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Banking system of Kosovo not at risk


Prishtinë, Mar 16, 2006 - TVs and dailies in Kosovo interviewed economic experts on the closure of the Credit Bank of Prishtina (CBP). Most of the experts consider that given its low participation percentage in the Kosovo market, the closure of CBP will not affect Kosovo’s banking system. There are, however, experts who consider that the CBP case will have a negative impact on Kosovo’s economy and depositors’ confidence in Kosovo banks.

The Minister of Economy and Finance, Haki Shatri, told Koha Ditore: “In general, the banking system has not been put at risk as there is a rigid supervision by BPK.” Shatri emphasised that the BPK and the Government would not allow irregularities in any bank of Kosovo. He did not promise that the Government would compensate the depositors that could lose their money.

“You know that the Government does not run BPK; therefore we can not compensate the depositors,” says Shatri. “I am sure that no depositor will lose his money.”

Meanwhile, President of Kosovo Chamber of Commerce, Besim Beqaj, said that the closure of the CBP should not create panic amongst the depositors, since 95% of the deposits will be refunded by the end of this week.

At a meeting with the heads of this Bank, Beqaj said that the closure of the CBP cannot have a negative impact on Kosovo’s economy since it covers only 5% in the bank industry of Kosovo.

“This case shows that the banks are supervised and that we will not allow pyramidal schemes in Kosovo,” says Beqaj.

According to Beqaj, nobody can prevent bad decisions taken by a bank’s management. He also said that CBP management did not act properly when issuing loans.

Also Ibrahim Rexhepi, an economic expert, suggested that citizens should not start withdrawing their money from the banks.

“Where would their money go if banks were not in operation? Banks bankrupt in countries across the world. But banks in these countries, however, are more transparent and people know if there is a risk that their bank might go bankrupt,” says Rexhepi.

Muhamet Mustafa, Head of Riinvest Institute for Development Research hopes that the CBP closure will remain an “isolated case”.

“I believe that BPK and other bodies in charge will do their utmost to protect the depositors’ interests,” says Mustafa. He says that other commercial banks will learn a lesson from the CBP case and respect the BPK’s rules.

Meanwhile, Musa Limani, Professor of Economics at Prishtina University, says that the closure of CBP reflects negatively not only Kosovo’s economy, but also CBP’s depositors. “The CBP’s management was inefficient,” says Limani. “The internal factor is one of the main reasons that made CBP go bankrupt.” Limani considers that the in general lending policies of Kosovo banks are not functioning properly. “There can be other banks going bankrupt because of mismanagement of financial means, just as happened with CBP,” Limani told Iliria Post.

Isa Mustafa, an economic expert, told Express that BPK should have taken action much earlier. “BPK should have more supervision over commercial banks,” he said. “There were some other commercial banks that had problems earlier, but they improved their performance in cooperation with BPK.”

But Ajri Begu, BPK Governor, says that “BPK carried out the inquiry as soon as the facts were disclosed.”

According to the data that Express took from CBP’s website, CBP not only failed to declare the losses, but even declared to have a profit of € 87,000. According to Express, CBP has only € 6 million at BPK, which is 1/6 of its overall deposits.

Lajm reports that two years ago KTA, PTK, and Government did not allow PTK to deposit €130 million outside Kosovo. “Given the loan risk, we wanted to reduce the deposits in local banks, but we were not allowed to,” PTK officials said. “Risk still exists, because we have € 130 million in Kosovo banks.”

But Minister Shatri says that PTK never made such a request at Government. “PTK neither asked us [to transfer the money abroad] nor reported where they are depositing their money,” says Shatri. “Certainly, we would not like this money to be deposited out of Kosovo, but rather keep it here and help Kosovo’s economy. We hope that KTA could have decided about PTK’s money, as KTA supervises completely PTK.”

PTK officials also told Lajm that PTK had deposited €20 million in CBP, but gradually reduced it to €13 million. Lajm also report that CBP managers do not agree with BPK’s decision to close this bank. A CBP manager, who did not identify himself as it was forbidden by BPK, said: “We were aware of problems, but they were not insolvable. I can say with full certainty that we had fewer problems than some other banks. BPK made a hasty decision. We were not the worst in the first three inquiries, so how come they announced a bankruptcy in the fourth inquiry?”

The manager also said that nobody knows anything about the BPK’s inquiry report. But Shkendije Himaj-Zekaj, BPK spokesperson, says that: “The BPK inquiry report is submitted to all members of the BPK Managing Board and the General Director.”

The CBP manager also accuses BPK of not waiting the CBP to finalise negotiations with the Bank of Lubjana. “We were about to finalise negotiations with the Bank of Lubjana, who were interested in investing €10 million in our bank and later transfer them into shares. We had arranged a meeting with them, BPK Director, and the Government in early April. In addition, there were some Arabic banks, namely from Dubai, who were interested in buying CBP at a good price. We had some preliminary discussions with them.”

But BPK officials say that “BPK was aware of some earlier contact that CBP had with some credit banks, but they were not committed to buying CBP. Purchasers are interested in potential profit; nobody is interested in buying losses.”

Lajm also interviewed several depositors of CBP. They say they are afraid they might lose their deposits. Some of them even say: “If I ever get my money back I will not deposit a cent in a bank.”

KTV reports that there is a possibility that some depositors will never be refunded. PTK is the largest depositor of CBP, with €14 million. This public company deposited around €130 million in the seven commercial banks in Kosovo.

According to PTK spokesperson, Seremb Gjergji, the PTK will lose a part of the amount deposited in this bank.

BPK Spokesperson, Shkendije Himaj-Zekaj says that the closure of CBP bank will not have negative impact on Kosovo’s banking system: “given that CBP is a small banking institution with around 4% of the general banking system.”

Zeri reports that there are no indications that people have started to withdraw their money from any banks of Kosovo. “No increased withdrawal has been detected,” says Himaj-Zekaj. “On the contrary, commercial banks informed us that many CBP clients have already opened their bank accounts in other commercial banks.” She also said that CBP clients would not be charged administrative fee when opening a new bank account in any bank, where CBP would transfer their money.

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