Credit Line to the Deposit Insurance Agency of BiH

cancelled

The EBRD is considering providing the Deposit Insurance Agency of Bosnia and Herzegovina with a stand-by credit line in the amount of EUR 50 million. The Agency would be permitted to drawdown funds from this credit line under certain pre-agreed conditions with the purpose of making funds available to pay out to depositors. The aim of the credit line is to increase confidence in the country’s financial sector by enabling the Agency to increase deposit insurance coverage to 50’000 KM, in response to recent increases in Deposit Insurance Coverage in neighbouring countries. The product has been designed to allow the Agency to accumulate funds safely over time without placing undue pressure on the banking system. It is designed to expire once the Agency no longer requires EBRD support. Customer deposits are a key source of funding for the banking system. A well functioning deposit insurance scheme is a key component of a country’s financial infrastructure and helping the development of such schemes that engender trust in the financial system is a key priority. In Bosnia and Herzegovina the deposit insurance scheme was established only recently, with a donation from USAID and KfW. The deposit insurance scheme has worked well so far and the authorities’ decision to increase the deposit insurance coverage in order to catch up with neighbouring countries was a necessary development in the current environment. The EBRD support will provide further stability to the system and strengthen the Agency. The Agency is an independent, non-profit legal entity designed to provide deposit insurance to all individuals that hold accounts with member banks. A committed stand-by credit line in the amount of EUR 50 million, supported by sovereign guarantee. EUR 50 million. Not applicable. None.