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Serbia Eyes Bank Capital Boost If Parent Funding Fails, Soskic

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Serbia is looking at ways of aiding its banks if they run into problems as a result of Europe’s growing debt crisis, central bank Governor Dejan Soskic said today.

“We have repeated in many cases that banks are well capitalized but they do face certain risks which we closely monitor,” Soskic said in an interview at a conference today in Vienna. Liquidity for the time being is not an issue in Serbia, he said.

Serbia has been studying four options and one of them is said to involve as much as 1 billion euros ($1.35 billion) in new domestic debt for the industry to offset potential contagion from the euro area, Deputy Finance Minister Goran Radosavljevic said in a Nov. 17 interview.

The ongoing debt crisis in Europe will change “the availability of long-term financing of subsidiary banks in the region,” Soskic said. “In all of these circumstances it’s also a very important thing to take into account all of the possibilities which may occur to have funds available in case of new capitalization needs.”

Government aid to banks wouldn’t represent a return to nationalization of the industry, he said.

“There are obviously alternatives that could be explored, but that should not be in any way long-term capital involvement in banking sector,” Soskic said. “We’d like to see banks having a private capital structure.”



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