Bosnia and Herzegovina Financial Sector Assessment
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 significa...
| Main Authors: | , |
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| Language: | English en_US |
| Published: |
Washington, DC
2015
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2015/07/24782201/bosnia-herzegovina-financial-sector-assessment http://hdl.handle.net/10986/22260 |
| Summary: | 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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