The World Bank Banking Sector Strengthening Project (P158387) REPORT NO.: RES43317 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF BANKING SECTOR STRENGTHENING PROJECT APPROVED ON APRIL 28, 2017 TO BIH MINISTRY OF FINANCE AND TREASURY FINANCE, COMPETITIVENESS AND INNOVATION EUROPE AND CENTRAL ASIA Regional Vice President: Anna M. Bjerde Country Director: Linda Van Gelder Regional Director: Lalita M. Moorty Practice Manager/Manager: Mario Guadamillas Task Team Leader(s): Johanna Jaeger, Ruvejda Aliefendic The World Bank Banking Sector Strengthening Project (P158387) ABBREVIATIONS AND ACRONYMS AQR Asset Quality Review BA Banking Agency BARS Banking Agency of the Republika Srpska BiH Bosnia and Herzegovina DB Development Bank DLI Disbursement Linked Indicator DLR Disbursement Linked Results EBA European Banking Authority EU European Union FBA Federal Banking Agency FBiH Federation of Bosna and Herzegovina IRBRS Investment Development Bank of the Republika Srpska KM Bosnia and Herzegovina Convertible Marka MoF Ministry of Finance MoFT Ministry of Finance and Treasury PDO Project Development Objective PIT Project Implementation Team PP Procurement Plan QIS Quantitative Impact Study RBFBiH Development Bank of the Federation of Bosnia and Herzegovina RS Republika Srpska RS IDB RS Investment Development Bank SME Small and Medium-sized Enterprise SOE Statement of Expenditure SORT Systematic Operations Risk-Rating Tool SREP Supervisory Review and Evaluation Process WB World Bank The World Bank Banking Sector Strengthening Project (P158387) BASIC DATA Product Information Project ID Financing Instrument P158387 Investment Project Financing Original EA Category Current EA Category Not Required (C) Not Required (C) Approval Date Current Closing Date 28-Apr-2017 30-Jun-2021 Organizations Borrower Responsible Agency Republika Srpska Ministry of Finance,FBiH Ministry of BiH Ministry of Finance and Treasury Finance Project Development Objective (PDO) Original PDO The Project Development Objective (PDO) 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. Current PDO The Project Development Objective (PDO) is to improve the soundness of the banking sector by enhancing bank regulation, supervision and resolution capacity and by enhancing the development finance framework for Covid-19 affected enterprises. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-87410 28-Apr-2017 31-Oct-2017 25-Oct-2018 30-Jun-2021 60.00 54.70 9.00 The World Bank Banking Sector Strengthening Project (P158387) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. This Restructuring Paper seeks approval to restructure the Project to help address challenges of the Covid-19 pandemic as well as implementation delays of the development banks reforms in order to increase the likelihood of meeting the Project Development Objective (PDO). The Bank received a request for restructuring from the Ministry of Finance and Treasury (MoFT) on October 13, 2020, preceded by the request from the Ministry of Finance (MoF) of Federation BiH (FBiH) on October 6, 2020. The rationale for the restructuring was underlined by the need to secure resources for the FBiH to address the continued impact of the Covid-19 pandemic on the economy. The restructuring includes the following elements: (i) revision to the project Disbursement Linked Indicators (DLIs), (ii) reallocation of proceeds between components and disbursement categories, (iii) revision to the results indicators, and (iv) restructuring of Component 4 in response to Covid-19 and the delays faced as part of the development banks reforms. The project closing date was previously extended during a restructuring of the Republika Srpska part from December 31, 2020 to June 30, 2021. The restructuring was completed and an Amendment No. 1 to the Loan Agreement signed on July 2, 2020. 2. The Project is designed to support the authorities in strengthening Bosnia and Herzegovina’s (BiH) banking sector by improving bank regulation and supervision, addressing weaknesses in the banking sector, establishing the new bank resolution frameworks, and enhancing the governance and operation of the entity development banks. The Project’s objectives remain highly relevant, especially during and in the aftermath of the Covid-19 pandemics. 3. The project design continues to be unique and ensures that activities related to the banking sector are fully harmonized between the entities, creating a uniform environment for banking sector operation. In a fragmented environment this design provides stability, transparency, and predictability for banks and supervisors alike, creating a more stable and resilient financial sector benefiting businesses and citizens. A. Overall Project Status 4. The project continues to deliver strongly, and the ratings for the progress towards achieving the PDO is Moderately Satisfactory, while the implementation progress was upgraded to Satisfactory during the last Implementation Status and results Report (ISR) filed on September 8, 2020. The MS rating of the PDO reflects delays primarily because reforms related to the development banks were stalled by elections and post-election delays in the formation of a government in the Federation of Bosnia and Herzegovina (FBiH) and at the level of BiH institutions. In addition, deliberations of the working group in the RS took longer than anticipated, having completed its findings only in early 2020. Both entities have taken steps to address the delays and deal with institutional improvements, starting by nominating a new management in both entities. As the work on the development bank component got back on track in FBiH, the outbreak of Covid-19 and economic unravelling has put these plans back on hold. In FBiH, the authorities have restarted the work on preparation of the new FBiH Development Bank Law, aiming to address long-standing deficiencies of the existing legislation and to bring it in line with the FBiH Law on Banks. A multi- institutional working group comprising MoF, Development Bank (DB) and the Federation Banking Agency (FBA) representatives The World Bank Banking Sector Strengthening Project (P158387) was established during the summer 2020 to facilitate this work and has already met to discuss the scope of the new DB law. The Entity Governments remain fully committed to the development bank reform agenda, once the emergency mode passes. 5. The project was made effective for the RS component on October 25, 2018, while the conditions for withdrawal in the FBiH were lifted on April 28, 2020, three years after the Board date. The Project progress against disbursement linked results (DLRs)1 was strong from the onset of the project implementation in both entities, resulting in full achievement of all DLRs for Components 1 through 3 for both entities. These components included i) strengthening regulation and supervision aligned with the Basel III regime, tailoring it to the level of development of the banking system in BiH, ii) enhancement of the terms of reference for asset quality reviews (AQRs) of banks and the subsequent enforcement of the AQRs findings, and iii) introducing and making operational of the new bank resolution frameworks. A total of 40.6 m Euros was withdrawn to date, amounting to 85 percent of the overall project. Table 1: Disbursement status by Component, as of October 16, 2020 Total Revised Loan Amount Disbursed (EUR) (EUR) RS FBiH RS FBiH Total (%) Component 1 8,539,250 6,039,250 8,539,250 6,039,250 100 Component 2 7,080,000 7,080,000 7,080,000 7,080,000 100 Component 3 7,080,000 7,080,000 7,080,000 7,080,000 100 Component 4 5,530,000 7,080,000 5,000,000 0 39.7 Unallocated 0 950,000 0 70,000 7.3 technical assistance component Front-end fee 141,500 141,500 100 Total 56,600,000 27,699,250 20,269,250 85 (including front-end fee) 6. The need for Project restructuring arises because of two reasons. First, in response to the Covid-19 outbreak, the authorities have requested the World Bank to refocus part of the unspent resources under Component 4 and the unallocated technical assistance component on expanding the existing development finance framework in FBiH by enabling one of their development finance institutions (FBiH Development Bank) to launch a temporary partial credit guarantee scheme providing financing to COVID-19 affected enterprises through adoption of framework for this scheme by adopting a Government Decree to govern