Recent events on Insolvency & Restructuring/NPLs in Serbia

Managing partner Tijana Kojović participated on 7 June 2017 in a panel discussion at the conference on Operational Restructuring, organized in Belgrade by the Serbian chapter of the Turnaround Management Association. The panel discussed commercial, regulatory and legal issues influencing lenders’ decisions as to whether to take management control over the distressed debtor, convert debt to equity and/or give new money. Other panelists included Byron Nurse, Partner Restructuring and Insolvency group, Dentons London; Dr. Martin Stotter, Member of the Managing Board/CRO, Raieisen Banka a.d. Beograd; Milena Vukotić, Head of Corporate Special Credit, Unicredit bank Srbija a.d. Beograd; Martin Kammermeier, Managing Director, Exit Management, Heta Asset Resolution Austria; and Marko Ketler as moderator, Partner / Attorney at Law in cooperation with Karanović & Nikolić.


The number of successful operational restructurings in Serbia is modest. Pre-packed insolvency reorganization plans (so-called UPPRs) have largely concentrated around financial restructuring (hair-cuts and generous repayment schedule reprogramme), with insufficient operational restructuring plans. In Serbia, banks, practically the only lenders on the market, have not been willing to take equity or control over the debtor not because of regulatory and legal hurdles but because of reputational risk and general unwillingness to get involved in non-core business. While the protection national insolvency laws of SEE countries offer to new money lent to a distressed debtor differ, Serbia being in the background in this respect, the prevailing bankers’ view is that if the business fundamentals are good, lenders are willing to support recovery. Different views were heard as to whether high NPL ratio prevents banks from lending more fresh money – some bankers in the audience were heard to say that this is an obstacle, while others claimed that low interest rates on the market suggest otherwise.

Dragoljub Sretenović, associate in the Banking and Finance group, spoke at the Workout & Restructuring 2017 conference in Vienna on 31 May 2017. He participated in a panel discussing legal obstacles and challenges to restructuring and NPL resolution in Serbia. Other panelists included Alexander Rakosi, Partner, CMS, Austria; Vladan Tekic, MD, NLB, Serbia; Marko Mićanović, Restructuring & Workout Division Head, Sberbank, Serbia; and Nevenka Črešnar Pergar, Director and Founder, NP Consulting, Slovenia (moderator). The session also included presentations by Jelena Jović Milentijević, Managing Director, EOS, Serbia, and Marko Fabris, Senior Manager, PwC, Serbia.


The distressed debt market in Serbia is evolving and attracts growing interest from cross-border investors. The NPL ratios have considerably decreased since the Government started implementing its strategy, which includes recognition of NPL write-offs as expense for tax purposes and stricter asset valuations. The pace of changes will be further influenced by the ongoing consolidation in the banking sector. This trend is expected to stimulate banks to clean their balance sheets, which may help reduce recurrent pricing gaps. While the regulatory framework has improved, the prohibition on selling retail loans to purchasers that are not Serbian licensed banks remains a key regulatory obstacle to the cleaning of the banks’ balance sheets. The panelists were skeptical of the official announcements by the regulator that this restriction will soon be relaxed. Other concerns included difficulties in replacing the seller in court litigation proceedings initiated prior to the acquisition of the loan. Furthermore, recent decisions of the Appellate Commercial Court in Belgrade holding that a buyer of a secured claim cannot enforce mortgage in judicial enforcement proceedings are more than disappointing. The purchaser can manage these risks to a certain extent by negotiating tailored contractual protections, and structuring transactions to avoid any pitfalls and extra costs.

Please contact Tijana Kojović or Dragoljub Sretenović with any questions:

Tijana Kojović             +381 11 3284 212

Dragoljub Sretenović  +381 11 3284 212

Cart Item Removed. Undo
  • No products in the cart.