Skopje, 19 September 2020 

COVID-19 crisis occurred in mid-March and therefore it is simply impossible in such a short period to lead to banks’ insolvency and be a determining factor for its closure. Eurostandard Bank has been exposed to a greater credit risk and operating weaknesses for a long time, therefore it was under intensive supervision and numerous supervisory measures were imposed in order to fix the situation in the Bank. In fact, it was the impartiality and the thorough approach that surfaced these weaknesses in the Bank’s balance sheet.

This was stated by the National Bank Vice Governor Ana Mitreska in an interview with MIA, regarding the collapse of Eurostandard Bank.

She points out that despite the corrective measures, the Bank’s capital fell below the capital requirement and in such case the only possible solution is to request the owners to fulfill their obligation prescribed by law and invest additional funds.

“I would like the public to have a clear picture about this and to know that these are not funds that the National Bank needs. These funds flow into the balance sheet of the commercial bank and in this case they were necessary to meet the capital requirement so the Eurostandard Bank could survive”, she said.

Unfortunately, as she points out, neither the owners, nor the potential investor, provided the necessary capital to meet the capital requirements, and thus provide conditions for the bank to regenerate, which of course would have been the best solution for all.

“This is why we made considerable efforts. Every central bank makes efforts to find an alternative solution before closing a bank. In this context, despite the information released in public, we had intensive communication with the potential investor pointing out the necessity for additional capital investment in the Bank. However, there was no willingness to provide the necessary investments. At the same time, the necessary documentation to assess whether he meets the legal requirement for a shareholder was not completely submitted”, said Mitreska.

The Vice Governor also points out that in such circumstances there was no other solution but to revoke the founding and operating license of Eurostandard Bank.

“The National Bank cannot and must not allow a bank to operate against legislation”, says Mitreska in an interview with MIA.

The Vice Governor says that banks are a vital part of any economy and their managing structures have a much greater responsibility than the ones of the non-financial institutions, simply because they manage the assets of their depositors. Corporate governance of banks should be based on integrity, professionalism and exceptional responsibility in any decision making.

Mitreska points out for MIA, that the high-frequency daily data available to the National Bank for August on a monthly basis show a certain increase in total deposits in the banking system. At the same time, as she says, we cannot notice some unusual tendencies in the foreign exchange market either, that would indicate a greater propensity for holding foreign currency.

“Hence, the flows are stable, and as we expected, the revocation of the founding and operating license of Eurostandard Bank has no major effects on the banking system or the behavior of depositors”, assesses the Vice Governor.

In the interview with MIA, Mitreska also reflects on the National Bank assessments and expectation about the effects of the corona crisis on the Macedonian economy. She also points out that so far the economy is going through the crisis mainly as expected by the National Bank.

The interview is available here.