Public Disclosure Copy The World Bank Implementation Status & Results Report Deposit Insurance Strengthening Project (P146248) Deposit Insurance Strengthening Project (P146248) EUROPE AND CENTRAL ASIA | Serbia | Finance & Markets Global Practice | IBRD/IDA | Investment Project Financing | FY 2014 | Seq No: 6 | ARCHIVED on 09-May-2017 | ISR27911 | Implementing Agencies: Key Dates Key Project Dates Bank Approval Date:25-Feb-2014 Effectiveness Date:26-Nov-2014 Planned Mid Term Review Date:30-Nov-2015 Actual Mid-Term Review Date:30-Nov-2015 Original Closing Date:30-Jun-2016 Revised Closing Date:31-May-2017 Project Development Objectives Project Development Objective (from Project Appraisal Document) The project development objective is to strengthen the financial and institutional capacity of the Deposit Insurance Agency, so as to enable it to meet its deposit insurance and bank resolution obligations and serve as a core part of financial sector safety net. Has the Project Development Objective been changed since Board Approval of the Project Objective? No PHRPDODEL Components Name Strengthen the financial capacity of the DIA:(Cost $198.50 M) Strengthen the institutional capacity of the DIA:(Cost $1.00 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO  Satisfactory  Satisfactory Overall Implementation Progress (IP)  Satisfactory  Satisfactory Overall Risk Rating  Moderate  Moderate Implementation Status and Key Decisions 5/9/2017 Page 1 of 7 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Deposit Insurance Strengthening Project (P146248) The Project Development Objective is to strengthen the financial and institutional capacity of the Deposit Insurance Agency (DIA), so as to enable it to meet its deposit insurance and bank resolution obligations and serve as a core part of financial sector safety net. The project has two components: 1) Strengthen the financial capacity of the DIA (EUR144.23 million at project approval) through financing the DIF based on the achievement of several DLIs; and 2) Strengthen the institutional capacity of the DIA (EUR 0.71 million at project approval) through financing technical assistance to the DIA and the Ministry of Finance. The first component that capitalized the Deposit Insurance Fund (DIF) utilizing disbursement linked indicators and the full amount has been transferred to the DIF. The second component has also almost fully disbursed and has provided important TA to the DIA and MoF in order to achieve the PDO. The project is expected to close on May 31, 2017. All of the results indicators have been met (both the PDO and intermediate results indicators). Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance  --  Moderate  Moderate Macroeconomic  --  Moderate  Moderate Sector Strategies and Policies  --  Moderate  Moderate Technical Design of Project or Program  --  Moderate  Moderate Institutional Capacity for Implementation and Sustainability  --  Moderate  Substantial Fiduciary  --  Moderate  Moderate Environment and Social  --  Moderate  Substantial Stakeholders  --  Moderate  Moderate Other  --  --  -- Overall  --  Moderate  Moderate Results Project Development Objective Indicators PHINDPDOTBL  Cumulative inflows into the Deposit Insurance Fund equivalent to 2.5 percent insured deposits (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 2.50 2.74 2.50 Date 31-Dec-2013 30-Jun-2016 31-Mar-2017 30-Jun-2016 Comments As of 31 March 2017, the DIF balance was EUR 315.89 million, equaling 2.74% of the insured deposit level as of the relevant date 5/9/2017 Page 2 of 7 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Deposit Insurance Strengthening Project (P146248) (December 31st, 2013). PHINDPDOTBL  DIA performing its legally mandated technical functions in any future bank failures in which DIF resources are utilized (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value N Y Y Y Date 31-Dec-2013 30-Jun-2016 31-Mar-2017 30-Jun-2016 Overall Comments There have been no bank failures during the most recent period reviewed. Intermediate Results Indicators PHINDIRITBL  Premium Rate (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.40 0.60 0.60 0.40 Date 31-Dec-2013 30-Jun-2016 31-Mar-2017 30-Jun-2016 Comments The premium amount is higher than envisaged when the project was developed, as the DIA's Board has decided to increase the regular annual rate from 0.4% to 0.6% rather than having the regular annual rate be 0.4% and having in place a temporary extraordinary premium of 0.2%. This increase is in line with their law, and the World Bank reviewed the rationale for the increase. Considering the need to further increase the DIF, it does make sense to retain the level at 0.6% using regular premiums rather than having in place a temporary extraordinary premium