SERBIA: Administration for the Supervision of Financial Institutions to be established under the Central Bank

13 September 2012 — Lela SAKOVIC
serbiaThe Law on the National Bank of Serbia, adopted in early August, stipulates the establishment of Administration for the Supervision of Financial Institutions. The former responsibilities of specific sectors for supervision of banks, voluntary pension funds, under the jurisdiction of the vice-governor, will be taken over by the authority expected to be established.

"The establishment of this administration is undisputed since it is a recognized world practice applied also by the Central Bank of the United Kingdom, and also will be applied by the European Central Bank". This was, at her first press conference, announced by the new governor of the National Bank of Serbia, Jorgovanka TABAKOVIC, who took office in early August as well. Since then, she was Member of Parliament of the Serbian Progressive Party which won the last elections, and which gave the current Serbian president.

When asked when the new director of the Administration would be appointed, TABAKOVIC said it was still unknown since the plan was to first elect new vice-governors and then the members of the NBS Council, whereupon the Council would adopt the Statute to define the Administration competences. She said that she exclusively would recommend the person to head the Administration adding that it would be "the person from the National Bank of Serbia, with authority to perform that task in the best possible way"

Late last week, however, the Serbian Parliament session was to be held in order to elect new vice-governors. The session was postponed, and the official announcement read that the reason for postponement was to wait for some laws to be proposed by the Government of Serbia at the said session - more than 35 related laws in preparation. The public, however, speculates that the reason for the postponement of this session is conflict between governor Tabakovi? and new Minister of Finance and Economy Mla?an DINKIC. According to the daily newspaper with highest circulation, DINKIC threatened with his party, the United Regions of Serbia, to withhold the support to candidates for vice-governor proposed by governor Jorgovanka TABAKOVIC. According to the same source, the conflict erupted a while ago because the governor refused the request made by Minister DINKIC to reduce the obligatory reserve requirements on loans, on the grounds that it would further weaken the dinar.

The opposition representatives argue that the person to head Administration for the Supervision of Financial Institutions will be equal with the governor - it will be accountable only to the Serbian Parliament. They believe that the Law on the National Bank of Serbia has not clearly defined the relationship between the governor and the director of the Administration.

The media assume that this office will be taken by a person from the political party of Minister of Finance and Economy, Mla?an DINKI?, in order for the above two strong personalities in the political, i.e. economic scene in Serbia to be satisfied.

Under the new Law, Administration for the Supervision will be an autonomous institution under the NBS, so economic analysts from the opposition fear that the room for political abuse could open here: "As Director of Administration is at the same time a member of the Executive Board, it is unclear whether governor and vice-governor will be able to outvote him in decision-making," said one of the former members of the Central Bank Board of Governors.

Lela SAKOVIC

XPRIMM correspondent for Serbia, Montenegro, Bosnia & Herzegovina, Macedonia

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