details of its implementation. The Project will not capitalize this guarantee scheme nor provide financing for the firms but rather help the authorities to set up an appropriate framework for such emergency mechanisms. The Bank team worked in close coordination with other IFIs, particularly the European Bank for Restructuring and Development (EBRD) who are planning to provide a stand-by credit line backstop the credit guarantee fund. Given the renewed delays to the structural development bank reform agenda due to the pandemic, there is a need to strike a balance between a somewhat reduced level of reform ambition under Component 4 while keeping the strategic refocusing of the Entity development banks part of the project. The focus being on strategic direction of the reforms now and in the post-pandemic time, providing a key first step in putting these banks on sounder footing. The FBiH Ministry of Finance supports continuation of the reforms of the development bank under 1The terminology Performance-Based Condition (PBC) has replaced Disbursement Linked Indicator (DLI) and Disbursement Linked Result (DLR). For consistency purposes with the Project Appraisal Document DLI and DLI are being used in this restructuring paper. The World Bank Banking Sector Strengthening Project (P158387) an extended timeline once the Covid-19 pandemic gives the authorities a much-needed break from addressing health and immediate economic issues. This is confirmed in the letter seeking project restructuring. As the economic impact of the pandemic on the economy is being addressed by the authorities, the Bank and the authorities are reengaging on the strategic direction and drafting of the new Development Bank law. This activity will spill over into first half of 2021 with a new deadline for achievement of the DLR set at end-June 2021. Furthermore, an additional reform step in the operationalization of the new Supervisory Review and Evaluation Processes (SREP) methodology adopted in December 2019 is added as a new DLR under Component 1. Therefore, this restructuring is meant to reprogram unallocated funds and revise Component 4 under an extended project timeline to allow for full disbursement in line with the PDO revised in July 2020. 7. Fiduciary arrangements for the Project are acceptable. The procurement risk rating of the Project is moderate, as neither of the implementing agencies have experience in Bank-procurement, nor have a procurement specialist in place. However, the use of procurement is highly limited as per Project’s design. In the FBiH, the procurement plan contained in the disclosed PAD is updated to include the selection of two consultants (Project Manager and Financial Management Specialist), and small shopping for the equipment for the Project Implementation Team’s (PIT) and has been disclosed on the Bank’s external website on August 10, 2020. Financial management arrangements of the Project continue to be adequate as per the latest desk review undertaken on September 10, 2020. There are currently no overdue project audit reports and interim unaudited financial statements. The Project audit report for the FY 2019 have been received tamely and were found acceptable. No accounting issues and internal controls deficiencies were reported by the auditors in the management recommendation letters. 8. The original project does not include activities that have associated environmental and social impacts and therefore does not trigger any WB environmental and social safeguards policies. Therefore, the project has been assigned a Category ‘C’ in accordance with the WB safeguard policy OP/BP/GP 4.01. The activities proposed under the restructuring also do not have any environmental and social impacts or implications and as such, there are no changes to the environmental category assigned, nor is there any change in the due diligence. 9. Citizen engagement indicators remain unchanged. II. DESCRIPTION OF PROPOSED CHANGES 10. The proposed changes include the following elements: (i) revision to the project Disbursement Linked Indicators (DLIs), (ii) reallocation of proceeds between components and disbursement categories, (iii) revision to the results indicators and (iv) restructuring of Component 4 in response to Covid-19 and the delays faced as part of the development banks reforms. Adjustment of DLIs 11. Full matrix of proposed adjustment to DLIs is provided in performance-based conditions matrix and a simplified version is attached as Annex 1. Summary of the changes includes: Component 1. Strengthen bank regulation and supervision aligned with Basel II/III regimes The World Bank Banking Sector Strengthening Project (P158387) 12. An additional DLR 1.4 (FBA adopted the SREP operational procedure) will be included, with an allocation of EUR 2.5mln and a timeline by end December 2020. This is a key reform step in the operationalization of the new SREP methodology that was adopted in December 2019. Component 2 and 3: No changes are proposed. Component 4. Improved governance and business model of the FBiH development bank 13. The title of Component 4 will be changed to “Promote access to finance of COVID-19 affected enterprises through liquidity measures while maintaining financial stability as well as improving the governance of the FBiH development bank” 14. DLR 4.2. and 4.3 will be dropped to adjust to the increased importance of the role of development finance institutions in providing counter-cyclical financing to COVID-19 affected enterprises. The new DLRs focus on the creation of a development finance framework in FBiH by enabling a framework for the FBiH Development Bank to launch and administer a partial credit guarantee scheme to provide financing to COVID-19 affected enterprises. The new framework is created on the basis of the Law on mitigating the negative economic consequences (The Covid Law) FBiH (Official Gazette FBiH N° 28/20) and via adoption of a Government Decree to create conditions for institutional and operational arrangements for a partial credit guarantee scheme. The Decree is a government-adopted act that specifies the operational arrangements the FBiH DB would administer as a response to COVID-19, including its nature, the terms and conditions, eligibility, institutional and administrative management. However, given the Government’s continued focus and determination to reform the FBiH development bank, current DLR 4.1 will be kept and expanded (now as DLR 4.2: FBiH Government to approve a strategic statement for RBFBIH future development and adopt a draft2 new Law on Development Bank), but its timeline will be shifted to end-June 2021 to reflect the implementation delays and allow enough time to complete this vital reform step supported by the Project. Changes in the Results Framework 15. The PDI 3 indicator will be adjusted to read as follows: “Development finance framework for Covid-19 affected enterprises enhanced.” Description: The FBiH Government has adopted measures expanding the existing development finance framework in FBiH by enabling FBiH Development Bank to launch a partial credit guarantee scheme providing financing to COVID-19 affected enterprises through adoption of a detailed Government Decree. 16. Changes to several intermediate indicators are provided in the results framework. These reflect the proposed adjustments to the project implementation and the revised closing date outlined above. Reallocation of proceeds between components and disbursement categories FBiH 17. As discussed above, in response to the Covid-19 outbreak, the authorities have requested the World Bank to refocus part of the unspent resources under Component 4 and the unallocated technical assistance component to measures addressing liquidity shortages of Covid-19 affected businesses as well as an additional reform step in the operationalization of the new SREP methodology adopted in December 2019. The unallocated technical assistance component will remain at 70,000 Euros to be used for agreed purposes until June 30, 2021. 2 Draft Law refers to the version adopted by Government and ready for the Parliament’s first reading. The World Bank Banking Sector Strengthening Project (P158387) 18. Under Component 1, a new DLR3 1.4 (FBA adopted the SREP operational procedure) is being introduced with an allocation of EUR 2.5 million. This DLR is an additional key reform in the operationalization of the new SREP methodology to be achieved by end-2020. 