Law Office Lazarov Attorney at Law Gordana Susuleska-Itic talks about banking and finance in 2025 in North Macedonia.
CEELM: What is in the pipeline in terms of legislation that you believe will have the most impact on the banking/finance sector in North Macedonia?
Susuleska-Itic: The changes in the legal regulations in the Republic of North Macedonia due to its alignment with the Markets in Financial Instruments Directive II EU regulation, especially the new Financial Instruments Law (Official Gazette of RNM no.66/2024), have imposed a need for harmonization and adjustments to the operations of banks as key market participants. The law requires harmonization in several aspects, such as internal (re)organization, changes in internal operating procedures or introduction of new ones, as well as harmonization of the bank’s internal acts. Hence, the most significant legislative pipeline items in North Macedonia are the by-laws arising from the Financial Instruments Law, which should be adopted by September 2025 – a total of 75. Currently, 26 new by-laws have been adopted, leaving 49 new by-laws to be adopted in the following six months. Their implementation will have the biggest impact on the financial sector in North Macedonia.
CEELM: Of the above, which ones are you/your clients most excited about and why?
Susuleska-Itic: The novelties imposed by the Financial Instruments Law offer several benefits for financial institutions, even though its implementation may present challenges. These benefits primarily stem from the law’s alignment with EU standards, which enhance the stability, transparency, and efficiency of the financial system. Increased market transparency and confidence will reduce uncertainty. This provides a clearer framework for conducting business and helps attract investors. By aligning with EU regulations, the law boosts trust in North Macedonia’s financial markets, attracting more foreign and domestic investors. Easier cross-border transactions and partnerships with EU-based financial entities will open new channels for investment and trade. By bringing in stricter standards, financial institutions will establish robust risk management frameworks that reduce operational risks. Financial institutions that are early adopters of the law’s provisions can position themselves as leaders in compliance and attract both institutional and retail clients who value security and regulatory adherence and can attract EU-based clients.
CEELM: On the flip side, which ones are you/your clients dreading the most and why?
Susuleska-Itic: Considering that the adoption and establishment of the latest set of regulations is an ongoing process, there is still a level of uncertainty among our clients on whether they will have the capacity to adapt and implement the novelties in their everyday business within the given timeframe.
Financial institutions may need to invest in new technologies or enhance existing infrastructure to handle the finality of transactions and settlements as per EU norms. This could involve significant costs and resource allocation, particularly for smaller institutions. With stricter regulations, financial institutions will face increased scrutiny from local and EU regulators. This could lead to more frequent audits, compliance checks, and penalties for non-compliance, which could increase operational costs.
Institutions may need to adjust their trading platforms, clearing processes, and contract frameworks to accommodate the law’s stipulations, which could involve significant operational changes and delays in implementation.
The shift to a more stringent regulatory environment increases the risk of fines or penalties for non-compliance, especially if financial institutions are slow to adopt the necessary changes.
CEELM: What trends do you expect to shape the banking sector in North Macedonia in 2025?
Susuleska-Itic: In 2025, North Macedonia’s banking sector will be characterized by digital innovation, regulatory alignment with EU standards, and a growing emphasis on sustainability and personalized services. While these trends bring opportunities for growth and improved customer experience, they also present challenges for banks that need to adapt to an increasingly competitive and complex environment. Cybersecurity, financial inclusion, and digital transformation will likely be at the forefront as the sector continues to evolve.
CEELM: What is the biggest challenge for the banking sector in North Macedonia at the moment, in your view, and what is the likelihood you’ll see it overcome in 2025?
Susuleska-Itic: While the banking sector in North Macedonia is making strides in overcoming these challenges, digital transformation and cybersecurity will remain ongoing concerns through 2025.
The implementation of AI in North Macedonia’s banking sector depends on developing the necessary infrastructure for AI education, fostering innovation, and adopting a national strategy along with ethical guidelines. Without these foundational elements, the country risks falling behind in AI advancement, despite its strong IT sector and investment appeal. AI presents significant opportunities for the banking sector in North Macedonia if addressed and implemented properly.
This article was originally published in Issue 12.1 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
