NBG Central Bank Mandatory Reserves Coverage in Macedonia
On March 31, 2014, MIGA issued a guarantee of €104.5 million ($143.9 million equivalent) covering investments by the National Bank of Greece S.A. (NBG) in its subsidiary in the Former Yugoslav Republic of Macedonia, Stopanska Banka a.d. Skopje. The coverage is for a period of up to three years against the risk of expropriation of funds for mandatory reserves held by these subsidiaries.[1]
MIGA’s guarantee will help NBG obtain relief from the capital adequacy requirements by reducing the risk weighting for the mandatory reserves maintained by NBG’s subsidiary in FYR Macedonia. This will free up equity tied up for country risk purposes and allow NBG’s subsidiary to extend more credit that will stimulate growth, generate employment, and reduce poverty in the country.
MIGA’s coverage to NBG is consistent with the goals of the crisis response initiative for the Europe and Central Asia region launched by the World Bank Group in January 2012. As part of the initiative, MIGA seeks to support capital-constrained banks active in the region. The project is also aligned with the World Bank Group’s strategy for FYR Macedonia, as the country seeks to address the spillover from the financial crisis.
[1] The guarantee was cancelled on March 30, 2016.