19. Under Component 4, the original DLR 4.1. becomes an expanded DLR 4.2 (Adoption by the FBiH Government of a strategic statement for RBFBIH future development and adoption of a draft new Law on Development Bank) with an appropriately increased allocation of EUR 2.96 million. The original DLIs 4.2 will be dropped to reflect the expanded new DLR 4.2, while 4.1. will be replaced by measures focused on expanding the existing development finance framework in FBiH by enabling one of their development finance institutions (FBiH Development Bank) to launch a partial credit guarantee scheme providing financing to COVID-19 affected enterprises through adoption of a Government Decree with an allocation of EUR 2.5 million.4 Other issues Following the restructuring, the Project Operations Manual will be revised to reflect the adjustments to the Project, including the verification protocols for the revised DLIs and the new implementation arrangements. 3 The terminology Performance-Based Condition (PBC) has replaced Disbursement Linked Indicator (DLI) and Disbursement Linked Result (DLR). For consistency purposes with the Project Appraisal Document DLI and DLI are being used in this restructuring paper. 4 Beyond liquidity support measures taken, in March 2020 in response to the COVID-19 crisis, the Banking Agencies in FBiH and RS introduced a decision on a 6-month moratorium on credit repayments of COVID-19 affected borrowers as well as measures to preserve banks’ capital. The moratorium was extended by 6 months and the grace period up to 12 months by subsequent decision adopted in August 2020. The World Bank Banking Sector Strengthening Project (P158387) III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ PBCs ✔ Reallocation between Disbursement Categories ✔ Implementation Schedule ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Cancellations Proposed ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_REALLOCATION _TABLE The World Bank Banking Sector Strengthening Project (P158387) REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IBRD-87410-001 | Currency: EUR iLap Category Sequence No: 1 Current Expenditure Category: FBiH Eligible Expenditure Program 27,279,250.00 20,199,250.00 28,159,250.00 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: G, non-CS, CS, TR, IOC for Part A.5 950,000.00 0.00 70,000.00 100.00 100.00 iLap Category Sequence No: 3 Current Expenditure Category: RS Eligible Expenditure Program 28,229,250.00 27,699,250.00 28,229,250.00 100.00 100.00 iLap Category Sequence No: 4 Current Expenditure Category: G, non-CS, CS, TR, IOC for Part B.5 0.00 0.00 0.00 100.00 100.00 iLap Category Sequence No: 6 Current Expenditure Category: PREMIUM FOR CAPS/COLLARS 0.00 0.00 0.00 Total 56,458,500.00 47,898,500.00 56,458,500.00 . The World Bank Banking Sector Strengthening Project (P158387) . Results framework COUNTRY: Bosnia and Herzegovina Banking Sector Strengthening Project Project Development Objectives(s) The Project Development Objective (PDO) is to improve the soundness of the banking sector by enhancing bank regulation, supervision and resolution capacity and by enhancing the development finance framework for Covid-19 affected enterprises. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 Banking Sector Strengthening PDI 1.a. (RS): All RS banks remain No No No No Yes well-capitalized (Text) PDI 1.a. (FBiH): All FBiH banks No No No No Yes remain well-capitalized (Text) PDI 1.b. (FBiH): FBA reviews and efficiently responds to cases when No No No No Yes banks do not meet prudential norms for capital adequacy (Text) PDI 1.b. (RS): BARS reviews and efficiently responds to cases when No No No No Yes banks do not meet prudential norms for capital adequacy (Text) PDI 2 (FBiH): FBA performing its legally mandated technical No No No No Yes functions in bank resolution (Text) The World Bank Banking Sector Strengthening Project (P158387) RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 PDI 2 (RS): BARS performs its legally mandated technical functions in No No No No Yes bank resolution (Text) PDI 3 (RS): Development finance framework for Covid-19 affected No No No No Yes entrprises enhanced (Text) PDI 3 (FBiH): Development finance f/w for Covid-19 affected No No No No Yes enterprises enhanced. (Text) Action: This indicator has been Revised PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 Strengthen bank regulation and supervision (Action: This Component has been Revised) IRI 1 (FBiH): Quantitative impact study on liquidity and capital PBC 1 No Yes Yes Yes Yes regulations completed (Text) IRI 2 (FBiH):Bylaws adopted on (i) capital; (ii) liquidity; (iii) risk management standards; (iv) ICAAP; PBC 2 No No Yes Yes Yes and (v) consolidated supervision (Text) The World Bank Banking Sector Strengthening Project (P158387) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 IRI 3 (FBiH): Adoption of new risk- based supervisory review and evaluation process (SREP) PBC 3, No No No Yes Yes methodology aligned with with EU 26 (European Banking Authority EBA) standards (Text) IRI 1 (RS): Quantitative impact study on liquidity and capital PBC 4 No Yes Yes Yes Yes regulations completed. (Text) IRI 2 (RS): Bylaws adopted on (i) capital; (ii) liquidity; (iii) risk management standards; (iv) ICAAP; PBC 5 No No Yes Yes Yes and (v) consolidated supervision (Text) IRI 3 (RS): Adoption of new risk based SREP methodology aligned PBC 6 No No No Yes Yes with EU (EBA) standards (Text) IRI 3a (RS): BARS adopted the SREP PBC 7 No Yes operational procedure (Text) IRI 3a (FBiH): FBA adopted the SREP No Yes Operational Procedures (Text) Action: This indicator is New Address weaknesses in the domestic banking sector IRI 4 (FBiH): FBA (i) adopted a harmonized 2017 AQR framework; (ii) approved the final reports of PBC 8 No Yes Yes Yes Yes AQRs of all banks in FBiH not previously subject to an AQR based The World Bank Banking Sector Strengthening Project (P158387) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 on the harmonized 2017 AQR framework. (Text) IRI 5 (FBiH): All undercapitalized banks have in place either mandatory time bound corrective PBC 9 No No Yes Yes Yes action programs or resolution/liquidation programs (Text) IRI 4 (RS): BARS (i) adopted a harmonized 2017 AQR framework; (ii) approved the final reports of AQRs of all banks in RS not PBC 11 No Yes Yes Yes Yes previously subject to an AQR based on the harmonized 2017 AQR framework. (Text) IRI 5 (RS): All undercapitalized banks have in place either mandatory time bound corrective PBC 12 No No Yes Yes Yes action programs or resolution/liquidation programs (Text) Improve Banking Agencies’ ability to undertake bank recovery and resolution functions IRI 6 (FBiH): Bylaw on recovery PBC 14 No Yes Yes Yes Yes plans adopted by FBA (Text) IRI 7 (FBiH): Resolution unit in FBA established and made operational PBC 15 No No Yes Yes Yes (Text) The World Bank Banking Sector Strengthening Project (P158387) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 IRI 8 (FBiH): Number of recovery plans submitted and assessed in PBC 16 0.00 0.00 8.00 15.00 15.00 line with internal assessment methodology (Number) IRI 6 (RS): Bylaw on recovery plans PBC 17 No Yes Yes Yes Yes adopted by BARS (Text) IRI 7 (RS): Resolution unit in BARS established and made operational PBC 18 No No Yes Yes Yes (Text) IRI 8 (RS): Number of recovery plans submitted and assessed in PBC 19 0.00 0.00 4.00 8.00 8.00 line with internal assessment methodology (Number) Improved governance and business model of the BiH development banks (Action: This Component has been Revised) IRI 9 (FBiH): FBiH Government to approve a strategic statement for PBC 20, RBFBIH future development and No Yes Yes Yes Yes 20 adopt a draft new Law on Development Bank (Text) Action: This indicator has been Revised IRI 10 (FBiH): RBFBIH’s business plan for 2018-20 approved by the PBC 21 No No Yes Yes Yes Shareholders Assembly (Text) Action: This indicator has been Marked for Deletion IRI 11 (FBiH): Gov't decision PBC 22, No No No Yes Yes adopted detailing eligibility and 22 The World Bank Banking Sector Strengthening Project (P158387) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 pricing criteria, impl'n arrangements for the temporary partial credit guarantee scheme providing financing to Covid-19 affected enterpr (Text) Action: This indicator has been Revised IRI 9 (RS): Approval by the RS Government of a statement PBC 25 No Yes Yes Yes Yes governing IRBRS’s future development. (Text) IRI 10 (RS): Adoption of a Government decree on a temporary partial credit guarantee PBC 23 No No Yes Yes Yes scheme providing financing to COVID-19 affected enterprises (Text) IRI 11 (RS): Gov't decision adopted detailing eligibility and pricing criteria, implement'n arrangements for the temporary partial credit PBC 24 No No No Yes Yes guarantee scheme providing financing to Covid-19 affected ente (Text) Citizen engagement IRI 12 (FBiH): Citizen Engagement: % of Project-supported bylaws 0.00 0.00 0.00 0.00 100.00 reflecting outcomes of consultations. (Percentage) The World Bank Banking Sector Strengthening Project (P158387) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 IRI 12 (RS): Citizen Engagement: % of Project-supported bylaws 0.00 0.00 0.00 0.00 100.00 reflecting outcomes of consultations. (Percentage) IO Table SPACE Performance-Based Conditions Matrix DLI IN00888472 ACTION PBC 1 DLR 1.1 (FBiH): Quantitative impact study on liquidity and capital regulations completed and results published Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output Yes Text 1,319,250.00 0.00 Period Value Allocated Amount (USD) Formula Baseline No Amount denominated in EURO as June 2021 Yes 1,319,250.00 per Loan Agreement DLI IN00888473 ACTION DLR 1.2 (FBiH):Bylaws adopted on (i) capital; (ii) liquidity; (iii) risk management standards; (iv) ICAAP; and (v) consolidated PBC 2 supervision Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output Yes Text 2,360,000.00 0.00 Period Value Allocated Amount (USD) Formula The World Bank Banking Sector Strengthening Project (P158387) Baseline No Amount denominated in EURO as June 2021 Yes 2,360,000.00 per Loan Agreement DLI IN00888474 ACTION DLR 1.3 (FBiH): Adoption of new risk-based supervisory review and evaluation process (SREP) methodology aligned with PBC 3 with EU (European Banking Authority EBA) standards Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output No Text 2,360,000.00 0.00 Period Value Allocated Amount (USD) Formula Baseline No Amount denominated in EURO as June 2021 Yes 2,360,000.00 per Loan Agreement DLI IN00888475 ACTION PBC 4 DLR 1.1 (RS): Quantitative impact study on liquidity and capital regulations completed and results published. Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output Yes Text 1,319,250.00 0.00 Period Value Allocated Amount (USD) Formula Baseline No Amount denominated in EURO as June 2021 Yes 1,319,250.00 per Loan Agreement The World Bank Banking Sector Strengthening Project (P158387) DLI IN00888476 ACTION DLR 1.2 (RS): Bylaws adopted on (i) capital; (ii) liquidity; (iii) risk management standards; (iv) ICAAP; and (v) consolidated PBC 5 supervision Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output Yes Text 2,360,000.00 0.00 Period Value Allocated Amount (USD) Formula Baseline No Amount denominated in EURO as June 2021 Yes 2,360,000.00 per Loan Agreement DLI IN00888477 ACTION PBC 6 IRI 1.3 (RS): Adoption of new risk based SREP methodology aligned with EU (EBA) standards Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output No Text 2,360,000.00 0.00 Period Value Allocated Amount (USD) Formula Baseline No Amount denominated in EURO as June 2021 Yes 2,360,000.00 per Loan Agreement DLI IN00888478 ACTION PBC 7 DLR 1.4 (RS): BARS adopted the SREP operational procedure Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output No Text 2,500,000.00 0.00 Period Value Allocated Amount (USD) Formula The World Bank Banking Sector Strengthening Project (P158387) Baseline No Amount denominated in EURO as June 2021 Yes 2,500,000.00 per Loan Agreement DLI IN00888479 ACTION DLR 2.1 (FBiH): FBA (i) adopted a harmonized 2017 AQR framework; (ii) approved the final reports of AQRs of all banks in PBC 8 FBiH not previously subject to an AQR based on the new AQR framework. Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output Yes Text 2,360,000.00 0.00 Period Value Allocated Amount (USD) Formula Baseline No Amount denominated in EURO as June 2021 Yes 2,360,000.00 per Loan Agreement DLI IN00888480 ACTION DLR 2.2 (FBiH): All undercapitalized banks have in place either mandatory time bound corrective action programs or PBC 9 resolution/liquidation programs Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome No Text 2,360,000.00 0.00 Period Value Allocated Amount (USD) Formula Baseline No Amount denominated in EURO as June 2021 Yes 2,360,000.00 per Loan Agreement The World Bank Banking Sector Strengthening Project (P158387) DLI IN00888481 ACTION DLR 2.3 (FBiH): All undercapitalized banks have in place either mandatory time bound corrective action programs or PBC 10 resolution/liquidation programs Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome No Yes/No 2,360,000.00 0.00 Period Value Allocated Amount (USD) Formula Baseline No Amount denominated in EURO as June 2021 Yes 2,360,000.00 per Loan Agreement DLI IN00888482 ACTION DLR 2.1 (RS): BARS (i) adopted a harmonized 2017 AQR framework; (ii) approved the final reports of AQRs of all banks in RS PBC 11 not previously subject to an AQR based on the harmonized 2017 AQR framework. Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output Yes Text 2,360,000.00 0.00 Period Value Allocated Amount (USD) Formula Baseline No Amount denominated in EURO as June 2021 Yes 2,360,000.00 per Loan Agreement The World Bank Banking Sector Strengthening Project (P158387) DLI IN00888483 ACTION DLR 2.2 (RS): All undercapitalized banks have in place either mandatory time bound corrective action programs or PBC 12 resolution/liquidation programs Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome No Text 2,360,000.00 0.00 Period Value Allocated Amount (USD) Formula Baseline No Amount denominated in EURO as June 2021 Yes 2,360,000.00 per Loan Agreement DLI IN00888484 ACTION DLR 2.3 (RS): All undercapitalized banks have in place either mandatory time bound corrective action programs or PBC 13 resolution/liquidation programs Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome No Yes/No 2,360,000.00 0.00 Period Value Allocated Amount (USD) Formula Baseline No Amount denominated in EURO as June 2021 Yes 2,360,000.00 per Loan Agreement DLI IN00888485 ACTION PBC 14 DLR 3.1 (FBiH): Bylaw on recovery plans adopted by FBA Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output No Text 2,360,000.00 0.00 Period Value Allocated Amount (USD) Formula The World Bank Banking Sector Strengthening Project (P158387) Baseline No Amount denominated in EURO as June 2021 Yes 2,360,000.00 per Loan Agreement DLI IN00888486 ACTION PBC 15 DLR 3.2 (FBiH): Resolution unit in FBA established and made operational Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output No Text 2,360,000.00 0.00 Period Value Allocated Amount (USD) Formula Baseline No Amount denominated in EURO as June 2021 Yes 2,360,000.00 per Loan Agreement DLI IN00888487 ACTION PBC 16 DLR 3.3 (FBiH): Number of recovery plans submitted and assessed in line with internal assessment methodology Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output No Number 2,360,000.00 0.00 Period Value Allocated Amount (USD) Formula Baseline 0.00 Amount denominated in EURO as June 2021 15.00 2,360,000.00 per Loan Agreement The World Bank Banking Sector Strengthening Project (P158387) DLI IN00888488 ACTION PBC 17 DLR 3.1 (RS): Bylaw on recovery plans adopted by BARS Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output No Text 2,360,000.00 0.00 Period Value Allocated Amount (USD) Formula Baseline No Amount denominated in EURO as June 2021 Yes 2,360,000.00 per Loan Agreement DLI IN00888489 ACTION PBC 18 DLR 3.2 (RS): Resolution unit in BARS established and made operational Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output No Text 2,360,000.00 0.00 Period Value Allocated Amount (USD) Formula Baseline No Amount denominated in EURO as June 2021 Yes 2,360,000.00 per Loan Agreement DLI IN00888490 ACTION PBC 19 DLR 3.3 (RS): Number of recovery plans submitted and assessed in line with internal assessment methodology Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output No Number 2,360,000.00 0.00 Period Value Allocated Amount (USD) Formula Baseline 0.00 The World Bank Banking Sector Strengthening Project (P158387) Amount denominated in EURO as June 2021 8.00 2,360,000.00 per Loan Agreement DLI IN00888491 ACTION