CONTEXT AND TRENDSIt has been a difficult year for Serbia as the recovery from the 2008 financial crisis remains painstakingly slow. Furthermore, there was political instability in the country until Tomislav Nikolić, founder of the Serbian Progressive Party, was elected as president from 31 May 2012....
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CONTEXT AND TRENDS
It has been a difficult year for Serbia as the recovery from the 2008 financial crisis remains painstakingly slow. Furthermore, there was political instability in the country until Tomislav Nikolić, founder of the Serbian Progressive Party, was elected as president from 31 May 2012. "Nikolić started the Serbian Progressive Party," one partner says. "It spilt from the Serbian Radical Party and instead of nationalistic rule it changed to pro EU. The main goal is the EU but there is a strong national element and this might be difficult to keep together especially with the Kosovo question." In fact, the Kosovo question is vital to Serbia's EU aspirations and the EU has been clear that it needs a visible improvement in relations between the two countries.
In the financial markets, there has been a decline in new money, particularly in real estate and an increase in restructuring on non-performing loans, workouts and acquisitions of distressed assets. "The financial market is one step from collapse," one partner says. "The new government has a lot of problems. If you have an economic crisis in Greece that's one issue but in Serbia it is a completely different issue. It's difficult because of the development of the country. It's a weak economy with a lot of bad debt. It's not easy to be a politician." In fact, the government has found it so hard to find finance; they've turned to cash rich Azerbaijan, China and Russia. Nevertheless, the EBRD (European Bank for Reconstruction and Development), EIB (European Investment Bank), IMF and ITC continue to be the major lenders in the Serbian market. Also, this year, the country made its debut Eurobond issue.
The only real successful industry in the last 12 months has been the automotive industry as investors like the Serbian market because of state subsidies and previous good experience with respect to the Serbian labour force. Furthermore, M&A was subject to a slowdown, but huge movement is expected in the banking sector. "Everyone wants to sell," one partner says. "The local banks struggle with capital and the regional players want to exit. The key question is will they find a buyer?"
On the legislative front, in a bid to move closer to Europe, the law in Serbia is changing rapidly. For example, there is a completely new company law, capital markets law and PPP (public-private partnership) law. "It's too fast for my taste and for foreign investors' taste too," one practitioner explains.
MAJOR LATERAL HIRES
Nedeljka Sorak
From: CMS Reich-Rohrwig Hasche Sigle
To: Jankovic Popovic & Mitic
Marina Papadakis
From: Zivkovic & Samardzic
To: National Bank of Serbia
Julijana Jevtić
From: Jankovic Popovic & Mitic
To: Wolf Theiss
MAJOR LEGISLATION CHANGES
The Company Law (No 36/2011)
Applied as of February 1 2012
Capital Market Law (No 31/2011)
In effect as of May 17 2011 and applied as of November 17 2011
New Law on Public-Private Partnerships and Concessions (No 88/2011)
In effect as of December 2 2011
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