1. 1 M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Working Group for Chapter 9– Financial Services Bilateral screening: Chapter 9 PRESENTATION OF MONTENEGRO Brussels, 10 June 2013

2. 2 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial Services DEPOSIT PROTECTION FUND Predrag Marković Deposit Protection Fund fzd@t-com.me @t-com.me@t-com.me

3. 3 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial Services LEGAL FRAMEWORK IN FORCE THE DEPOSIT PROTECTION LAW (“OGM” No. 44/10, 40/11) Subject Matter Article 1 This law regulates the deposit protection scheme covering deposits placed with banks having their registered offices in Montenegro, the competences and operations of the Deposit Protection Fund, and the guaranteed deposits payout aimed at protecting the interest of depositors and contributing to the maintenance of the banking system stability.

4. 4 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial Services SECONDARY LEGISLATION Secondary legislation: 1)By-Law of the Deposit Protection Fund (“OGM” No. 66/10, 25/12) 2)Guide to informing depositors and potential depositors about the deposit protection scheme (“OGM” No. 16/12) 3)Decision on detailed conditions, manner and procedure of the guaranteed deposit payout (“OGM” No. 16/12, 66/12) 4)Decision on Bank Monthly Reports to be submitted to the Deposit Protection Fund (“OGM” No. 66/12) 5)Decision on the Regular Premium Rate and the Manner of Regular Premium Calculation in 2013 (“OGM” No. 16/12)

5. 5 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial Services RELEVANT SOURCES OF LAW OF THE EUROPEAN UNION Directive 94/19/EC of the European Parliament and of the Council of 30 May 1994 on deposit-guarantee schemes amended by Directive 2009/14/EC of the European Parliament and of the Council of 11 March 2009 The Deposit Protection Law (“OGM” No. 44/10, 40/11) enacted in 2010 is partially compliant with the aforesaid relevant sources of law of the European Union.

6. 6 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial Services INSTITUTIONAL FRAMEWORK Competent authority in Montenegro The competent authority in Montenegro is the Deposit Protection Fund that was established by the Deposit Protection Law („OGRM“ No. 40/03, 65/05) and which started operating in December 2004. After the enactment of the new Deposit Protection Law in 2010, the Deposit Protection Fund continued operating under this law. The Deposit Protection Fund is an independent organisation.

7. 7 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial Services The Deposit Protection Fund Governance The Fund's bodies are the Managing Board of the Fund and the Director General. The Managing Board is comprised of three members, appointed by the Central Bank. One member is nominated by the Ministry of Finance and one member is nominated by the Association of Montenegrin Banks and Financial Institutions. Members of the Managing Board are appointed for a term of four-years and no member shall be appointed for more than two consecutive terms. The Managing Board appoints the Director General, for a term of four-years and he/she may be reappointed. The Managing Board submits the Fund's annual financial plans and reports to the Central Bank. The Fund's Annual Report is submitted to the Government of Montenegro and the Parliament of Montenegro for information purposes.

8. 8 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial Services PRINCIPLES OF DEPOSIT PROTECTION The deposit protection scheme covers euro and/or other currency deposits placed with a bank prior to or on the day of the occurrence of the protection event up to the amount guaranteed under the Law. A bank is obliged to participate in the deposit protection scheme as provided for by the Law. Depositors have the right to the guaranteed deposit payout (natural persons and legal persons) holding deposits in a bank, including depositors held by bank branches operating abroad. Level of coverage: 50.000 €. Deposits payouts are made in € (deposits in other currencies shall be transfered to €).

9. 9 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial Services Compliance with Directive 94/19/EC amended by Directive 2009/14/EC TRIGGER: Partially compliant A protected event shall occur on the day when the Central Bank passes a decision on instigating bankruptcy proceedings against a bank. LEVEL OF COVERAGE: Not compliant The Fund shall calculate and perform the payout of guaranteed deposits up to the amount of EUR 50,000 per depositor, regardless of the number and amount of deposits held by a depositor with a bank. SCOPE OF COVERAGE: Fully compliant - Covered (deposit of natural persons and legal persons holding deposits with a bank, including depositors of bank branches operating abroad). - Excluded (deposits by finansial institutions, public authorities, certain deposits/depositors)

10. 10 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial Services Compliance with Directive 94/19/EC amended by Directive 2009/14/EC DEPOSIT PAYOUT: Fully compliant - Payout shall be made in EUR and deposits in other currencies shall be transfered to EUR at the medium rate under the official exchange rate announced by the Central Bank as at the protected event date. COMPENSATION DEADLINE: Fully compliant The Fund is obliged to make the guaranteed deposits available to all depositors no later than within 20 working days following the date of the protected event. FUNDING: - Ex-ante funding, supported by ex-post contributions if needed, borrowing from the Budget of Montenegro, taking loans from foreign banks and financial institutions, issuing securities. - Fixed target level for ex-ante funds.

11. 11 Financial Services M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 9: Financial Services CONVERGENCE DYNAMICS Partial compliance with Directive 94/19/EC amended by Directive 2009/14/EC Full compliance shall be achieved with the adoption of the new law that will amend the Deposit Protection Law (“OGM” No. 44/10, 40/11). Full alignment: On the accession of Montenegro to the European Union.

12. 12 Thank you for your attention! QUESTIONS