1. REPUBLIC OF SERBIA BANKING SYSTEM PRESENTATION Nikola Arandjelovic Executive Director Agrobanka a.d. Belgrade BACEE`s 14 th Conference Budapest, 29 March 2006

2. BACEE Conference Republic of Serbia – Banking System presentation Data and some comments in this presentation were used from the National Bank of Serbia`s (Serbian Central Bank) Third Quarter Report 2005 named ``BANKING SECTOR IN SERBIA`` available at NBS website address: www.nbs.yu as well as banks balance sheets as at 31. Dec. 2005 published at the same address. All sums in the presentation are expressed in Serbian national currency – dinar (CSD) As of December, 31. 2005 1 EUR = 85,50 CSD

3. BACEE Conference Republic of Serbia – Banking System presentation Banking Sector in 2005 1.Structure of the Banking Sector in Serbia * Central Bank ( National Bank of Serbia-NBS); * commercial banks; * other financial organizations (postal savings banks, saving credit organizations and savings-credit cooperatives). Serbian banks are of general & universal type, founded as joint-stock companies

4. As of December 31, 2005, 40 banks with NBS operational licenses were active in Serbia. In the observed period one bank (Depozitno kreditna banka a.d. Beograd) have its operating license revoked. 10 banks has special license given by NBS and SEC for broker-dealer operations at the capital market and 4 banks to operate as custody banks. 1.1. Number of Banks Dec. 31, 2003 Dec. 31, 2004 Dec. 31, 2005 Number of Banks 47 43 40 Number of OFOs 1) 14 8 8 1) Other financial organizations – saving banks, saving-credit organizations and saving- credit cooperatives BACEE Conference Republic of Serbia – Banking System presentation

5. 1.2. Bank`s Organizational Networks DescriptionDec.31, 2003. Dec.31, 2004. Sept. 30, 2005. Number of business units 97 124 111 Number of branches 292 300 319 Number of branch offices 774 1,010 1,067 Number of counters 302 275 291 Total 1,465 1,709 1,788

6. BACEE Conference Republic of Serbia – Banking System presentation During nine months of 2005, the greatest expansion of organizational networks (the opening of new business units, branches, branch offices and counters (total)) was registered with the following banks: Dec. 31 Sept. 30 2004 2005 Panonska banka a.d. N.Sad 48 56 ProCredit banka a.d Beograd 27 31 Metals banka a.d. N.Sad 17 41 EFG Eurobank a.d. Beograd 17 23 Credy banka a.d. Kragujevac 38 46 Société Générale Yu Bank a.d. 25 41

7. BACEE Conference Republic of Serbia – Banking System presentation 1.3. Number of Employees in the Banking Sector During nine months of 2005, the total number of employees in commercial banks rose by 1,457 from 23,463 at end of 2004 to 24,920, the number recorded on September 30,2005. 1.4. Ownership Structure of Banks As of December 31, 2005, the ownership structure of 40 banks was as follows: 19 banks in majority ownership of foreign shareholders 11 banks in majority ownership of domestic physical and legal entities, 10 banks in majority ownership of Repub. of Serbia. 2) 2) The banks whose greatest shareholder is the Republic of Serbia, a major or single shareholder, directly or indirectly.

8. BACEE Conference Republic of Serbia – Banking System presentation 2. Market Share The market share of banks grouped according to balance sum total as of December 31, 2005 was as follows: Balance sum level Number of banks in CSD millionShare (%) Over 45 bn dinars 5 389 802 50,27 20 - 45 bn dinars 5 141 046 18,19 10 - 20 bn dinars 11 140 600 18,13 5 – 10 bn dinars 9 70 383 9,08 below 5 bn dinars 10 33 579 4,33 Total 40 775.413 100,00

9. BACEE Conference Republic of Serbia – Banking System presentation The share of the 5 largest banks in balance sum total equaled 50,2%. The 10 largest banks had a 68,4% share in the total balance sum. As of December 31, 2005, the overall banking sector balance sum reached CSD 775 billion, of which the share of banks in majority ownership of foreign entities was CSD 519 billion or 67,1%. The share of banks in majority ownership of the Republic of Serbia stood at CSD 152 billion or 19,67%, while banks in majority private ownership accounted for CSD 104 billion or 13,2%.