IRI 9 (FBiH): FBiH Government to approve a strategic statement for RBFBIH future development and adopt a draft new Law PBC 20 on Development Bank Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output No Text 2,360,000.00 0.00 Period Value Allocated Amount (USD) Formula Baseline No Amount denominated in EURO as June 2021 Yes 2,360,000.00 per Loan Agreement Action: This PBC has been Revised. See below. DLI IN00891010 ACTION DLR 4.2 (FBiH): FBiH Government to approve a strategic statement for RBFBIH future development and adopt a draft new PBC 20 Law on Development Bank Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output No Text 2,960,000.00 0.00 Period Value Allocated Amount (USD) Formula Baseline No Amount denominated in EURO as per June 2021 Yes 2,960,000.00 Loan Agreement The World Bank Banking Sector Strengthening Project (P158387) DLI IN00888492 ACTION PBC 21 DLR 4.2 (FBiH): RBFBIH’s business plan for 2018-20 approved by the Shareholders Assembly Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output No Text 2,360,000.00 0.00 Period Value Allocated Amount (USD) Formula Baseline No Amount denominated in EURO as June 2021 Yes 2,360,000.00 per Loan Agreement Action: This PBC has been Marked for Deletion DLI IN00888493 ACTION IRI 11 (FBiH): Gov't decision adopted detailing eligibility and pricing criteria, impl'n arrangements for the temporary partial PBC 22 credit guarantee scheme providing financing to Covid-19 affected enterpr Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output No Text 2,360,000.00 0.00 Period Value Allocated Amount (USD) Formula Baseline No Amount denominated in EURO as June 2021 No 2,360,000.00 per Loan Agreement Action: This PBC has been Revised. See below. The World Bank Banking Sector Strengthening Project (P158387) DLI IN00891041 ACTION DLR 4.1 (FBiH): Gov't decree adopted detailing eligibility and pricing criteria, impl'n arrangements for the temporary partial PBC 22 credit guarantee scheme providing financing to Covid-19 affected enterpr Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output No Text 2,500,000.00 0.00 Period Value Allocated Amount (USD) Formula Baseline No Amount denominated in EURO as per June 2021 No 2,500,000.00 Loan Agreement DLI IN00888494 ACTION DLR 4.1 (RS): Adoption of a Government decree on a temporary partial credit guarantee scheme providing financing to PBC 23 COVID-19 affected enterprises Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output No Text 2,000,000.00 0.00 Period Value Allocated Amount (USD) Formula Baseline No Amount denominated in EURO as June 2021 Yes 2,000,000.00 per Loan Agreement The World Bank Banking Sector Strengthening Project (P158387) DLI IN00888495 ACTION DLR 4.2 (RS): Gov't decision adopted detailing eligibility and pricing criteria, implement'n arrangements for the temporary PBC 24 credit guarantee scheme providing financing to Covid-19 affected ente Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output No Text 3,000,000.00 0.00 Period Value Allocated Amount (USD) Formula Baseline No Amount denominated in EURO as June 2021 Yes 3,000,000.00 per Loan Agreement DLI IN00888496 ACTION PBC 25 DLR 4.3 (RS): Approval by the RS Government of a statement governing IRBRS’s future development. Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output No Text 530,000.00 0.00 Period Value Allocated Amount (USD) Formula Baseline No Amount denominated in EURO as June 2021 Yes 530,000.00 per Loan Agreement DLI IN00891042 ACTION PBC 26 DLR 1.4 (FBiH) FBA adopted the SREP operational procedure Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output No Text 2,500,000.00 0.00 Period Value Allocated Amount (USD) Formula The World Bank Banking Sector Strengthening Project (P158387) Baseline NO June 2021 2,500,000.00 Action: This PBC is New Verification Protocol Table: Performance-Based Conditions DLI_TBL_VERIFICATION PBC 1 DLR 1.1 (FBiH): Quantitative impact study on liquidity and capital regulations completed and results published The indicator was achieved in June 2017. Description Official letters from MoFT confirming that the quantitative impact study on liquidity and capital regulations has been Data source/ Agency completed and results been published on the respective BAs website, with a copy of the respective QIS report attached. World Bank team Verification Entity FBiH/RS PITs collect and compile information through direct communication with the BAs, the website of banking agencies and respective official gazettes. FBiH/RS PITs collect and prepare for the entity MoFs quarterly interim unaudited financial reports (IFRs) on eligible Procedure expenditures to be sent to the WB. FBiH/RS MoFs send the evidence of achievement of DLIs when they have been achieved to WB TTL for verification, via Ministry of Finance and Treasury BiH. DLI_TBL_VERIFICATION DLR 1.2 (FBiH):Bylaws adopted on (i) capital; (ii) liquidity; (iii) risk management standards; (iv) ICAAP; and (v) consolidated PBC 2 supervision The indicator was achieved in October 2017. Description Official letters from MoFT confirming that bylaws on i) capital; (ii) liquidity; (iii) risk management standards, including risk Data source/ Agency appetite framework and internal governance; (iv) internal capital adequacy assessment process (ICAAP), and (v) consolidated supervision have been adopted by FBA/BARS respectively, with a copy of the respective regulations attached. The World Bank Banking Sector Strengthening Project (P158387) World Bank team Verification Entity FBiH/RS PITs collect and compile information through direct communication with the BAs, the website of banking agencies and respective official gazettes. FBiH/RS PITs collect and prepare for the entity MoFs quarterly interim unaudited financial reports (IFRs) on eligible Procedure expenditures to be sent to the WB. FBiH/RS MoFs send the evidence of achievement of DLIs when they have been achieved to WB TTL for verification, via Ministry of Finance and Treasury BiH. DLI_TBL_VERIFICATION DLR 1.3 (FBiH): Adoption of new risk-based supervisory review and evaluation process (SREP) methodology aligned with PBC 3 with EU (European Banking Authority EBA) standards The SREP methodology was adopted in December 2019. Description Official letters from MoFT confirming that a new risk based SREP methodology has been adopted by FBA/BARS respectively, Data source/ Agency with a copy of the respective methodology report attached. World Bank team Verification Entity FBiH/RS PITs collect and compile information through direct communication with the BAs, the website of banking agencies and respective official gazettes. FBiH/RS PITs collect and prepare for the entity MoFs quarterly interim unaudited financial reports (IFRs) on eligible Procedure expenditures to be sent to the WB. FBiH/RS MoFs send the evidence of achievement of DLIs when they have been achieved to WB TTL for verification, via Ministry of Finance and Treasury BiH. DLI_TBL_VERIFICATION PBC 4 DLR 1.1 (RS): Quantitative impact study on liquidity and capital regulations completed and results published. The indicator was achieved in June 2017. Description The World Bank Banking Sector Strengthening Project (P158387) Official letters from MoFT confirming that the quantitative impact study on liquidity and capital regulations has been Data source/ Agency completed and results been published on the respective BAs website, with a copy of the respective QIS report attached. World Bank team Verification Entity FBiH/RS PITs collect and compile information through direct communication with the BAs, the website of banking agencies and respective official gazettes. FBiH/RS PITs collect and prepare for the entity MoFs quarterly interim unaudited financial reports (IFRs) on eligible Procedure expenditures to be sent to the WB. FBiH/RS MoFs send the evidence of achievement of DLIs when they have been achieved to WB TTL for verification, via Ministry of Finance and Treasury BiH. DLI_TBL_VERIFICATION DLR 1.2 (RS): Bylaws adopted on (i) capital; (ii) liquidity; (iii) risk management standards; (iv) ICAAP; and (v) consolidated PBC 5 supervision The indicator was achieved in December 2017. Description Official letters from MoFT confirming that bylaws on i) capital; (ii) liquidity; (iii) risk management standards, including risk appetite framework and internal governance; (iv) internal capital adequacy assessment process (ICAAP), and (v) Data source/ Agency