Serb Central Bank Stress Tests Show Banks Face No Solvency Risk
Banks in Serbia face no solvency risk, while currency weakness and an expanding bad-loan portfolio could require some banks to boost their capital.
The National Bank of Serbia conducted stress tests, which in a moderate scenario assumed a 15 percent dinar decline and an increase in non-performing loans to more than 23 percent of total credit. This would push the capital-adequacy ratio of seven of the Balkan country’s 33 lenders below the regulatory minimum of 12 percent and they would need 7.15 billion dinars ($76 million) to improve their capital adequacy, which is 2.6 percent of “assessed regulatory capital,” the bank said.
In a worst-case scenario, where the dinar drops 25 percent and the bad-debt portfolio exceeds 25 percent, nine banks would need 10.08 billion dinars in total to meet the capital rules, which would be equivalent to 4.4 percent of estimated regulatory capital of the entire sector at the end of 2012, according to the central bank’s Financial Stability report.
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