Icade : The Banker Magazine Declares Governor Jorgovanka Tabaković Central Banker of the Year 2020

National Bank of Serbia Governor Jorgovanka Tabaković is the recipient of the annual awards as the best European and World Bank Governor, presented by The Banker monthly.

Each January, The Banker magazine, part of the Financial Times Group, presents the Central Banker of the Year award to heads of central banks who achieved the greatest success and helped encourage growth and stabilise their country's economy.

The award is presented based on the decision of the magazine's editorial board and a survey conducted among bankers and economists. There is a global award, as well as individual ones for Europe, North and South America, Asia-Pacific, Middle East and Africa.

Since 1926 The Banker has reported about developments in the world of finance and banking.

Commenting the award being presented to Governor Tabaković, the magazine elaborated that she has been at the helm of the NBS since 2012. In that time, she has acted to strengthen the country's banking system while pursuing monetary policy that has tamed inflation and supported both domestic demand and bank credit growth.

'Today, Serbia's banking system is highly liquid, profitable and well capitalised thanks in large part to the policies and oversight of the NBS. International Monetary Fund (IMF) data indicates that, in the first half of 2019, the sector's capital adequacy ratio was above 22%, while lending to corporates was growing at 10% a year.

Accommodative monetary policy has helped in this regard, as has the growing confidence in the Serbian economy. This has emerged as a result of sound management from the NBS and other government agencies. Arguably, however, it is the Serbian banking sector's improving asset quality that has played the greater role in reaching this point. Here, the NBS, under the guidance of Ms Tabaković, has registered one of its most remarkable accomplishments. In 2019 the ratio of non-performing loans (NPLs) hovered at about 5%, down from as high as 22% in 2015. This swift turnaround owes much to the work of the NBS, which, as part of a wider NPL Resolution Strategy, introduced improvements to accounting standards and collateral assessment, among other measures, across the banking system to great effect.

Despite this success, the NBS has continued to improve regulation and oversight to enhance Serbia's prudential framework. This includes the December 2018 adoption of regulatory initiatives that restrict banks' portfolios of long-term cash and consumer loans. It also includes debt-to-income limits on advances to individuals. Moreover, the NBS has also launched a survey of Serbian lenders' exposures to unhedged foreign currency borrowers in the market. In doing so, the NBS will have a better understanding of the ways in which banks assess clients' foreign exchange hedging and how these borrowers are subsequently managed by their financial institutions.

In October 2018, the NBS initiated an instant payments system covering transactions with a value up to RSD 300,000 (USD 2,849). Under NBS requirements, introduced in April 2019, Serbian lenders are obligated to provide instant payments on all available payment channels, including mobile and internet banking, over-the-counter transactions, bill payments and point-of-sale transactions, among others. The launch of this instant payments initiative feeds into another NBS objective: dinarisation.

In an effort to promote the use of Serbia's domestic currency and reduce the use of the euro in the economy, the NBS has enacted a number of initiatives to achieve this goal. This includes placing higher reserve requirements on foreign currency deposits. But instant payments are also expected to contribute, through the wider use of dinar-denominated mobile payments. According to IMF data, total banking sector deposit dinarisation was at 32% in April 2019, while total corporate and household credit dinarisation was 33%. In tandem, the ratio of dinar-denominated government debt was about 25%. Though this represents only modest growth following the country's first dinarisation strategy in 2012, the pace of this reform could increase following a strategy revision in 2018.

Meanwhile, in June 2019 Serbia was removed from the Financial Action Task Force's grey list, meaning it is no longer subject to the monitoring process as part of the organisation's continuous anti-money laundering and countering the financing of terrorism compliance function. Under Ms Tabaković's leadership, the NBS has played a vital role in achieving this through both its core regulatory and supervisory mandates.

As a result of these measures, and others, Ms Tabaković has secured the Global Central Banker of the Year 2020 Award. The stability of Serbia's financial sector, as well as the broader success of its economy in recent years, owes much to her work. Yet Ms Tabaković is not resting on her laurels. Efforts to improve the NBS's oversight of the banking sector and enhance channels of communication with other public entities are under way. For these reasons, and others, Serbia can look forward to a brighter economic future', reads the rationale for the award.

Speaking about the award, Governor Tabaković said that while many recognitions for the country's economic success also assume the acknowledgment of the results achieved by the NBS and herself as the Governor, she is very much honoured by this first personalized recognition.

'It is a great pleasure to receive news of such an award from a reputable and influential magazine. But the source of the greatest satisfaction for me is that the results of our work bring a better life to Serbian citizens, facilitate their planning in everyday life and business, and create a predictable and stimulating business environment.'

'With or without recognition or praise, the only way I can do my work is the way I have done it so far - in the best interest of all, because the NBS is an institution which must arrange a plethora of individual interests in a single mosaic. In future, our efforts must remain oriented toward the preservation of the achieved stability, stable and healthy economy and financial sector, and above all, further improvement of the living standard of our citizens', said Governor Tabaković.

Governor's Office