consolidated supervision have been adopted by FBA/BARS respectively, with a copy of the respective regulations attached. World Bank team Verification Entity FBiH/RS PITs collect and compile information through direct communication with the BAs, the website of banking agencies and respective official gazettes. FBiH/RS PITs collect and prepare for the entity MoFs quarterly interim unaudited financial reports (IFRs) on eligible Procedure expenditures to be sent to the WB. FBiH/RS MoFs send the evidence of achievement of DLIs when they have been achieved to WB TTL for verification, via Ministry of Finance and Treasury BiH. The World Bank Banking Sector Strengthening Project (P158387) DLI_TBL_VERIFICATION PBC 6 IRI 1.3 (RS): Adoption of new risk based SREP methodology aligned with EU (EBA) standards The SREP methodology was adopted in December 2019. Description Official letters from MoFT confirming that a new risk based SREP methodology has been adopted by FBA/BARS respectively, Data source/ Agency with a copy of the respective methodology report attached. World Bank team Verification Entity FBiH/RS PITs collect and compile information through direct communication with the BAs, the website of banking agencies and respective official gazettes. FBiH/RS PITs collect and prepare for the entity MoFs quarterly interim unaudited financial reports (IFRs) on eligible Procedure expenditures to be sent to the WB. FBiH/RS MoFs send the evidence of achievement of DLIs when they have been achieved to WB TTL for verification, via Ministry of Finance and Treasury BiH. DLI_TBL_VERIFICATION PBC 7 DLR 1.4 (RS): BARS adopted the SREP operational procedure Description Data source/ Agency World Bank team Verification Entity FBiH/RS PITs collect and compile information from the respective development bank. FBiH/RS PITs collect and prepare for the entity MoFs quarterly interim unaudited financial reports (IFRs) on eligible expenditures to be sent to the WB. Procedure FBiH/RS MoFs send evidence of DLIs achievement to WB TTL for verification that they have been achieved, via Ministry of Finance and Treasury BiH DLI_TBL_VERIFICATION DLR 2.1 (FBiH): FBA (i) adopted a harmonized 2017 AQR framework; (ii) approved the final reports of AQRs of all banks in PBC 8 FBiH not previously subject to an AQR based on the new AQR framework. Description The indicator was achieved in December 2017. The World Bank Banking Sector Strengthening Project (P158387) Official letter from MoFT confirming that (i) harmonized 2017 AQR framework was adopted by respective Banking Agency and (ii) AQRs undertaken in 2017 for all respective banks not previously subject to an AQR based on harmonized 2017 AQR Data source/ Agency framework developed with support of the WB have been completed and approved by FBA/BARS respectively. World Bank team Verification Entity FBiH/RS PITs collect and compile information through direct communication with the BAs, the website of banking agencies and respective official gazettes. FBiH/RS PITs collect and prepare for the entity MoFs quarterly interim unaudited financial reports (IFRs) on eligible Procedure expenditures to be sent to the WB. FBiH/RS MoFs send the evidence of achievement of DLIs when they have been achieved to WB TTL for verification, via Ministry of Finance and Treasury BiH. DLI_TBL_VERIFICATION DLR 2.2 (FBiH): All undercapitalized banks have in place either mandatory time bound corrective action programs or PBC 9 resolution/liquidation programs FBA confirmed that as of end 2018 and end 2019 that from the banks participating in Phase 3 of the AQR none are Description undercapitalized. Official letter from MoFT confirming that all undercapitalized banks stemming from the 2017 AQR have in place either Data source/ Agency mandatory time bound corrective action programs or resolution/liquidation programs approved by FBA/BARS respectively. World Bank team Verification Entity FBiH/RS PITs collect and compile information through direct communication with the BAs, the website of banking agencies and respective official gazettes. FBiH/RS PITs collect and prepare for the entity MoFs quarterly interim unaudited financial reports (IFRs) on eligible Procedure expenditures to be sent to the WB. FBiH/RS MoFs send the evidence of achievement of DLIs when they have been achieved to WB TTL for verification, via Ministry of Finance and Treasury BiH. The World Bank Banking Sector Strengthening Project (P158387) DLI_TBL_VERIFICATION DLR 2.3 (FBiH): All undercapitalized banks have in place either mandatory time bound corrective action programs or PBC 10 resolution/liquidation programs Achieved as of end 2019. Description Official letter from MoFT confirming that all undercapitalized banks stemming from the 2017 AQR have in place either Data source/ Agency mandatory time bound corrective action programs or resolution/liquidation programs approved by FBA/BARS respectively. World Bank team Verification Entity FBiH/RS PITs collect and compile information through direct communication with the BAs, the website of banking agencies and respective official gazettes. FBiH/RS PITs collect and prepare for the entity MoFs quarterly interim unaudited financial reports (IFRs) on eligible Procedure expenditures to be sent to the WB. FBiH/RS MoFs send the evidence of achievement of DLIs when they have been achieved to WB TTL for verification, via Ministry of Finance and Treasury BiH. DLI_TBL_VERIFICATION DLR 2.1 (RS): BARS (i) adopted a harmonized 2017 AQR framework; (ii) approved the final reports of AQRs of all banks in RS PBC 11 not previously subject to an AQR based on the harmonized 2017 AQR framework. The indicator was achieved in December 2017. Description Official letter from MoFT confirming that (i) harmonized 2017 AQR framework was adopted by respective Banking Agency and (ii) AQRs undertaken in 2017 for all respective banks not previously subject to an AQR based on harmonized 2017 AQR Data source/ Agency framework developed with support of the WB have been completed and approved by FBA/BARS respectively. World Bank team Verification Entity FBiH/RS PITs collect and compile information through direct communication with the BAs, the website of banking agencies and respective official gazettes. FBiH/RS PITs collect and prepare for the entity MoFs quarterly interim unaudited financial reports (IFRs) on eligible Procedure expenditures to be sent to the WB. FBiH/RS MoFs send the evidence of achievement of DLIs when they have been achieved to WB TTL for verification, via Ministry of Finance and Treasury BiH. The World Bank Banking Sector Strengthening Project (P158387) DLI_TBL_VERIFICATION DLR 2.2 (RS): All undercapitalized banks have in place either mandatory time bound corrective action programs or PBC 12 resolution/liquidation programs BARS confirmed that as of end 2018 and end 2019 that from the banks participating in Phase 3 of the AQR none are Description undercapitalized. Official letter from MoFT confirming that all undercapitalized banks stemming from the 2017 AQR have in place either Data source/ Agency mandatory time bound corrective action programs or resolution/liquidation programs approved by FBA/BARS respectively. World Bank team Verification Entity FBiH/RS PITs collect and compile information through direct communication with the BAs, the website of banking agencies and respective official gazettes. FBiH/RS PITs collect and prepare for the entity MoFs quarterly interim unaudited financial reports (IFRs) on eligible Procedure expenditures to be sent to the WB. FBiH/RS MoFs send the evidence of achievement of DLIs when they have been achieved to WB TTL for verification, via Ministry of Finance and Treasury BiH. DLI_TBL_VERIFICATION DLR 2.3 (RS): All undercapitalized banks have in place either mandatory time bound corrective action programs or PBC 13 resolution/liquidation programs Achieved as of end 2019. Description Official letter from MoFT confirming that all undercapitalized banks stemming from the 2017 AQR have in place either Data source/ Agency mandatory time bound corrective action programs or resolution/liquidation programs approved by FBA/BARS respectively. World Bank team Verification Entity FBiH/RS PITs collect and compile information through direct communication with the BAs, the website of banking agencies and respective official gazettes. Procedure FBiH/RS PITs collect and prepare for the entity MoFs quarterly