Montenegro: Financial Sector Assessment Program-Framework for NonPerforming Loans Workout and Insolvency and Creditor Rights-Technical Note
IMF Staff Country Reports, June 28, 2016
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- Montenegro: Financial Sector Assessment Program-Framework for NonPerforming Loans Workout and Insolvency and Creditor Rights-Technical Note
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Bibliographic details
- Published: June 28, 2016
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781498325653.002
Overview
- Examines the current state of nonperforming loans (NPLs) in Montenegro.
- Assesses the regulatory and supervisory framework and the insolvency and creditor rights regime.
- Makes recommendations for strengthening the framework.
- Notes that the local and regional boom-bust cycle has left a legacy of high NPLs in Montenegro.
Scope of assessment
- Evaluates the legal, regulatory, and supervisory regimes in four key areas:
- (1) Creditor rights and enforcement systems (for secured and unsecured credit).
- (2) Debt recovery and informal enterprise workout practices.
- (3) Formal insolvency system (liquidation and reorganization proceedings).
- (4) Effectiveness of the relevant institutional, regulatory, and supervisory frameworks in implementing laws, regulations, and supervisory requirements in this area.
Key findings (as presented)
- High levels of nonperforming loans persist, driven by a local and regional boom-bust cycle.
- Weaknesses identified across:
- Creditor rights and enforcement systems for secured and unsecured credit.
- Debt recovery practices and the capacity for informal enterprise workouts.
- Formal insolvency procedures, including liquidation and reorganization.
- Institutional, regulatory, and supervisory effectiveness in implementing relevant laws and requirements.
Policy recommendations (overall emphasis)
- Strengthen creditor rights and enforcement systems to improve recovery for secured and unsecured credit.
- Enhance frameworks and incentives for debt recovery and informal enterprise workouts.
- Reform insolvency procedures to improve the effectiveness of liquidation and reorganization proceedings.
- Improve institutional, regulatory, and supervisory capacity to implement laws, regulations, and supervisory requirements related to NPL resolution.
Subject areas and keywords
- Subject: Asset and liability management; Banking; Collateral; Debt restructuring; Financial institutions; Loans; Mortgages; Nonperforming loans.
- Keywords: bank account; Collateral; coverage ratio; CR; credit risk; Debt restructuring; debtor's house exemption; enforcement procedure; enterprise restructuring; ISCR; Loans; management goal; management practice; mortgage registration procedure; Mortgages; Nonperforming loans; NPL portfolio; NPL resolution; promissory note; resolution practice; resolution strategy.