Decision on Minimum Standards for Investment of Credit Institutions in Immovable Property and Fixed Assets

[unofficially consolidated translation] DECISION ON MINIMUM STANDARDS FOR INVESTMENT OF CREDIT INSTITUTIONS IN IMMOVABLE PROPERTY AND FIXED ASSETS (OGM 126/20 of 25 December 2020, 020/24 of 7 March 2024) Subject matter Article 1 This Decision prescribes the minimum standards for investment of credit institutions in immovable property and fixed assets. Immovable property and fixed assets Article 2 (1) Immovable property, within the meaning of this Decision, means land, buildings and other immovable property that the credit institution records in its business books as funds held for sale or as other assets in accordance with the decision governing chart of accounts of credit institutions. (2) Fixed assets, within the meaning of this Decision, means asset items that a credit institution records in its business books in the accounts 1801 to 1830 in accordance with the decision governing chart of accounts of credit institutions. Limitation of investments Article 3 (1) Total investments of a credit institution in immovable property and fixed assets shall not exceed the amount of credit institution’s Common Equity Tier 1 capital, calculated before including the amount referred to in paragraph (2) item 1) of this Article. (2) By way of derogation from paragraph (1) of this Article, a credit institution may have investments in immovable property and fixed assets exceeding the amount of its Common Equity Tier 1 capital, provided that the following requirements have been met:

1. A credit institution treats the investment in immovable property and fixed assets exceeding the amount of credit institution’s Common Equity Tier 1 capital calculated as a deductible item in the calculation of credit institution’s Tier 1 capital;
2. after the deduction from credit institution`s Common Equity Tier 1 capital in line with item 1) of this paragraph, the level of own funds and the solvency ratio shall be higher than the prescribed minimum. Treatment of acquired immovable property Article 4 (1) When calculating the total amount of investment in immovable properties and fixed

[unofficially consolidated translation]

---

Decision on Minimum Standards for Investment of Credit Institutions in Immovable Property and Fixed Assets (OGM 126/20, 20/24) 2 assets, for the immovable property acquired as an exchange for receivables in debt restructuring process, bankruptcy proceedings, liquidation proceedings of the credit institution’s debtor, in the process of reorganisation of debtor in accordance with regulations governing bankruptcy proceedings or in the process of execution for the purpose of settling credit institution’s receivables, a credit institution shall include 100% of the value of such immovable property into the calculation if more than two years have elapsed since the day of the acquisition of that immovable property. (2) If the credit institution, in the process of execution, for the purpose of settling receivables or in another process referred to in paragraph (1) of this Article, reacquires immovable property that it has previously disposed of, for the purposes of calculating the total amount of investment in immovable property and fixed assets in accordance with paragraph (1) of this Article, the date of the first acquisition of immovable property before disposal shall be deemed to be the date of the acquisition of that immovable property. Reporting to the Central Bank of Montenegro Article 5 (1) A credit institution shall submit to the Central Bank of Montenegro data on the type, time of acquisition and value of immovable property acquired, filled out in the Template SN which is attached to this Decision and makes its integral part thereof. (2) Data referred to in paragraph (1) of this Article shall be submitted twice a year as follows:

1. by end of February of the current year (data as at 31 December of the previous year); and
2. by end of July of the current year (data as at 30 June of the current year). Repealed regulations Article 6 As from the commencement date of application of this Decision, the Decision on minimum standards for investment of banks in immovable property and fixed assets (OGM, 24/09, 66/10, 58/11, 61/12, 13/13, 51/13, 16/15, 82/17) shall be repealed. Entry into force Article 7 This Decision shall enter into force on the eighth day following that of its publication in the Official Gazette of Montenegro, and it shall apply as of 30 June 2024. THE COUNCIL OF THE CENTRAL BANK OF MONTENEGRO

[unofficially consolidated translation]

---

Decision on Minimum Standards for Investment of Credit Institutions in Immovable Property and Fixed Assets (OGM 126/20, 20/24) 3 TEMPLATE SN Name of credit institution OVERVIEW OF ACQUIRED IMMOVABLE PROPERTIES As of ________ No Type of immovable property¹ Acquisition date ² Value ³ 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. TOTAL:

---

/name and last name/signature/phone no. of authorised person/ ¹ Type of immovable property (land, commercial property, residential property). ² Date when the credit institution’s ownership of the property is entered in the cadastre register. If the credit institution reacquires immovable property that it has previously disposed of, the date when the credit institution's ownership of that immovable property was entered in the real estate cadastre upon the first acquisition of that immovable property shall be entered. ³ Value of property determined in accordance with IAS/IFRS.