interim unaudited financial reports (IFRs) on eligible expenditures to be sent to the WB. The World Bank Banking Sector Strengthening Project (P158387) FBiH/RS MoFs send the evidence of achievement of DLIs when they have been achieved to WB TTL for verification, via Ministry of Finance and Treasury BiH. DLI_TBL_VERIFICATION PBC 14 DLR 3.1 (FBiH): Bylaw on recovery plans adopted by FBA The indicator was achieved in October 2017. Description Official letter from MoFT confirming the adoption of a bylaw on recovery plans by FBA/BARS respectively, with a copy of the Data source/ Agency respective regulation attached. World Bank team Verification Entity FBiH/RS PITs collect and compile information through direct communication with the BAs, the website of banking agencies and respective official gazettes. FBiH/RS PITs collect and prepare for the entity MoFs quarterly interim unaudited financial reports (IFRs) on eligible Procedure expenditures to be sent to the WB. FBiH/RS MoFs send the evidence of achievement of DLIs when they have been achieved to WB TTL for verification, via Ministry of Finance and Treasury BiH. DLI_TBL_VERIFICATION PBC 15 DLR 3.2 (FBiH): Resolution unit in FBA established and made operational Description Official letter from MoFT confirming that FBA/BARS respectively have established and made operational resolution units Data source/ Agency which are adequately resourced and staffed as well as organizationally and functionally independent from supervision. World Bank team Verification Entity FBiH/RS PITs collect and compile information through direct communication with the BAs, the website of banking agencies and respective official gazettes. Procedure FBiH/RS PITs collect and prepare for the entity MoFs quarterly interim unaudited financial reports (IFRs) on eligible expenditures to be sent to the WB. The World Bank Banking Sector Strengthening Project (P158387) FBiH/RS MoFs send the evidence of achievement of DLIs when they have been achieved to WB TTL for verification, via Ministry of Finance and Treasury BiH. DLI_TBL_VERIFICATION PBC 16 DLR 3.3 (FBiH): Number of recovery plans submitted and assessed in line with internal assessment methodology Description Official letter from the MOFT confirming that FBA/BARS have received and assessed recovery plans submitted by all banks Data source/ Agency licensed in their respective territory in line with newly developed internal assessment methodology. World Bank team Verification Entity FBiH/RS PITs collect and compile information through direct communication with the BAs, the website of banking agencies and respective official gazettes. FBiH/RS PITs collect and prepare for the entity MoFs quarterly interim unaudited financial reports (IFRs) on eligible Procedure expenditures to be sent to the WB. FBiH/RS MoFs send the evidence of achievement of DLIs when they have been achieved to WB TTL for verification, via Ministry of Finance and Treasury BiH. DLI_TBL_VERIFICATION PBC 17 DLR 3.1 (RS): Bylaw on recovery plans adopted by BARS The indicator was achieved in December 2017. Description Official letter from MoFT confirming the adoption of a bylaw on recovery plans by FBA/BARS respectively, with a copy of the Data source/ Agency respective regulation attached. World Bank team Verification Entity FBiH/RS PITs collect and compile information through direct communication with the BAs, the website of banking agencies and respective official gazettes. Procedure FBiH/RS PITs collect and prepare for the entity MoFs quarterly interim unaudited financial reports (IFRs) on eligible expenditures to be sent to the WB. The World Bank Banking Sector Strengthening Project (P158387) FBiH/RS MoFs send the evidence of achievement of DLIs when they have been achieved to WB TTL for verification, via Ministry of Finance and Treasury BiH. DLI_TBL_VERIFICATION PBC 18 DLR 3.2 (RS): Resolution unit in BARS established and made operational The indicator was achieved in December 2018. Description Official letter from MoFT confirming that FBA/BARS respectively have established and made operational resolution units Data source/ Agency which are adequately resourced and staffed as well as organizationally and functionally independent from supervision. World Bank team Verification Entity FBiH/RS PITs collect and compile information through direct communication with the BAs, the website of banking agencies and respective official gazettes. FBiH/RS PITs collect and prepare for the entity MoFs quarterly interim unaudited financial reports (IFRs) on eligible Procedure expenditures to be sent to the WB. FBiH/RS MoFs send the evidence of achievement of DLIs when they have been achieved to WB TTL for verification, via Ministry of Finance and Treasury BiH. DLI_TBL_VERIFICATION PBC 19 DLR 3.3 (RS): Number of recovery plans submitted and assessed in line with internal assessment methodology Description Official letter from the MOFT confirming that FBA/BARS have received and assessed recovery plans submitted by all banks Data source/ Agency licensed in their respective territory in line with newly developed internal assessment methodology. World Bank team Verification Entity FBiH/RS PITs collect and compile information through direct communication with the BAs, the website of banking agencies and respective official gazettes. Procedure FBiH/RS PITs collect and prepare for the entity MoFs quarterly interim unaudited financial reports (IFRs) on eligible expenditures to be sent to the WB. The World Bank Banking Sector Strengthening Project (P158387) FBiH/RS MoFs send the evidence of achievement of DLIs when they have been achieved to WB TTL for verification, via Ministry of Finance and Treasury BiH. DLI_TBL_VERIFICATION IRI 9 (FBiH): FBiH Government to approve a strategic statement for RBFBIH future development and adopt a draft new Law PBC 20 on Development Bank FBiH Government approves a strategic statement for RBFBIH’s future development foreseeing that the bank will: comply with the Banking Law and will be supervised by the Federation Banking Agency (FBA) under a regulatory scheme adapted to Description the bank’s funding model; operate on a financially sustainable basis; conform to the regulations of the FBA in the structure of governance and risk management of the bank; and operate predominantly as a wholesale institution. Official letter from the MoFT confirming that FBIH and RS Governments have each adopted and gazzetted a strategic statement for future development of RBFBiH and IRBRS requiring that: the banks will comply with the respective Banking Law and will be supervised by the BAs under a regulatory scheme adapted to the banks’ funding model; will operate on a financially sustainable basis; the structure of governance and risk management of the banks will conform to the regulations Data source/ Agency of the BAs; and the RBFBiH will operate predominantly as a wholesale institution - with the exception of participation in syndicated credits involving at least two other domestic or foreign banks or IFIs - while IRBRS will operate as a wholesale institution only (as regards to credit and guarantee agreements entered into by the bank after 1 January 2018). World Bank team Verification Entity FBiH/RS PITs collect and compile information from the respective development bank. FBiH/RS PITs collect and prepare for the entity MoFs quarterly interim unaudited financial reports (IFRs) on eligible expenditures to be sent to the WB. Procedure FBiH/RS MoFs send evidence of DLIs achievement to WB TTL for verification that they have been achieved, via Ministry of Finance and Treasury BiH DLI_TBL_VERIFICATION DLR 4.2 (FBiH): FBiH Government to approve a strategic statement for RBFBIH future development and adopt a draft new PBC 20 Law on Development Bank FBiH Government approves a strategic statement for RBFBIH’s future development was prepared and is being finalized Description accordingly. Adoption is delayed due to teh Covid-19 emergency situation. Draft new Law on development bank foresees that the bank will: comply with the Banking Law and will be supervised by the Federation Banking Agency (FBA) under a The World Bank Banking Sector Strengthening Project (P158387) regulatory scheme adapted to the bank’s funding model; and conform to the regulations of the FBA in the structure of governance and risk management of the bank; and operate predominantly as a wholesale institution. Official