Kosovo's Central Bank exercises its authority

Financial institutions operating under Serbia's banking regulations are being targeted by the Central Bank of Kosovo.

By Linda Karadaku for Southeast European Times in Pristina -- 08/08/12

Some banks in Kosovo are operating under Serbia's banking rules. [Reuters]

The Central Bank of Kosovo is taking action against two financial institutions in Serb-dominated enclaves that have been operating without the authorisation of the Central Bank.

The Central Bank has the exclusive legal responsibility for regulating, licensing, registration and supervision of all financial institutions in the country. But the two banks that were found in non-compliance, both operated by Dunav banka AD Zvecan, are in municipalities with a majority Serb population. They have been operating according to Serbia's banking regulations.

The Bank took action against branches operating in Gracanica and Strpce, but has not intervened in branches north of the Ibar River.

"The policy of the Kosovo Central Bank is to ensure the implementation of the law on banks, macro-financial institutions, and non-banking financial institutions in Kosovo," Besnik Kada, communications and media relations officer for the Central Bank, told SETimes. "Material and equipment used for non-licensed activity were seised in both locations, and will be used for their respective legal proceedings."

Liljana Gajic, director of risk management for Dunav banka AD Zvecan, said she was aware of the action. "I don't know what to say," she told SETimes. "I can't say anything. This is a government problem."

Kada said that Bank representatives are communicating with any relevant authorities for additional explanation on the results of the inspection.

Gracanica Mayor Bojan Stojanovic said the inspection is about the financial and banking discipline. "Not everything can be hidden behind political and status issues. The banking system should be one of the sectors that operate on technical principles, not politics," Stojanovic told SETimes.

There are three banks in Gracanica functioning in line with the Kosovo banking system: Raifaisen, Pro Credit and NLB banka. KosInvest i KEP and Dunav banka operate according to Serbia's banking regulations. The Commercial Bank, derived from the Serbian banking system, is now also licensed by the Kosovo banking system.

Stojanovic said the inspection of the bank in Gracanica was done in a dramatic fashion.

"The banking control at the Gracanica bank could have been without an action movie scenario --bank officials accompanied by the police force disturbed the daily banking people's routine. The Gracanica bank officials could have performed the technical control," Stojanovic told SETimes.

"We have the example of the Commercial Bank in which the state of Serbia has the majority shares, but for some years has been licensed [by the Kosovo Bank]," Stojanovic added.

Ibrahim Rexhepi, executive director of the Kosovo Centre for Strategic and Social Research, agreed that the Bank should extend its control throughout Kosovo. "It is normal to have the Kosovo Central Bank continue and extend its control in Kosovo's north also. That means, closing down all financial institutions that are not licensed, regardless of what country they come from," he told SETimes.

Source: SETimes.com