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)| false Quintyn, Marc, Karacadag, Cem, Zunic, Walter, and Haddon, Ms. Jennifer, 2000, “ Former Yugoslav Republic of Macedonia: Strengthening Banking Supervision and the Banking System” Volume I, Main Report ( Washington: International Monetary Fund, Monetary and Exchange Affairs Department)
This paper was written during my tenure as resident representative in FRY Macedonia, under the supervision of Biswajit Banerjee. I would like to thank him, as well as Governor Trpeski for invaluable support. I would like to thank Deputy Governor Gligor Bishev, the head of bank supervision Ilja Graorkovski, and his staff, for comments and fruitful cooperation. I also thank Cem Karacadag and Mark Quintyn for comments and Gjorgji Nacevski for excellent research assistance. The views expressed in this paper are those of the author only. The standard disclaimer applies.
According to the Banks and Savings Houses Act and NBM Regulations. Some terminology may differ from standard usage.
The minimum capital requirements for domestic operations are, respectively, DM 6 million by end-April 2000 and DM 7 million by end-April 2001.
The third largest bank accounted for 5 percent of total banking system assets.
At end-September 1999, six banks had exposure to a single shareholder in excess the prudential limit.
Held by residents and non-residents.
On- and off-balance sheet items, excluding provisions for loan losses, and without risk-weighting.
The increase in banks’ assets could be overstated, owing to possible inaccuracies and misclassification of accrued interest.
Paid on three-month deposits.
In December 1998, Stopanska Banka reprogrammed denar 6 billion, equivalent to 7 percent of banking system assets, reclassifying “other assets” into “credit to enterprises.”
At end-September 1999, foreign currency credit was equivalent to 13 percent of the banking system assets.
The ratio could be larger if security held as cover for letters of credit and guarantees entails risk.
Interest income minus interest expenses, as per banks’ balance sheets.
Verification of collateral is part of the regular on-site inspections by the Bank Supervision Department of the National Bank.
Since September 1998, the Banking Supervision Department has started disclosing the amount of unnalocated provisions, by banks.
Including Stopanska Banka. Includes off-balance sheet items.
The CAR should be restored with the recapitalization of Stopanska Banka (see Section G).
Equivalent to less than 2 percent of total banking system assets.
Excluding Stopanska Banka and Almako Bank.
The NBM Supervision Department began monitoring off-balance-sheet activity in May 1999.
This ratio may overestimate the share of credit to the 16 largest debtors with classified exposure to the extent that credit arising from denar and foreign currency advances for letter of credit transactions made on behalf of banks’ clients in previous periods, as well as receivables from payments made on behalf of banks’ clients arising from guarantees (an off-balance-sheet item fee that has come on balance) may have been improperly classified as “other assets” in banks’ balance sheets. The ratio, adjusted for potential misclassification, would still be very high (53 percent).
Low remuneration of reserve requirements is also partly responsible for the high spread between lending and deposit rates. In June 1998, the National Bank increased the remuneration or reserve requirements by 2.8 percentage points to 6.2 percent, a level that remains below market rates. The higher remuneration, however, has a marginal impact on the intermediation spread, estimated to be only 0.2 percentage point.
Credit measured by the NBM may not reflect all credit expansion that is due to off-balance-sheet activity, owing to possible misclassification of credit by banks as other assets and temporary accounts.
The share purchase contract was expected to be closed on October 1998 but the deal did not go through.
According to the Banks and Savings Houses Act and the NBM’s regulations. Some terminology may differ from standard usage elsewhere.