Banking Sector Strengthening Project

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The objective of the Banking Sector Strengthening Project for Bosnia and Herzegovina is to improve the soundness of the banking sector by enhancing bank regulation, supervision and resolution capacity and by enhancing the governance of the Entity development banks. There are five components to the project, the first component being strengthening regulation and supervision aligned with the third Basel regime, tailored to the level of development of the banking sector. This component focuses on strengthening banking sector regulation and supervision aligned with the third Basel regime, tailored to the level of development of the banking sector. The second component is the addressing weaknesses in the banking sector. The third component is the operationalizing the new bank resolution framework. The project will support the authorities in implementation of the bank resolution framework as foreseen in the Banking Laws. The Disbursement Linked Indicators (DLIs) focus on preparation and adoption of a key set of bylaws and decisions related to bank recovery and resolution, establishment and operationalization of dedicated bank resolution units within Banking Agency of the Republika Srpska (BARS) and Federal Banking Agency (FBA), adoption of an internal assessment methodology for recovery plans and subsequent assessment of recovery plans to be submitted by all banks to FBA and BARS. The fourth component is the Improving governance and business model of entity development banks. This component supports strengthening of institutional, corporate governance, and supervisory arrangements of the entity development banks, and updating their strategies. Finally, the fifth component is the technical assistance. The selection of reform areas also takes into account gaps in assistance and areas already being supported by other development partners.