By Cecilia Calatrava
The EBRD is providing a €50 million(US$58.99million) stand-by credit line to the Deposit Protection Fund of Montenegro (DPFM) to ensure the protection of citizens and businesses against potential sector vulnerabilities following the outbreak of the coronavirus pandemic.
DPFM is an independent public institution incorporated in Montenegro and provides insurance to the owners of deposits held with local banks. The new facility will be guaranteed by the government and replace an existing €30 million stand-by credit line signed with the EBRD in 2010.
The new funds will enable DPFM to ensure that adequate funding is in place to protect retail and corporate clients with insured deposits of up to €50,000 per depositor. The fund is experienced in managing challenges and successfully secured confidence in the past.
The EBRD’s stand-by facility will contribute to the stability of the financial system in the country and maintain market confidence in the overall banking sector. Strengthening Montenegro’s financial safety net is key to withstand shocks stemming from the coronavirus pandemic.
“We are happy to renew our stand-by credit line with the Deposit Protection Fund of Montenegro to support the stability of the financial system. Depositors will continue to be protected and as a result we maintain confidence in a resilient banking sector, facilitating the economic recovery from the COVID-19 crisis.” said Head of EBRD Podgoric Jaap Sprey.
“The stand-by arrangement with the EBRD will help the fund increase its current resources by an additional €50 million and thus provide deposit coverage close to targeted level of 10 per cent. This will ensure not only compliance with the EU coverage standard but also much better safety of deposits and will contribute to the stability of the banking sector and the overall financial system of Montenegro”, said Director of the Deposit Protection Fund of Montenegro, Predrag Markovic.
The EBRD is focused on supporting the financial system as an effective driver of economic growth and strengthening its resilience against future economic shocks and crises.
The EBRD started in investing in Montenegro in 2006. To date, the Bank has invested more than €621 million in over 70 projects in the corporate, financial, energy and infrastructure sectors of the Montenegrin economy.
