In the structure of time deposits, the largest share recorded deposits with maturity from 3 months to 1 year (av-erage about 54.9%) and they recorded an increase of their share. Deposits with maturity up to 3 months recorded a fall of their share (19.4%). Observed by sectors, in the deposit structure, deposits of natural persons were still dominant with a share of about 56.5%.

Household DepositsTotal household deposits amounted to € 3,363.10 million from the end of Sep-tember to the end of November 2012, and at the monthly level amounted to € 1,121.03 million. At the end of Novem-ber, total household deposits amounted to 1,134.70 million and recorded an increased of 1.8% at monthly level and 10.6% at the annual level. From the end of September to the end of November 2012, in the maturity structure of household deposits, time

deposits were dominant with 69.5%. In addition, time deposits recorded an increase of their share.

LoansFrom the end of September to the end of November 2012, total loans granted by banks amounted to € 5.617,30 million, which was at the monthly level € 1.872,43 million. At the end of November, total loans amounted to € 1.866,10 million, thus 3.7% less than in the previous year.

The loan-to-deposit ratio1 amounted to 0,95 at the end of June 2012, 0,95 at the end-October and 0,94 at the end of November 2012.

In the structure of total loans dis-bursed, corporate and household loans were dominant by 92.0% in the period from September to November 2012, whereas the remaining referred to banks, other financial institutions, public owned organizations, non-profitable organizations and others.

Interest rates

From September to November 2012, the weighted average lending effec-tive interest rate (lending interest rates) amounted to around 9.50%. The weighted average deposit effective interest rate (deposit interest rates) amounted to around 3.21% in the same period. ■

Graphic 2: Interest rates, period-end, in %

Source: Bulletin of Central Bank of Montenegro July, August, September 2012.

1 This ratio represents the relationship between the amount of loans and deposits. In this case loans were below deposits by 5% at the end of September, 5% at the end of October and by 6% at the end of November 2012.

InvestmentsCable Car Kotor – Lovcen – Cetinje

An approximately 15 km long ca-ble car with four stations is to be constructed from Cetinje through Lovćen to Kotor. The cable car, whose gondolas can accommodate 8 persons, will be the longest cable car on the Adriatic coast and is the requirement for the planned tourist development along the route. The European Bank for Reconstruction and Development (EBRD) called the tender for seeking a consultant

for the construction of the cable car. Italy’s DBA Group won the tender among nine reputable bidders. The advisory assignment is expected to start in the first quarter of 2013 and has an estimated overall duration of six months. The consultant should prepare a technical review and pub-lic-private partnership tender for the cable car project. The public-private partnership (PPP) should involve the government of Montenegro with the private concessionaire to be selected through an open international ten-der. The cable car project will help to fulfill one of the main objectives of the government of Montenegro

According to the announcements of the Government of Montenegro, the main projects expected this year will be in the energy sector: the launching of the tender for gas and oil exploration is expected; there are interests in building the Thermo Power Plant Pljevlja’s second block; and it is expected to start with construction of the first small hydro power plants and their commissioning. The Government also prepared a proposal for the Privatization Plan 2013. The privatization process will be orientated towards repeated procedures of failed privatization processes and new projects for which open calls have not been invited yet.

and the municipalities of Kotor and Cetinje, which is to develop high-quality tourism amenities.

The Government Has Set Up a New Body to Support Large Investors The Government has recently set up the Developing Project Secretariat, a special body dealing exclusively with large investment ventures and providing support in solving administrative and other business constraints. The reason for estab-lishing such a body, which will be accountable to the Prime Minister directly, was numerous problems investors were facing both on a local and national level. On several occa-sions, foreign investors complained about slow administration and long procedures for doing business in Montenegro. Therefore, many proj-ects that were started remained only dead letter in planning documents, or were stuck at the beginning. The role of the Secretariat will be to identify problems of investors, whose project could have signifi-cant impact on development of the Montenegrin economy and to help in their elimination. According to analysis so far, the biggest prob-lems were noted at local authority level. The majority of complaints referred to unclear costs of local self-government, long periods for obtaining permits, slow adminis-tration and extensive paperwork. The Secretariat contact is: nebojsa.popovic@srp.gov.me

Ten New HotelsThe head of the newly formed De-veloping Projects Secretariat, Mr. Nebojša Popović has announced an intensive investments cycle. The con-struction of several hotels is expected to start either by the end of the cur-rent or at the beginning of the next year: Jadran and Galeb in Ulcinj, a five-star hotel in Bečići to be built by Capital Estate, Suisse hotel in Budva, a new hotel Queen’s Beach in Miločer, a marina and golf course on Luštica, a new exclusive resort at Plavi horizonti