Montenegro is advancing reforms to strengthen supervision of financial groups spanning banking, insurance and investment services, as it works toward completing EU alignment under Chapter 9 – Financial Services. The government has adopted amendments to the Law on Financial Conglomerates to align supplementary supervision with EU Directive 2002/87/EC, which covers financial groups operating across multiple regulated sectors.
The amendments are intended to improve oversight of risks that may not be fully identified when banks, insurers and investment firms are supervised separately. The reform expands the focus toward consolidated supervision of ownership structures, capital adequacy, intra-group transactions and risk concentration.
Link to EU Accession
The legislation is directly connected with Montenegro’s EU accession negotiations under Chapter 9, which covers banking, insurance, securities markets, investment services and financial-market infrastructure. The government expects adoption of the amendments to complete legislative alignment in the financial conglomerates area and support progress toward provisional closure of Chapter 9.
Parliament must still approve the amendments before they become law. The changes are particularly relevant as Montenegro’s financial sector becomes increasingly integrated with larger European groups. Most banking assets are controlled by subsidiaries of foreign banking groups, while the insurance sector includes regional and European owners. That structure increases the importance of cooperation between domestic regulators and supervisory authorities in foreign jurisdictions.
Consolidated Financial Oversight
Financial conglomerate rules are intended to identify risks that can move between subsidiaries within the same ownership structure. A bank may satisfy its individual capital requirements while the wider group carries exposure through an insurer or investment company. Related-party transactions can also transfer liquidity or risk without materially altering consolidated exposure. The EU framework therefore adds supplementary controls to sector-specific supervision of individual banks, insurers and investment firms.
For regulated groups, alignment is expected to involve more detailed consolidated reporting, identification of group-wide risks and closer monitoring of related-party transactions. The framework also strengthens attention to capital adequacy at conglomerate level and coordination between authorities supervising different financial activities. Montenegro’s Central Bank, insurance supervisor and capital-market authorities will consequently require increasingly integrated supervisory processes as the country moves toward EU membership.
Banking Sector Growth
The reform comes as the Central Bank strengthens its institutional readiness for eventual integration into the European System of Central Banks, forming part of wider changes to Montenegro’s financial architecture ahead of accession. The banking system remains highly liquid and profitable, while credit growth and increasing financial-sector complexity raise the importance of group-level risk supervision.
Total banking-sector loans stood at around €5.8 billion at the end of June, more than 12% higher year on year, while deposits exceeded €6 billion. Banks recorded aggregate profit of approximately €64.5 million during the first half of 2026. The scale of the sector increases the potential systemic impact of weaknesses in group-level risk management.
Compliance and Supervisory Capacity
EU accession will bring Montenegro closer to the bloc’s supervisory and resolution architecture. Alignment with EU rules can also reduce regulatory differences between Montenegro and the home jurisdictions of foreign-owned banks and insurers, potentially reducing cross-border compliance differences. The amendments are not expected to immediately alter profitability or capital requirements across the entire sector. Their main effect is expected through stronger governance and risk-control standards.
Institutions with simple ownership structures should face relatively limited adjustments, while groups combining banking, insurance, asset management or investment activities could face greater reporting and compliance requirements. Parliamentary approval remains the immediate milestone. Even after Chapter 9 closure, Montenegro would still need to demonstrate that regulators have the staff, systems and independence required to enforce the rules effectively. If approved without significant gaps, the financial-conglomerate amendments would remove another technical obstacle to Chapter 9 closure and further align Montenegro’s financial sector with the supervisory framework applicable within the EU.