that was put in place when the balance of the DIF was extremely low. In 2015, both quarterly and extraordinary premiums at the aggregate rate of 0.6% p.a. were collected from the DGS member banks. In 2016, however, the collection of extraordinary premiums was discontinued, but the quarterly premium rate was increased to 0.6% p.a. The legal maximum (DI Law) is 0.8% p.a. 5/9/2017 Page 3 of 7 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Deposit Insurance Strengthening Project (P146248) PHINDIRITBL  Stand-by funding available for DIF (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value EUR 0 EUR 0 EUR 0 EUR 0 Date 31-Dec-2013 30-Jun-2016 31-Mar-2017 30-Jun-2016 Comments The DIF does not have in place any official government guarantee in the budget and has begun repaying the budget for resources provided by the budget on a temporary basis, as the private sector participants should be responsible for providing funds to the DIF in line with international best practice. The DIF does have a backup facility with EBRD of EUR 200m that is sufficient based on the analysis provided by the DIA. PHINDIRITBL  Number of Independent Board Members (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 3.00 3.00 3.00 Date 31-Dec-2013 30-Jun-2016 30-Jun-2016 30-Jun-2016 PHINDIRITBL  Regular government financial stability committee meetings (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 8.00 8.00 8.00 Date 31-Dec-2013 30-Jun-2016 31-Mar-2017 30-Jun-2016 Comments This indicator target was met in 2015. In 2014 meetings were held on 31 January, 29 April, 31 October and 12 December and in 2015 on 19 March, 23 June, 23 September and 10 December. The evidence of this, as per the agreed Verification Protocol, has been provided by the National Bank of Serbia in its letter to the DIA of 8 August 2016. 5/9/2017 Page 4 of 7 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Deposit Insurance Strengthening Project (P146248) PHINDIRITBL  Sharing of NBS risk information on problematic banks with DIA (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value N Y Y Y Date 31-Dec-2013 30-Jun-2016 31-Mar-2017 30-Jun-2016 Comments With World Bank support, a set of new financial laws governing the roles and responsibilities of the DIA and the NBS has been adopted by the Parliament in early February 2015 being in application as of April 1st, 2015. The new legislation sets the basic rules for the information exchange between the institutions. They are further elaborated in Memorandum of Understandings (MoU) between the NBS and the DIA, executed on 28 May 2015. The MoU spells out the type of information to be exchanged between the signatories (Articles 3 and 4 of the MoU), which includes the minimum scope of data related to the bank risk and problem banks specified within DLI 4.2 and 4.3. PHINDIRITBL  Sharing of NBS Supervision Conclusions on Problematic Banks with DIA (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value N Y Y Y Date 31-Dec-2013 30-Jun-2016 31-Mar-2017 30-Jun-2016 Comments A set of new financial laws governing the roles and responsibilities of the DIA and the NBS has been adopted by the Parliament in early February 2015 being in application as of April 1st, 2015. The new legislation sets the basic rules for the information exchange between the institutions. They are further elaborated in Memorandum of Understandings (MoU) between the NBS and the DIA, executed on 28 May 2015. The MoU spells out the type of information to be exchanged between the signatories (Articles 3 and 4 of the MoU), which includes the minimum scope of data related to the bank risk and problem banks specified within DLI 4.2 and 4.3. PHINDIRITBL  Cumulative value recovered from bank bankruptcies since February 1, 2014 (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value EUR 0m EUR 110m EUR 110m EUR 110m Date 31-Dec-2013 30-Jun-2016 31-Mar-2017 30-Jun-2016 5/9/2017 Page 5 of 7 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Deposit Insurance Strengthening Project (P146248) PHINDIRITBL  Information Collected by the MoF on State Owned Banks. (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value N Y Y Y Date 31-Dec-2013 30-Jun-2016 31-Mar-2017 30-Jun-2016 Overall Comments Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed P146248 IBRD-83400 Effective USD 200.00 200.00 0.00 172.46 0.76 86% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P146248 IBRD-83400 Effective 25-Feb-2014 10-Jul-2014 26-Nov-2014 30-Jun-2016 31-May-2017 Cumulative Disbursements 5/9/2017 Page 6 of 7 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Deposit Insurance Strengthening Project (P146248) Restructuring History Level 2 Approved on 20-Apr-2016 Related Project(s) There are no related projects. 5/9/2017 Page 7 of 7 Public Disclosure Copy