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: 4 | ARCHIVED on 25-Apr-2019 | ISR36524 | 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: 25-Oct-2018 Planned Mid Term Review Date: 27-May-2019 Actual Mid-Term Review Date: -- Original Closing Date: 31-Dec-2020 Revised Closing Date: 31-Dec-2020 pdoTable 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 Components Table Name Banking Sector Strengthening:(Cost $60.00 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Satisfactory Overall Risk Rating Substantial Substantial Implementation Status and Key Decisions The ratification process for the BSSP project has been finalized on the RS side with the project having been declared effective on October 25, 2018 following significant delays due to the pre-election complex political inter-government relationships. The ratification process in the Federation of BiH is still pending. In the meantime, considerable progress has been made against all four disbursement linked indicators (DLIs). On January 18, 2019, RS withdrew 15.12m USD against 6 DLIs (out of a total of 12 for RS) for 2017 and 2018 raising the overall disbursement ratio to 24.76%. 4/25/2019 Page 1 of 9 The World Bank Implementation Status & Results Report Banking Sector Strengthening Project (P158387) 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 PDO Indicators by Objectives / Outcomes Banking Sector Strengthening IN00687206 ►PDI 1.a. (RS): All RS banks remain well-capitalized (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No -- Too early to measure Yes Date 31-Dec-2016 31-Oct-2018 15-Apr-2019 31-Dec-2020 IN00687207 ►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. Yes Date 31-Dec-2016 31-Oct-2018 15-Apr-2019 31-Dec-2020 IN00687208 ►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 Value No -- Too early to measure Yes 4/25/2019 Page 2 of 9 The World Bank Implementation Status & Results Report Banking Sector Strengthening Project (P158387) Date 31-Dec-2016 31-Oct-2018 15-Apr-2019 31-Dec-2020 IN00687209 ►PDI 1.b. (RS): BARS 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 Value No -- Too early to measure. Yes Date 31-Dec-2016 31-Oct-2018 15-Apr-2019 31-Dec-2020 IN00687210 ►PDI 2 (FBiH): FBA performing its legally mandated technical functions in bank resolution (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No -- Too early to measure. Yes Date 31-Dec-2016 31-Oct-2018 15-Apr-2019 31-Dec-2020 IN00687211 ►PDI 2 (RS): BARS performs its legally mandated technical functions in bank resolution (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No -- Too early to measure. Yes Date 31-Dec-2016 31-Oct-2018 15-Apr-2019 31-Dec-2020 IN00687212 ►PDI 3 (RS): New governance and business model for IRBRS adopted (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No -- No Yes Date 31-Dec-2016 31-Oct-2018 15-Apr-2019 31-Dec-2020 IN00687213 ►PDI 3 (FBiH): New governance and business model for RBFBIH adopted (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No -- No Yes Date 31-Dec-2016 31-Oct-2018 15-Apr-2019 31-Dec-2020 Overall Comments PDO A MTR scheduled for w/c May 27 will collect, analyze and report against all indicators. Data collection is in progress. Intermediate Results Indicators by Components 4/25/2019 Page 3 of 9 The World Bank Implementation Status & Results Report Banking Sector Strengthening Project (P158387) Strengthen bank regulation and supervision IN00687214 ►IRI 1 (FBiH): Quantitative impact study on liquidity and capital regulations completed (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No -- QIS completed. Yes Date 31-Dec-2016 31-Oct-2018 15-Apr-2019 31-Dec-2020 The indicator was achieved in June 2017. Comments: IN00687219 ►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 All by-laws have been Value No -- Yes adopted Date 31-Dec-2016 31-Oct-2018 15-Apr-2019 31-Dec-2020 The indicator was achieved in October 2017. Comments: IN00687224 ►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 ongoing Yes Date 31-Dec-2016 31-Oct-2018 15-Apr-2019 31-Dec-2020 IN00687228 ►IRI 1 (RS): Quantitative impact study on liquidity and capital regulations completed. