Public Disclosure Copy The World Bank Implementation Status & Results Report Banking Sector Strengthening Project (P158387) Banking Sector Strengthening Project (P158387) EUROPE AND CENTRAL ASIA | Bosnia and Herzegovina | Finance, Competitiveness and Innovation Global Practice | IBRD/IDA | Investment Project Financing | FY 2017 | Seq No: 2 | ARCHIVED on 04-Apr-2018 | ISR31972 | Implementing Agencies: BiH Ministry of Finance and Treasury, Republika Srpska Ministry of Finance, FBiH Ministry of Finance Key Dates Key Project Dates Bank Approval Date:28-Apr-2017 Effectiveness Date:-- Planned Mid Term Review Date:25-Apr-2019 Actual Mid-Term Review Date:-- Original Closing Date:31-Dec-2020 Revised Closing Date:31-Dec-2020 Project Development Objectives Project Development Objective (from Project Appraisal Document) 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. Has the Project Development Objective been changed since Board Approval of the Project Objective? No PHRPDODEL Components Name Banking Sector Strengthening:(Cost $60.00 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO  Satisfactory  Satisfactory Overall Implementation Progress (IP)  Satisfactory  Satisfactory Overall Risk Rating  Substantial  Substantial Implementation Status and Key Decisions The ratification process for the BSSP project is still ongoing, having been delayed by the current complex political inter-government relationships. The Loan Agreement was signed on October 31, 2017 and Entities are currently making final adjustments to the Subsidiary Loan Agreement which is 4/4/2018 Page 1 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Banking Sector Strengthening Project (P158387) expected to be finalized in April 2018. In the meantime, considerable progress has been made against all four DLIs. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance  Substantial  Substantial  Substantial Macroeconomic  Moderate  Moderate  Moderate Sector Strategies and Policies  Moderate  Moderate  Moderate Technical Design of Project or Program  Substantial  Substantial  Substantial Institutional Capacity for Implementation and Sustainability  Substantial  Substantial  Substantial Fiduciary  Moderate  Moderate  Moderate Environment and Social  Low  Low  Low Stakeholders  Moderate  Moderate  Moderate Other  --  --  -- Overall  Substantial  Substantial  Substantial Results Project Development Objective Indicators PHINDPDOTBL  PDI 1.a. (FBiH): All FBiH banks remain well-capitalized (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Too early to measure. Too early to measure. Yes Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 PHINDPDOTBL  PDI 1.b. (FBiH): FBA reviews and efficiently responds to cases when banks do not meet prudential norms for capital adequacy (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Initial ISR. Too early to Initial ISR. Too early to Value No Yes measure measure 4/4/2018 Page 2 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Banking Sector Strengthening Project (P158387) Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 PHINDPDOTBL  PDI 2 (FBiH): FBA performing its legally mandated technical functions in bank resolution (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Initial ISR. Too early to Initial ISR. Too early to Value No Yes measure. measure. Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 PHINDPDOTBL  PDI 3 (FBiH): New governance and business model for RBFBIH adopted (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Initial ISR. too early to Initial ISR. too early to Value No Yes measure. measure. Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 PHINDPDOTBL  PDI 1.a. (RS): All RS banks remain well-capitalized (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Initial ISR. Too early to Initial ISR. Too early to Value No Yes measure measure Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 PHINDPDOTBL  PDI 1.b. (RS): BARS reviews and efficiently responds to cases when banks do not meet prudential norms for capital adequacy (Text, Custom) 4/4/2018 Page 3 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Banking Sector Strengthening Project (P158387) Baseline Actual (Previous) Actual (Current) End Target Initial ISR. Too early to Initial ISR. Too early to Value No Yes measure. measure. Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 PHINDPDOTBL  PDI 2 (RS): BARS performs its legally mandated technical functions in bank resolution (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Initial ISR. too early to Initial ISR. too early to Value No Yes measure. measure. Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 PHINDPDOTBL  PDI 3 (RS): New governance and business model for IRBRS adopted (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Initial ISR. Too early to Initial ISR. Too early to Value No Yes measure. measure. Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 Overall Comments Intermediate Results Indicators PHINDIRITBL  IRI 1 (FBiH): Quantitative impact study on liquidity and capital regulations completed (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target QIS completed. FBA QIS completed. FBA submitted all relevant submitted all relevant Value No Yes documents for review documents for review by by the team. the team. Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 4/4/2018 Page 4 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Banking Sector Strengthening Project (P158387) PHINDIRITBL  IRI 2 (FBiH):Bylaws adopted on (i) capital; (ii) liquidity; (iii) risk management standards; (iv) ICAAP; and (v) consolidated supervision (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Work ongoing as Work ongoing as planned. All draft by- planned. All draft by- laws have been laws have been published on the FBA published on the FBA Value No Yes website for public website for public consultation. The team consultation. The team is reviewing the text, as is reviewing the text, as agreed. agreed. Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 PHINDIRITBL  IRI 3 (FBiH): Adoption of new risk-based supervisory review and evaluation process (SREP) methodology aligned with with EU (European Banking Authority EBA) standards (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Work not started yet. Work not started yet. Yes Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 PHINDIRITBL IRI 4 (FBiH): FBA (i) adopted a harmonized 2017 AQR framework; (ii) approved the final reports of AQRs of all banks in FBiH not previously subject to an AQR based on the harmonized 2017 AQR framework. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Harmonised AQR 2017 Harmonised AQR 2017 Value No adopted. AQR reviews adopted. AQR reviews Yes ongoing as planned. ongoing as planned. Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 PHINDIRITBL  IRI 5 (FBiH): All undercapitalized banks have in place either mandatory time bound corrective action programs or resolution/liquidation programs (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No No No Yes Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 4/4/2018 Page 5 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Banking Sector Strengthening Project (P158387) PHINDIRITBL  IRI 6 (FBiH): Bylaw on recovery plans adopted by FBA (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Initial ISR. Too early to Initial ISR. Too early to Value No measure, although the measure, although the Yes work is ongoing. work is ongoing. Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 PHINDIRITBL  IRI 7 (FBiH): Resolution unit in FBA established and made operational (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Initial ISR. Too early to Initial ISR. Too early to Value No Yes measure. measure. Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 PHINDIRITBL IRI 8 (FBiH): Number of recovery plans submitted and assessed in line with internal assessment methodology (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 15.00 Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 PHINDIRITBL  IRI 9 (FBiH): FBiH Government to approve a strategic statement for RBFBIH future development (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Initial ISR. Too early to Initial ISR. Too early to Value No Yes measure. measure. Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 4/4/2018 Page 6 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Banking Sector Strengthening Project (P158387) PHINDIRITBL  IRI 10 (FBiH): RBFBIH’s business plan for 2018-20 approved by the Shareholders Assembly (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Initial ISR. Too early to Initial ISR. Too early to Value No Yes measure. measure. Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 PHINDIRITBL  IRI 11 (FBiH): RBFBiH’s risk management strengthened (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Initial ISR. Too early to Initial ISR. Too early to Value No Yes measure. measure. Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 PHINDIRITBL  IRI 12 (FBiH): Citizen Engagement: % of Project-supported bylaws reflecting outcomes of consultations. (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 100.00 Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 PHINDIRITBL  IRI 1 (RS): Quantitative impact study on liquidity and capital regulations completed. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Initial ISR. QIS Initial ISR. QIS completed. the team is completed. the team is Value No Yes reviewing the reviewing the documents. documents. Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 4/4/2018 Page 7 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Banking Sector Strengthening Project (P158387) PHINDIRITBL  IRI 2 (RS): Bylaws adopted on (i) capital; (ii) liquidity; (iii) risk management standards; (iv) ICAAP; and (v) consolidated supervision (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target All draft bylaws have All draft bylaws have been completed by the been completed by the Value No client. The team is client. The team is Yes reviewing the final reviewing the final output. output. Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 PHINDIRITBL  IRI 3 (RS): Adoption of new risk based SREP methodology aligned with EU (EBA) standards (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Initial ISR. Too early to Initial ISR. Too early to Value No Yes measure. measure. Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 PHINDIRITBL  IRI 4 (RS): BARS (i) adopted a harmonized 2017 AQR framework; (ii) approved the final reports of AQRs of all banks in RS not previously subject to an AQR based on the harmonized 2017 AQR framework. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Harmonized 2017 AQR Harmonized 2017 AQR framework adopted. framework adopted. Value No Yes AQR reviews ongoing AQR reviews ongoing as as planned. planned. Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 PHINDIRITBL  IRI 5 (RS): All undercapitalized banks have in place either mandatory time bound corrective action programs or resolution/liquidation programs (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Initial ISR. Too early to Initial ISR. Too early to Value No Yes measure. measure. Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 4/4/2018 Page 8 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Banking Sector Strengthening Project (P158387) PHINDIRITBL  IRI 6 (RS): Bylaw on recovery plans adopted by BARS (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Work ongoing. Work ongoing. Yes Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 PHINDIRITBL  IRI 7 (RS): Resolution unit in BARS established and made operational (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Initial ISR. Too early to Initial ISR. Too early to Value No Yes measure. measure. Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 PHINDIRITBL  IRI 8 (RS): Number of recovery plans submitted and assessed in line with internal assessment methodology (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 8.00 Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 PHINDIRITBL  IRI 9 (RS): Approval by the RS Government of a statement governing IRBRS’s future development. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Work ongoing. Work ongoing. Yes Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 4/4/2018 Page 9 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Banking Sector Strengthening Project (P158387) PHINDIRITBL  IRI 10 (RS): Transfer of identified Funds’ assets to IRBRS in compliance with (i) amended IRBRS Law and (ii) IRBRS regulations and BARS bylaw governing the application of banking regulations to IRBRS. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Initial ISR. Too early to Initial ISR. Too early to Value No Yes measure. measure. Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 PHINDIRITBL  IRI 11 (RS): IRBRS in full compliance with BARS bylaw governing the application of banking regulations to IRBRS. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Initial ISR. Too early to Initial ISR. Too early to Value No Yes measure. measure. Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 PHINDIRITBL  IRI 12 (RS): Citizen Engagement: % of Project-supported bylaws reflecting outcomes of consultations. (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 100.00 Date 31-Dec-2016 05-Sep-2017 05-Sep-2017 31-Dec-2020 Overall Comments Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed Not P158387 IBRD-87410 USD 60.00 60.00 0.00 0.00 60.00 0% Effective Key Dates (by loan) 4/4/2018 Page 10 of 11 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Banking Sector Strengthening Project (P158387) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date Not P158387 IBRD-87410 28-Apr-2017 31-Oct-2017 -- 31-Dec-2020 31-Dec-2020 Effective Cumulative Disbursements Restructuring History There has been no restructuring to date. Related Project(s) There are no related projects. 4/4/2018 Page 11 of 11 Public Disclosure Copy