On 11 July 2016, The National Bank of Serbia adopted amendments
to three by-laws of the Law on Banks (Risk Management Decision,
Decision on the Classification of Bank Balance Sheet Assets and
Off-balance Sheet Items and the Decision on Reporting Requirements
for Banks), and in doing so, took a significant step towards
effectuating the implementation of the strategies on resolving
non-performing loans and the action plan rendered by the Government
of the Republic of Serbia and the National Bank of Serbia in
cooperation with the IMF, World Bank and EBRD – adopted at
the end of last year. Furthermore, the amendments are also intended
to improve the regulatory framework for the treatment of
restructured receivables, in order to provide sustainable
incentives in practice and to prevent unsustainable refinancing, as
well as in the area of banks' obligations on reporting the
structure of restructured receivables and reporting on banks'
non-performing loans. These amendments entered into force on 15
July 2016, whereas amendments to the Risk Management Decision shall
be applicable as of 15 July 2016, and the application of the
amendments to the Decision on the Classification of Bank Balance
Sheet Assets and Off-balance Sheet Items and the Decision on
Reporting Requirements for Banks is postponed until 1 October
The key amendments of the Risk Management Decision can be
separated into three main parts: (i) amendments allowing for the
assignment of the bank's undue receivables towards legal
entities, entrepreneurs and agriculturalists to other legal
entities in order to decrease banks' distressed assets; (ii)
amendments related to banks' distressed assets management; and
(iii) amendments related to the valuation of the quality of
The first part, related to the assignment of the bank's
undue receivables to other legal entities in essence allows for,
among other things, the assignment of receivables towards entities
undergoing pre-package reorganisation plan implementation.
The second part, related to bank's distressed assets
management includes the regulation of the regulatory procedures and
strategies in the banks for monitoring distressed assets, as well
as organisational-structural measures which a bank should undertake
in order to provide adequate distressed assets management.
The third part, related to the valuation of the quality of
security instruments, provides precise regulation of the security
instruments whose value will be subject to the valuation and
addresses the duties and obligations of a licensed valuator through
manuals for the valuation and the producing of a valuation report,
as well as factors and analyses which may impact the security
The latest amendments to the above outlined by-laws represent a
signal that the market of non-performing loans may be developing,
although the results still remain to be seen and tested in
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The implementation of the mandatory exchange of initial and
variation margin for non-cleared OTC derivative trades in the EU
commenced on 4 February for financial counterparties with the
largest derivatives portfolios.
Nevertheless, a RAIF's investment policy is subject to certain risk diversification requirements laid down by the CSSF.
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