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No -- QIS completed. Yes Date 31-Dec-2016 31-Oct-2018 15-Apr-2019 31-Dec-2020 The indicator was achieved in June 2017. Comments: IN00687234 ►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 bylaws have Value No -- Yes adopted. Date 31-Dec-2016 31-Oct-2018 15-Apr-2019 31-Dec-2020 The indicator was achieved in December 2017. Comments: IN00687237 ►IRI 3 (RS): Adoption of new risk based SREP methodology aligned with EU (EBA) standards (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No -- work ongoing. Yes 4/25/2019 Page 4 of 9 The World Bank Implementation Status & Results Report Banking Sector Strengthening Project (P158387) Date 31-Dec-2016 31-Oct-2018 15-Apr-2019 31-Dec-2020 Address weaknesses in the domestic banking sector IN00687216 ►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 Value No -- 2017 adopted. AQRs Yes completed. Date 31-Dec-2016 31-Oct-2018 15-Apr-2019 31-Dec-2020 The indicator was achieved in December 2017. Comments: IN00687221 ►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 -- Too early to measure. Yes Date 31-Dec-2016 31-Oct-2018 15-Apr-2019 31-Dec-2020 IN00687225 ►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 framework Value No -- Yes adopted. AQRs completed. Date 31-Dec-2016 31-Oct-2018 15-Apr-2019 31-Dec-2020 The indicator was achieved in December 2017. Comments: IN00687229 ►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 Value No -- Yes Yes Date 31-Dec-2016 31-Oct-2018 15-Apr-2019 31-Dec-2020 BARS confirmed that as of end 2018 that from the banks participating in Phase 3 of the AQR none are Comments: undercapitalized. Improve Banking Agencies’ ability to undertake bank recovery and resolution functions IN00687217 ►IRI 6 (FBiH): Bylaw on recovery plans adopted by FBA (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No -- Bylaw adopted. Yes 4/25/2019 Page 5 of 9 The World Bank Implementation Status & Results Report Banking Sector Strengthening Project (P158387) Date 31-Dec-2016 31-Oct-2018 15-Apr-2019 31-Dec-2020 The indicator was achieved in October 2017. Comments: IN00687222 ►IRI 7 (FBiH): Resolution unit in FBA established and made operational (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No -- In progress. Yes Date 31-Dec-2016 31-Oct-2018 15-Apr-2019 31-Dec-2020 IN00687226 ►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 31-Oct-2018 15-Apr-2019 31-Dec-2020 IN00687231 ►IRI 6 (RS): Bylaw on recovery plans adopted by BARS (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No -- Bylaw adopted. Yes Date 31-Dec-2016 31-Oct-2018 15-Apr-2019 31-Dec-2020 The indicator was achieved in December 2017. Comments: IN00687233 ►IRI 7 (RS): Resolution unit in BARS established and made operational (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No -- yes Yes Date 31-Dec-2016 31-Oct-2018 15-Apr-2019 31-Dec-2020 The indicator was achieved in December 2018. Comments: IN00687235 ►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 31-Oct-2018 15-Apr-2019 31-Dec-2020 Improved governance and business model of the BiH development banks IN00687218 ►IRI 9 (FBiH): FBiH Government to approve a strategic statement for RBFBIH future development (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 4/25/2019 Page 6 of 9 The World Bank Implementation Status & Results Report Banking Sector Strengthening Project (P158387) Value No -- In progress. Yes Date 31-Dec-2016 31-Oct-2018 15-Apr-2019 31-Dec-2020 IN00687223 ►IRI 10 (FBiH): RBFBIH’s business plan for 2018-20 approved by the Shareholders Assembly (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No -- In progress. Yes Date 31-Dec-2016 31-Oct-2018 15-Apr-2019 31-Dec-2020 IN00687227 ►IRI 11 (FBiH): RBFBiH’s risk management strengthened (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No -- In progress. Yes Date 31-Dec-2016 31-Oct-2018 15-Apr-2019 31-Dec-2020 IN00687230 ►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. Yes Date 31-Dec-2016 31-Oct-2018 15-Apr-2019 31-Dec-2020 IN00687232 ►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 Value No -- In progress Yes Date 31-Dec-2016 31-Oct-2018 15-Apr-2019 31-Dec-2020 IN00687236 ►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 Value No -- In progress Yes Date 31-Dec-2016 31-Oct-2018 15-Apr-2019 31-Dec-2020 Citizen engagement IN00687215 ►IRI 12 (FBiH): Citizen Engagement: % of Project-supported bylaws reflecting outcomes of consultations. (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 100.00 100.00 100.00 Date 31-Dec-2016 31-Oct-2018 15-Apr-2019 31-Dec-2020 4/25/2019 Page 7 of 9 The World Bank Implementation Status & Results Report Banking Sector Strengthening Project (P158387) The indicator was achieved in June 2018. Comments: IN00687220 ►IRI 12 (RS): Citizen Engagement: % of Project-supported bylaws reflecting outcomes of consultations. (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 100.00 100.00 100.00 Date 31-Dec-2016 31-Oct-2018 15-Apr-2019 31-Dec-2020 The indicator was achieved in September 2018. Comments: Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P158387 IBRD-87410 Effective USD 60.00 60.00 0.00 15.12 45.94 25% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P158387 IBRD-87410 Effective 28-Apr-2017 31-Oct-2017 25-Oct-2018 31-Dec-2020 31-Dec-2020 Cumulative Disbursements 4/25/2019 Page 8 of 9 The World Bank Implementation Status & Results Report Banking Sector Strengthening Project (P158387) Restructuring History There has been no restructuring to date. Related Project(s) There are no related projects. 4/25/2019 Page 9 of 9