The Meeting of Standing Committee on Financial Stability Held

The meeting of the Standing Committee on Financial Stability was held in Sarajevo on 18 August 2011, being chaired by the Governor of the Central Bank of Bosnia and Herzegovina (CBBH) Kemal Kozarić, Ph.D., and attended by BH Minister of Finance and Treasury Dragan Vrankić, Ph.D., Minister of Finance of BH Federation, Ante Krajina, a representative of the Republika Srpska Ministry of Finance Dalibor Tomaš, the Directors of the Entities Banking Agencies, Zlatko Barš and Slavica Injac, Director of the Agency for Deposit Insurance, Josip Nevjestić. The meeting was attended by the Secretary to the BH Association of Banks (BABH) Mijo Mišić and representatives of the commercial banks.

Standing Committee on Financial Stability is tasked to identify potential problems in the financial sector and coordinated work in cases where required by specific situations that can cause systemic risk and threaten the financial stability, proposing the specific recommendations. Today's meeting delivered the recommendations on the potential measures for the facilitating the position of debtors with the loans indexed in Swiss Francs.

Standing Committee on Financial Stability has unanimously proposed the following recommendations:

1. that for the Swiss Franc indexed loans, the commercial banks fix the exchange rate of KM against the Swiss Franc at the level as of 31 December 2010, which amounted to KM 1.5678 for 1CHF;

2. that the difference up to the actual rate is calculated and recorded separately (so called balloon) with an interest rate that will be defined in agreement with the banks;

3. that banks consider the possibility of reducing interest rates for certain types of loans (housing loans);

4. that the repayment of a balloon loan would follow after the repayment of main loan for a maximum period of five years;

5.  the Banking Agencies are advised  that such recontracted loans are classified as performing assets;

6. Entities Ministries of Finance are  recommended to change the Entity Laws on the Foreign Exchange Operations, more precisely, the Article 5, which would allow foreign currency clause related only to EURO paging  due to the Currency Board  arrangement being on in BH and for the protection of customers;

7.That the Entities Ministries for Finance amend the Law on Foreign Exchange Operations , and allow the cash payment in Euro if two  parties agree, which would facilitate the cash turn over  to customers, tourists and others.

The above mentioned recommendations will be applied starting shortly after the banks make the technical preparations.

All participants of today's meeting (banks, Ministries and Banking Agencies) should present their positions on the acceptability of recommendations by 25  August, 2011  when the next meeting of the Standing Committee on Financial Stability is scheduled to be held in Banja Luka.

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