Everything you need to know about the Montenegro banking system

Tourism accounts for more than 20% of Montenegro’s GDP and represents one of the pillars of the economy. Every year tourism brings in three times as many visitors as Montenegro’s total population, which initiated the development of luxury tourism along the coast – such as the luxury waterfront residential haven and superyacht marina Porto Montenegro. 

The expansion of tourism and luxury real estate followed by low tax rates brings many foreign investors interested in buying a property to Montenegro.  Foreign investment per capita was one of the highest in Europe in 2017.  

This has been recognized by the government with the launch of The Citizenship by Investment program, allowing foreign citizens to obtain Montenegrin citizenship and passports by investing in the country. 

Whether you are new in town, or are interested in investing in Montenegro, you will need some information about the Montenegro banking system to help ease your relocation to this wonderful country!

Montenegro has a business-focused financial system that offers great economic freedom and monetary stability to citizens and investors alike. 

The economy in Montenegro has been transitioning to a market system, which led to the privatization of around 90% of Montenegrin state-owned companies, including the banking sector.

During the last couple of years, Montenegro has experienced a stabilization within its banking system. Around 15 banks are currently operating in Montenegro and the sector is considered highly concentrated with 65% of consolidated banking assets currently being held by 5 of the largest banks in the country. Montenegro allows for national and foreign companies to have the same rights, making it easy to see why all of these banks are currently foreign controlled.

Banks in Montenegro are mainly focused in areas such as retail and corporate banking and are allowed to perform a broad range of banking operations – from payments, safekeeping, and business loans to advising and analyzing different aspects of the market. 

A bank’s capital mostly comes from foreign sources, due to a majority already belonging to international banking chains providing equal treatment between domestic and foreign clients making it easy for foreign investors to obtain a credit or loan in the local market.  

The tax system in Montenegro is one of the most competitive in Europe with some of the lowest tax rates in the world! Montenegro has become one of the friendliest places for business and often referred to as the tax haven of Europe.

Corporate taxes are currently at 9% with royalties and capital gains about the same, there are no surtaxes or minimum taxes for companies conducting business in Montenegro.

Resident individuals pay a maximum of 15% on salary earnings, and tax relief can be applied on foreign sources of income. Montenegro has fast become a popular destination for foreign investments.

Montenegro is the only country in the world that uses the euro as its domestic currency, though it is not yet an official member of the European Union. 

The European Commission has used a specific approach for this matter and allowed Montenegro to continue to use the euro currency as its legal tender, as a part of the integration towards the eurozone. 

Besides cash, credit cards and bank cards are used in most shops and restaurants.

Banks in Montenegro provide a broad range of retails and choosing the right bank will depend on your personal needs and tendencies. The most popular banks in the country are First Bank of Montenegro, Erste Bank AD Podgorica, and Societe Generale Bank Montenegro, and they are the default option for ordinary inquiries. 

However, investment banking solutions, for example, are provided by three banks Hipotekarna Bank, Invest Bank Montenegro, and previously mentioned First Bank of Montenegro, offering amenities such as securities trading and custody services. 

Private banking on the other hand is only offered by CKB (Crnogorska Komercijalna Banka). 

The good thing is that most banks within the Montenegro banking system charge symbolic fees on a monthly basis with the accounts monthly maintenance often costing only a euro (fees rarely exceed 5€), and standard service fees for international transfers and certified checks.

A good place to start when deciding how to choose the right bank for you is identifying the type of account you need, according to financial goals and priorities. 

If you are new in town and you need casual citizenship services, it would be a good idea to choose one of the more popular banks in the country, since they will have the most branches in and around the city. Accessibility is a factor that many consumers overlook and considering this early-on in the process can be very helpful in future. 

If you need specific services then your focus should be on choosing a bank which can assist you in meeting those needs.  

To improve regulation of the banking sector and elevate depositor safety, increasing trust in the banking sector itself, the Montenegrin government has established a new set of policies. These new regulations have introduced a deposit protection scheme, which is supported by a generous safe fund. 

This protection scheme guarantees reimbursement of customers in the case of bankruptcy within any branch in the Montenegro bank system.

The fund for the deposit protection guarantees a payoff in case of need, to all of the natural and legal persons, up to the amount of 50,000€. Almost all accounts, including current and saving accounts are insured. 

It is important to note that deposits by non-residents are also covered by this program.

The 15 banks operating in Montenegro offer a variety of banking services and to have access to them you will have to open an account with one first. 

Usually, there are two types of bank accounts at Montenegrin banks, depending on the location of the desired transaction, you can open a national or an international account. 

If you are looking to make transactions within the borders of Montenegro, you should choose a national account, which should be enough for everyday payments such as paying bills or rent.

International accounts are necessary for those in need of moving money in and out of the country. 

The procedure for opening an account as an individual is uncomplicated and the only requirement is holding a valid passport. All documents are signed in English.

In the past, remote opening was an option, however now you will have to visit your local bank branch in person. NB: Some banks require the account holder to have an existing tie to the country to open a bank account. 

When it comes to opening a bank account for company purposes, the procedure is a bit more complicated. Besides a valid passport, you will also need some recent documents with apostille (less than 3 months old) for the bank to keep and sometimes the company stamp may be required. 

If you are a non-resident please note that paying bills and fees is only possible from your national account. Most banks offer fee-free transfers between your national and international accounts. 

This can be especially useful for those in need of a European bank account for themselves or their business.

Before 2018, anyone with zero ties to Montenegro could show up at the bank with a passport and open an account in no time and most accepted offshore companies. However, the closer Montenegro gets to EU accession, the harder opening an account here becomes. 

In addition to all of the tax reliefs,  Montenegro’s banking system has a lot of advantages when it comes to banking, making it a favoured destination for foreign investments. If you are looking to invest in real estate in Montenegro, we warmly recommend looking into Porto Montenegro. Montenegro has great tourist potential and we think everyone should try and visit the natural beauties of this country.