Publication: Bosnia and Herzegovina Financial Sector Assessment
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2015-06
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2015-07-20
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Bosnia and Herzegovina (BiH) is still dealing with the aftershocks of the global financial crisis that have weakened financial sector asset quality and profitability. System-wide solvency and liquidity indicators appear broadly sound, but significant pockets of vulnerability exist among domestically-owned banks. Banking and insurance oversight have improved since the 2006 financial sector assessment program (FSAP), but a number of important shortcomings in some segments remain. Decisive and immediate actions to deal with weak banks are critical for preserving financial stability. The legal framework governing creditor and debtor relationships is comprehensive, however neither debt resolution, businesses reorganization, nor bankruptcy liquidation work effectively. The financial reporting framework has improved recently and is substantially aligned with the acquis communautaire and harmonized between the two entities. Governance processes of state-owned banks reveal a number of concerns. There is a need to further strengthen the supervisory board selection process and internal audit functions of state banks. The Development Bank of the Federation of BiH is only partially supervised by the Banking Agency of the Federation of BiH (FBA). Specific strategies and exit plans for the Republika Srpska (RS) government’s support of the financial sector are undefined.
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“World Bank; International Monetary Fund. 2015. Bosnia and Herzegovina Financial Sector Assessment. © World Bank. http://hdl.handle.net/10986/22260 License: CC BY 3.0 IGO.”
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