10. BACEE Conference Republic of Serbia – Banking System presentation 2.1.Share of top 10 banks as of December,31. 2005 in CSD million Bank Total balance sum Capital Loans Deposits 1.Raiffeisenbank 119 422 8 813 75 937 100 094 2.Banca Intesa 82 132 10 906 41 642 67 534 3.Komercijalna banka 74 799 8 932 35 512 60 271 4.Hypo Alpe Adria 68 141 5 819 40 239 55 277 5. HVB banka 45 307 4 171 25 308 38 053 6. Vojvodjanska banka 37 924 6 679 17 026 29 659 7.Societe Generale 33 815 2 873 18 797 28 385 8.JU (Alpha) bank 23 614 7 627 10 645 14 670 9. ProCredit banka 23 527 2 363 15 167 18 985 10. AIK banka 22 165 11 887 15 849 7 614 15. Agrobanka TOTAL 12 698 775 413 2 223 118 711 7 745 376 942 6 000 490 890

11. BACEE Conference Republic of Serbia – Banking System presentation 3. Privatization in the Banking Sector during 2005 Name of bankShare capital (in CSD) RS percentage share 3) Note Niska banka a.d. Nis1,012.69099.84At the beginning of November 2005, negotiations with OTP Bank RT, Hungary started Vojvodjanska banka a.d. Novi Sad 12,858.65097.79Potential investors` bids for the tender lauched in early November 2005 are expected to be processed in the first quarter 2006 Panonska banka a.d. Novi Sad 4,257.22487.31 Tender for the nomination of a privatization counselor was called in November 2005. Credy banka a.d. Kragujevac 1,200.54070.00The selection and nomination of a privatization counselor are underway. 3) The Republic of Serbia (RS) is involved either directly or indirectly. Indirect participation implies participation through banks in bankruptcy.

12. BACEE Conference Republic of Serbia – Banking System presentation Risks in the Banking Sector 1. Credit Risk Assets Quality at the level of Serbian Banking Sector in CSD million As of Total balance assets &off- balance sheet items Total classified assets, calculated deductibles Classified assetsShare of bad assets (C<D<E) in total classified assets, calculated deductibles (%) A+BC+D+E Dec.31, 2003 746,151256,280198,65457,62622,49 Dec.31, 2004 1,126.832343,117263,14379,96823,31 Sep.30, 2005 1,301.593421,646325,91995,72622,70

13. BACEE Conference Republic of Serbia – Banking System presentation 2. Liquidity Risk Banks Daily Liquidity Indicators as on Sept 30, 2005 in CSD million BanksGyro- account balance Calculated required reserve Column difference (2-3) Deposited liquid funds surpluses Daily liquidity loans Total in the Republic of Serbia 24,694 24,672 21,757 3,394 0 Out of the total number of banks, 18 of them used required reserves funds in the total amount of CSD 2,931 million or 9.69% of the total calculated required reserves. No bank used daily liquidity loans. During the period under review, banks` liquidity indicator ranged between 1.08 and 10.03.

14. BACEE Conference Republic of Serbia – Banking System presentation Capital Adequacy The table below shows capital adequacy indicators for 41 banks operating in first nine months of 2005 Capital adequacy indicator Number of banksShare in total number of banks Under 10%12.45% From 10 to 20%1024.39% From 20 to 30%819.51% Over 30%2253.65% Total41100%

15. BACEE Conference Republic of Serbia – Banking System presentation Profitability Indicators of Banking Sector operations Banking sector PROFITABILITY INDICATORSFinancial result (in CSD million) Gross revenues/ total assets (%) Net revenues from interest/ total assets (%) Operational expenditu- res/total assets (%) Net extraordina- ry revenues /total assets (%) Operational expenditure/ net revenues from interest and fees (%) Dec. 31, 2003 29.785.067.660.0190.62(1.055) Dec. 31, 2004 37.724.666.270.0284.50(4,989) Sept. 30, 2005 28.183.664.260.0076.086,037

16. BACEE Conference Republic of Serbia – Banking System presentation Main developments in 2005 During the third quarter of 2005, negotiations on the sale of Continental banka a.d.Novi Sad (Nova Ljubljanska banka d.d. Ljubljana, Slovenia) and Novosadska banka a.d. Novi Sad (Erste Bank AG Wien, Austria) were brought to a successful end and the sale was completed in the second half of July 2005. In the course of the second quarter of 2005, Atlas banka a.d. Beograd and Meridian banka a.d.Novi Sad were bought by Pireus Bank from Greece and Credit Agricole from France. Banca Intesa embarked on the purchase of shares of Delta banka a.d. Beograd in the capital market. As of October 1, 2005 owing to the merging of Eksim banka a.d. Beograd with HVB banka a.d. Beograd

17. BACEE Conference Republic of Serbia – Banking System presentation THANK YOU FOR YOUR ATTENTION ! AGROBANKA a.d. BELGRADE Nikola Arandjelovic Executive Director E-mail:nikola.arandjelovic@agrobanka.co.yu www.agrobanka.co.yu