letter from the MoFT confirming that FBIH and RS Governments have each adopted and gazzetted a strategic statement for future development of RBFBiH and IRBRS requiring that: the banks will comply with the respective Banking Law and will be supervised by the BAs under a regulatory scheme adapted to the banks’ funding model; will operate on a financially sustainable basis; the structure of governance and risk management of the banks will conform to the regulations Data source/ Agency of the BAs; and the RBFBiH will operate predominantly as a wholesale institution - with the exception of participation in syndicated credits involving at least two other domestic or foreign banks or IFIs - while IRBRS will operate as a wholesale institution only (as regards to credit and guarantee agreements entered into by the bank after 1 January 2018). World Bank team Verification Entity FBiH/RS PITs collect and compile information from the respective development bank. FBiH/RS PITs collect and prepare for the entity MoFs quarterly interim unaudited financial reports (IFRs) on eligible expenditures to be sent to the WB. Procedure FBiH/RS MoFs send evidence of DLIs achievement to WB TTL for verification that they have been achieved, via Ministry of Finance and Treasury BiH DLI_TBL_VERIFICATION PBC 21 DLR 4.2 (FBiH): RBFBIH’s business plan for 2018-20 approved by the Shareholders Assembly Initial work has started on developing a new business plan but progress on this indicator is pending on adoption of the Description strategic statement. Official letter from the MoFT confirming that the Shareholders Assembly of RBFBiH has approved the bank’s business plan Data source/ Agency for 2018-2020 in line with the FBiH Governments strategic statement, with a copy of the respective business plan attached. World Bank team Verification Entity FBiH/RS PITs collect and compile information from the respective development bank. Procedure FBiH/RS PITs collect and prepare for the entity MoFs quarterly interim unaudited financial reports (IFRs) on eligible expenditures to be sent to the WB. The World Bank Banking Sector Strengthening Project (P158387) FBiH/RS MoFs send evidence of DLIs achievement to WB TTL for verification that they have been achieved, via Ministry of Finance and Treasury BiH DLI_TBL_VERIFICATION IRI 11 (FBiH): Gov't decision adopted detailing eligibility and pricing criteria, impl'n arrangements for the temporary partial PBC 22 credit guarantee scheme providing financing to Covid-19 affected enterpr Description Official letter from the MoFT confirming that IRBRS adopted measures to fully comply with BARS bylaw governing the Data source/ Agency application of banking regulations to IRBRS. World Bank team Verification Entity FBiH/RS PITs collect and compile information from the respective development bank. FBiH/RS PITs collect and prepare for the entity MoFs quarterly interim unaudited financial reports (IFRs) on eligible expenditures to be sent to the WB. Procedure FBiH/RS MoFs send evidence of DLIs achievement to WB TTL for verification that they have been achieved, via Ministry of Finance and Treasury BiH DLI_TBL_VERIFICATION DLR 4.1 (FBiH): Gov't decree adopted detailing eligibility and pricing criteria, impl'n arrangements for the temporary partial PBC 22 credit guarantee scheme providing financing to Covid-19 affected enterpr Description Official letter from the MoFT confirming that IRBRS adopted measures to fully comply with BARS bylaw governing the Data source/ Agency application of banking regulations to IRBRS. World Bank team Verification Entity FBiH/RS PITs collect and compile information from the respective development bank. FBiH/RS PITs collect and prepare for the entity MoFs quarterly interim unaudited financial reports (IFRs) on eligible expenditures to be sent to the WB. Procedure FBiH/RS MoFs send evidence of DLIs achievement to WB TTL for verification that they have been achieved, via Ministry of Finance and Treasury BiH The World Bank Banking Sector Strengthening Project (P158387) DLI_TBL_VERIFICATION DLR 4.1 (RS): Adoption of a Government decree on a temporary partial credit guarantee scheme providing financing to PBC 23 COVID-19 affected enterprises Taking into account the complexity and heterogenous nature of the assets being managed by the RS IDB, the RS government does not believe a consolidation of assets (banking assets of the Funds) onto the balance sheet of the RS IDB will be feasible in the foreseeable future but instead committed to placing RS IDB and the three funds containing Description banking assets (Development and Employment Fund, the Eastern Republic of Srpska Development Fund, the Housing Fund) to regulation and supervision by the RS Banking Agency (BARS). Data source/ Agency World Bank team Verification Entity FBiH/RS PITs collect and compile information from the respective development bank. FBiH/RS PITs collect and prepare for the entity MoFs quarterly interim unaudited financial reports (IFRs) on eligible expenditures to be sent to the WB. Procedure FBiH/RS MoFs send evidence of DLIs achievement to WB TTL for verification that they have been achieved, via Ministry of Finance and Treasury BiH DLI_TBL_VERIFICATION DLR 4.2 (RS): Gov't decision adopted detailing eligibility and pricing criteria, implement'n arrangements for the temporary PBC 24 credit guarantee scheme providing financing to Covid-19 affected ente Initial work has started on developing the new BARS bylaw but progress on this indicator is pending on adoption of the Description strategic statement and amendments to the RS IDB Law. Data source/ Agency World Bank team Verification Entity FBiH/RS PITs collect and compile information from the respective development bank. FBiH/RS PITs collect and prepare for the entity MoFs quarterly interim unaudited financial reports (IFRs) on eligible expenditures to be sent to the WB. Procedure FBiH/RS MoFs send evidence of DLIs achievement to WB TTL for verification that they have been achieved, via Ministry of Finance and Treasury BiH The World Bank Banking Sector Strengthening Project (P158387) DLI_TBL_VERIFICATION PBC 25 DLR 4.3 (RS): Approval by the RS Government of a statement governing IRBRS’s future development. A formal government conclusion on the way forward of RS IDB was adopted on March 6, 2020. A draft strategic statement Description was prepared and finalized accordingly. Adoption is expected to be delayed due to the Covid-19 emergency situation. Official letter from the MoFT confirming that FBIH and RS Governments have each adopted and gazzetted a strategic statement for future development of RBFBiH and IRBRS requiring that: the banks will comply with the respective Banking Law and will be supervised by the BAs under a regulatory scheme adapted to the banks’ funding model; will operate on a financially sustainable basis; the structure of governance and risk management of the banks will conform to the regulations Data source/ Agency of the BAs; and the RBFBiH will operate predominantly as a wholesale institution - with the exception of participation in syndicated credits involving at least two other domestic or foreign banks or IFIs - while IRBRS will operate as a wholesale institution only (as regards to credit and guarantee agreements entered into by the bank after 1 January 2018). World Bank team Verification Entity FBiH/RS PITs collect and compile information from the respective development bank. FBiH/RS PITs collect and prepare for the entity MoFs quarterly interim unaudited financial reports (IFRs) on eligible expenditures to be sent to the WB. Procedure FBiH/RS MoFs send evidence of DLIs achievement to WB TTL for verification that they have been achieved, via Ministry of Finance and Treasury BiH DLI_TBL_VERIFICATION PBC 26 DLR 1.4 (FBiH) FBA adopted the SREP operational procedure Description Data source/ Agency World Bank team Verification Entity FBiH/RS PITs collect and compile information from the respective development bank. Procedure FBiH/RS PITs collect and prepare for the entity MoFs quarterly interim unaudited financial reports (IFRs) on eligible expenditures to be sent to the WB. The World Bank Banking Sector Strengthening Project (P158387) FBiH/RS MoFs send evidence of DLIs achievement to WB TTL for verification that they have been achieved, via Ministry of Finance and Treasury BiH The World Bank Banking Sector Strengthening Project (P158387)