CBBH meeting with the Banking Agencies

The Central bank of Bosnia and Herzegovina (CBBH) held a meeting with the Banking Agencies of the Federation and the Republika Srpska in Sarajevo on Wednesday, 17 November 1999. The Entity Banking Agencies have the responsibility for licensing and supervising banks in their regions and the CBBH, in terms of its Law, is responsible for coordination the work of the agencies. This was the fifth meeting the three institutions had held in order to discuss issues of common interest.

The meeting was chaired by the Governor of the CBBH, Peter Nicholl, and attended by Zlatko Bars, Director of the Federation Banking Agency, and Mrs Slavica Injac, Director of the RS Banking Agency, and Board members and senior staff from the three institutions. For the first time, the Director and Deputy Director of the Federation Agency for Deposit Insurance, Mr. Josip Nevjestic and Mr. Senad Manov, attended the meeting. They will be regular participants at the future meetings as will the senior staff of the RS Deposit insurance Agency when it sis formed. Representatives from USAID and the IMF who are involved in banking sector issues in BiH were also present.

The meeting discussed the latestregular reports that the Agencies send the CBBH on the state of the banking sector in their entity. The reprts made it clear that major problems remain in the banking sector, but some progress is being made in closing insolvent banks, merging smaller banks, and readying state for privatisation.

The meeting also discussed aagain the criteria that commercial banks will need to meet before they can offer domestic payment services to their customers. The federation banking Agency has adopted a set of criteria. That means that it is now possible for commercial banks in the Federation to apply for licenses to provide domestic payments. Licenses for low and moderate risk transactions should be able to be issued to suitable banks by the Agency relativly quickly but it will require banks to submit a 1999 Audit before completing these applications. The RS Banking Agency hopes to approve the criteria shortly and banks there will then also be able to apply for licenses, particulary for low and moderate risk transactions.

" Commercial banks have been aware for many months that this process, of licensing them for domestic non-cash transactions would commerce" said the Governor of the CBBH, Peter Nicholl. " I therefore hope that they apply promptly for licenses, particulary for low risk and moderate risk transations, which will represent a high proportion of total transactions. This is an important step in the transfer of this function from the Payment Bureaus to the commercial banks. Many commercial banks have been telling on they are ready and eager to carry out these transactions. They now have the opportunity yo begin to do so."

There was also some discussion, iniated by the Governor, of the problems caused by the names of some commercial banks potentially misleading for customers. The Governor belives this is important issue that needs to be addressed if the NiH banking sector is to be taken seriously.