Societe Generale to exit Montenegro or merge with local bank

By bne IntelliNews April 12, 2017

Montenegrin bank Societe Generale will either exit the Montenegrin market or it will merge with a local bank, the central bank governor Radoje Zugic was reported saying in Portalanalitika.me on April 12.

Societe Generale’s local branch has asked the central bank to allow a merger with Crnogorska Komercijalna Bank (CBCG. However, local economists say this would create a monopoly in the banking market.

“At CBCG (the Central Bank) we are analysing the potential repercussions from a merger and will decide accordingly,” Zugic was quoted to have said in Portalanalitika.

Societe Generale was the second largest bank in Montenegro in terms of net profit, which stood at €7.79mn as of end-2016, up 23.5%. Crnogorska Komercijalna Bank’s net profit, however, shrank 60% last year to €2.9mn.

In June, the International Monetary Fund (IMF) warned that low profits make Montenegrin banks’ costs volatile. Many of the 15 commercial banks operating in Montenegro could turn to loss as a consequence of even a modest funding shock, which undermines their capital adequacy. Local banks are likely to use deposit rates as a means to attract clients, which also raises their vulnerability to stressed episodes.

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