1. overview of the market, opportunities and impediments
NPL MARKET IN SERBIA
Turnaround Management Association’s Annual Conference
overview of the market, opportunities and impediments
Rome, 9th – 10th June 2016
Ministry of Finance

2. NPL market in Serbia - snapshot
Serbia has one of the most “attractive” NPL markets in Europe, with the gross NPLs in the banking sector amounting to EUR 3.49 billion at the end of 2015 and a NPL ratio of 21.6%
Together with the NPLs pertaining to the Development Fund, the Export Credit and Insurance Agency and the bankrupt banks, the level of total NPLs in Serbia surpasses the EUR 4 billion mark
The majority of NPLs relate to the corporate sector, with almost EUR 1.65 billion stemming from non-performing corporate loans:
Source: National Bank of Serbia, Banking sector report for Q4 2015
Ministry of Finance

3. NPL Strategy Ministry of Finance
In order to address the issue of growing NPLs in Serbia, the Government of the Republic of Serbia formed in May of 2015 a Working Group consisting of key government bodies (+ significant participation of major IFIs) with the task to conceive and implement a comprehensive Strategy for combating and reducing the level of NPLs in Serbia, with the aim of reigniting economic and credit activity in Serbia
The Government adopted the NPL Resolution Strategy in August of 2015; the Strategy, as envisioned by the Working Group, encompasses four major areas: Enhancing banks’ capacity for dealing with NPLs, Enabling conditions for NPL market development, Improving and promoting out-of- court debt restructuring and Improving in-court debt resolution and mortgage framework
A number of activities have been undertaken so far under the 4 areas by all WG members – amendments to relevant laws and bylaws prepared and adopted, trainings held for relevant persons on how to take appropriate steps in subject areas, detailed analyses performed etc.
The effect of these activities can already be felt – in the period from the adoption of the Strategy to March 15th, 2016, total claims assigned by banks amount to RSD 33 billion (58% assigned to other legal entities, 36% to entities associated with the bank and 6% to other banks)
In comparison, total claims that the banks have assigned in the period from 2013 to March 15th, 2016 amount to RSD 111 billion (26% assigned to other legal entities, 44% to entities associated with the bank and 30% to other banks):
Other banks 6%
Associated entities
36%
Other legal entities
58%
BREAKDOWN OF ASSIGNED CLAIMS FROM 2013 TO MARCH 2016
Ministry of Finance

4. NPL Market Study
Under the area Enabling conditions for NPL market development of the NPL Resolution Strategy, a team of consultants engaged by EBRD prepared an analysis of the most significant existing impediments to the sale of NPLs and the development of a more active NPL market, together with their recommendations for overcoming those impediments
The analysis and its contents have been presented to the Working Group and the public, which both had the opportunity to comment on the analysis and suggest additional issues to be considered or solutions to be approached
On the basis of the analysis and the gathered comments and suggestions, the Working Group will decide on its next steps in order to enhance the NPL market in Serbia at the next Working Group session to be held on June 14th, 2016
Ministry of Finance

5. THANK YOU FOR YOUR ATTENTION!
Q&A
Ministry of Finance