The National Bank of the Republic of Macedonia Council discussed several issues related to its operations at its session held today. 

Skopje, 26 February 2009

Press release of the NBRM

The National Bank of the Republic of Macedonia Council discussed several issues related to its operations at its session held today. 

The NBRM Council, at its today's session, passed the Decision on amending the Decision on Credit Risk Management. This decision specifies, in more details, the method of classifying and determining the impairment of the bank's investments in securities available for sale. Also, this Decision introduces a requirement for the banks to define, within their credit risk management system, acceptable level of coverage of credit risk exposure to natural persons with adequate source of repayment (amount of wage and other income). When defining the acceptable level of source of repayment, the banks have to take into account the relevant indicators for the consumer price developments. In addition, the banks will have an insight in the structure of their credit portfolio to the household sector regularly, by monthly income of the borrowers. 

Furthermore, the National Bank Council adopted the Decision on amending the Decision on Methodology for Determining the Capital Adequacy. This decision stipulates allocation of capital requirement for bank operating risk, in consistence with the first pillar of the New Capital Accord - Basle 2. Thus the banks could decide between two approaches for determining the capital requirement for operating risk, as follows: the base indicator approach and the standardized approach. These two approaches differ by the level of sophistication of the method of determining the capital requirement for operating risk. In the calculations, starting point of both approaches are the generated income and expenses of the bank from regular operations. At the standardized approach, the banks' income and expenses from regular operations are allocated according to the business line of their occurrence.

At its today's session, the National Bank Council passed the Decision on Currency Exchange Operations, which supersedes the existing Decision on the Terms and the Method for Issuing a License and Conducting Currency Exchange Operations. The new Decision more precisely specifies the terms and conditions, and the documentation required for granting a license for conducting currency exchange operations and creates conditions for increasing the efficiency of collecting data on the developments in the currency exchange market in the Republic of Macedonia. For the purposes of increasing the transparency of the responsibilities of the licensed currency exchange offices to the households, this decision includes a requirement for each licensed currency exchange entity to display, on a noticeable place on the premises of conducting currency exchange activities, a notification in a specific form, that they are required, for each transaction, to issue a receipt for purchasing/selling cash foreign currencies and checks, on a predefined form.

The NBRM Council was informed on the latest macroeconomic developments in the first two months of 2009. The annual inflation rate, as expected, continued slowing down in January, and equaled 1.7%, given the high comparison base from the preceding year. As of January 31, 2009, the gross foreign reserves total Euro 1,441.8 million, and compared to the end of 2008, it went down by Euro 53.2 million. In January, NBRM intervened on the foreign exchange market with a net sale of foreign currency, in the first half of February the interventions were of a smaller scale, whereas in the second half of February until today, there has not been any intervention. Considering the applied monetary strategy, the NBRM will continue intervening on the foreign exchange market, if needed.  In February commenced the organization of auctions of foreign currency deposits with NBRM, which is a new instrument for the banks to place their foreign assets with the NBRM, rather than abroad, thus reducing their exposure to credit risk. In January 2009, compared to January 2008, the total bank deposits surged by 10.3%, with a simultaneous increase of 32.1% being registered in the total bank credits to the private sector. Such developments indicate further gradual slowdown in the monetary and credit growth, a trend which is a continuation from the preceding year. According to the last Lending Survey conducted by the NBRM, the banks expect lower credit demand in the first quarter of 2009, and the lending terms will tend to tighten. The NBRM continues following the macroeconomic developments on ongoing basis, and remains ready to undertake measures, if necessary, with a view to attaining its monetary policy objectives.

At its today's session, the Council also discussed other issues. It adopted the Annual Account of the National Bank of the Republic of Macedonia for 2008, the Financial Statements compiled in line with the International Financial Reporting Standards and the Audit Report of the independent auditor PricewaterhouseCoopers Audit LLC Skopje on the Financial Statements of the National Bank of the Republic of Macedonia. According to the opinion of the independent auditor, the financial statements of the National Bank of the Republic of Macedonia for 2008 give a true and fair view of the financial position, the financial performance and the cash flows in accordance with the International Financial Reporting Standards. The Council also discussed the Information on Completion of the Financial Plan of the National Bank of the Republic of Macedonia for 2008 and the Information on Completion of the Plan for Investments in Fixed Assets of the National Bank of the Republic of Macedonia for 2008.

The Council passed a Decision on Amending the Decision on Bank Chart of Accounts which made certain accounts in the banks' chart of accounts precise and technically improved. These amendments will start being applied on the eighth day after the publishing of the Decision in the "Official Gazette of the Republic of Macedonia". The amendments to the bank chart of accounts introduced new accounts, most of which serve for better monitoring of the banks' exposure, particularly to foreign banks. These accounts will start being applied on June 1, 2009.

Governor's Office