Macedonian Banks Are Resilient to Greek Crisis, Bogov Says
The Republic of Macedonia’s banking industry will probably withstand the threat of contagion from the debt crisis in neighboring Greece, central bank Governor Dimitar Bogov said.
Macedonia introduced regulations to prevent banks from relying on their parent lenders for more than 10 percent of their capital, Bogov said today in an interview in Dubrovnik, Croatia. The two Greek-owned banks in Macedonia are Stopanska Banka, a unit National Bank of Greece SA, and Alpha Bank Skopje, owned by Alpha Bank AE.
“We are concerned by the crisis in Greece but not worried, because we ringfenced our banks,” Bogov said. “The possibility for a direct negative impact is pretty limited.”
The former Yugoslav republic has been a European Union candidate since 2005 and a dispute with Greece over the country’s name has obstructed negotiations. Greek officials say Macedonia’s name implies a territorial claim on the Mediterranean country’s province with the same name that was the birthplace of Alexander the Great.
“The start of negotiations is very important because it would add to political stability in Macedonia, which is now the weakest point,” Bogov said.
In case of Stopanska Banka, the country’s largest bank, the 10 percent limit of capital exposure to parents under current rules is 15 million euros ($21 million), Bogov said. Macedonian banks don’t rely on their parents for financing, lending mostly from local deposits, he said.
Explaining to Depositors
A bigger risk is a potential run on the two Greek-owned banks, which the central bank is aiming to prevent by explaining to depositors that their money is in Macedonia not in Greece and that it’s guaranteed by the state, he said.
The debt crisis in the euro region, the country’s biggest trading partner, has crimped demand, slowing the economy that the central bank expects to grow 3 percent next year after 3.5 percent in 2011, Bogov said. The economy grew 5.2 percent in the first half of this year.
Macedonia has a “good chance” to obtain a loan guarantee from the World Bank, a facility known as a policy-based guarantee, Bogov said. The government is planning to arrange a syndicated loan from commercial banks, probably by December, he said.
The government may receive 30 million euros from the World Bank, which may be used as a guarantee for debt issuance of four or five times that amount, enabling the government to borrow between 120 million euros and 150 million euros, he said. That amount would cover four months to six months worth of financing needs next year, Bogov said.
