Credit Line to the Deposit Protection Fund of Montenegro

cancelled

The EBRD is considering providing a EUR 30 million standby credit line fully covered by the sovereign guarantee to the DPF. As a standby credit line it is designed to operate similarly to an insurance product. It would provide immediate funds to DPF (if a need arises to pay out depositors) but would be substantially more cost effective than a loan. As a result the credit line will provide necessary coverage and thus maintain and ensure confidence in the country’s financial sector by enabling the DPF to raise coverage in stages to the EU prescribed EUR 50,000. The proposed project will help build confidence in the banking system as individual deposit insurance coverage will increase. Its specific transition impact derives from the fact that it will help Montenegro to catch up with its neighbours in terms of the guaranteed deposit level (EU prescribed level of EUR 50,000). Furthermore by building confidence in the banking system the project will establish a framework for markets, resulting in deposit growth along with the implementation of the new Deposit Protection Fund Law. In addition the framework of markets will reduce moral hazard as the implemented Laws will strengthen the supervisory and regulation function. The Deposit Protection Fund of Montenegro is an independent, non-profit institution. It provides insurance to owners of deposits held with banks and thus contributes to stability of the financial system. The main objective of deposit protection scheme is to ensure that citizens and companies will not lose their savings and deposits held with banks if their bank becomes insolvent. EUR 30 million Standby Credit Line. EUR 30 million. Categorised FI (2008). There are no adverse environmental and social issues associated with the DPF’s activities; therefore the DPF will not be required to adopt environmental & social management systems as per PR9. Like all EBRD clients, the DPF will need to apply PR 2 to its own staff. None. Visit EBRD Procurement Enquiries: Tel: +44 20 7338 6794; Fax: +44 20 7338 7472, Email: procurement@ebrd.com