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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